Why pay for business travel? Choice Hotels cuts out paperwork — and costs | PaymentsSource

Choice Hotels, which operates a franchise of 7,100 global locations, spends a lot of time managing transactions. A new system developed with TreviPay could reduce that friction by allowing the chain to integrate directly with U.S. business travelers’ employers.

Direct Pay enables companies to consolidate all their employees’ hotel stays into a single weekly invoice so that business travelers can check in and out without making a payment or submitting an expense report. It also slightly reduces Choice Hotels’ transaction expenses by aggregating many payments into one.

The move capitalizes on the pandemic-induced acceleration of embedded payments and the growing pressure for corporations to speed up cash flow and reduce fraud risk on transactions as business travel slowly recovers, according to Brandon Spear, CEO of TreviPay, which devised the solution with Choice Hotels.

“We wanted to make business-to-business payments look more like Uber by enrolling employers with Choice so that when employees check in and out the payment is essentially already on file,” Spear said.

Luke Sharrett/Bloomberg

The setup guarantees Choice Hotels’ franchisees are paid within 14 days through TreviPay — significantly speeding up accounts-payable cycles at a time when cash flow is still tight for independent hotel owners waiting for business travel to fully recover. The system also reduces the risk of fraud associated with employees using personal or corporate cards for travel.

Global business travel spending is recovering steadily, up 34% this year over last year. But corporate travel isn’t likely to reach pre-pandemic levels until 2026, when it’s estimated to reach $1.4 trillion, according to the Global Business Travel Association.

U.S. hotel occupancy is hovering at about 65%, with slightly less than half of business travelers planning work-related trips in the next 12 months, according to STR, a travel data research firm based in Hendersonville, Tennessee.

“Direct Pay guarantees our [franchise] owners prompt payment and enables them to spend less time manually invoicing, managing credit card authorization forms and chasing down payments,” said Chad Fletcher, vice president of global sales at Choice Hotels International. The concept also positions franchisees to potentially drive more bookings, he added. About 70% of Choice Hotels’ properties are in the U.S.

Choice Hotels’ Direct Pay demonstrates how much room there is to further streamline business-to-business payments, said Nathan Hilt, managing director with the consulting firm Protiviti.

“The streamlined digital payments movement we’ve seen in the last several years on the consumer side has really not happened yet in commercial payments, but I think we’re poised to see a lot more advancements like this soon,” Hilt said.

Choice Hotels, of Rockville, Maryland, laid the groundwork for the product in 2018 when it launched a virtual payment system enabling corporate travel managers to guarantee employees’ hotel room reservations without requiring the traveler to supply a credit card. Choice expanded those capabilities to group reservations in 2019.

Working as an intermediary, TreviPay combines these capabilities that a company can access through a dashboard to download and manage their invoice data, track invoice status and resolve any conflicts over charges.

Employees at participating companies may make reservations via Choice’s website, mobile app or call center for any location their employer has authorized. When checking in, employees show only a driver’s license or other ID. Employees can change the dates of existing reservations, and employers can add notes, including project budgets and department codes, to further simplify the reconciliation process.

Choice announced its alliance with TreviPay in April. The first set of employers — whose names the companies did not disclose — are in the process of enrolling, according to Spear.

TreviPay, a longtime global business-to-business payments technology firm formerly known as MSTS before rebranding last year, sees opportunities to expand the Direct Pay concept to other travel companies and other business verticals, Spear said.

“Choice is the first enterprisewide company to pioneer this solution, and it’s a great first use case,” Spear said.