Several years ago, a major Convention hotel on the Las Vegas strip was hosting an Association Group from New York in its meeting space. That evening, the Meeting Planner had pre-paid the hotel for 150 dinners for their Keynote Speaker banquet Friday evening. As it turned out, the Meeting Planner had more attendees than was originally planned, and asked the Banquet Manager for approximately $10,000 worth of additional food. The Meeting Planner took out her checkbook from the Association checking account. However, the Banquet Manager informed the Meeting Planner that the hotel policy was not to accept checks "on-site", because they would have no idea if the check would be able to clear the bank. The Banquet Manager asked the Meeting Planner if the Association had a corporate credit card. They did not. The Meeting Planner pleaded with the Banquet Manager to accept the check, indicating that it was Friday night, and the banks were closed…so, she could not effectuate an alternative form of payment from her Association such as a Cashiers Check or Wire Transfer. The upshot of this situation is that:
- The hotel lost the F&B revenue,
- The Group cancelled their meeting for the following year that had been booked at that hotel, and
- The systemic policy of not accepting the check on-site was a problem that is not only problem for this hotel; but, a hotel industry problem.
There was a solution available to the hotel. However, it was not a widely known solution. The solution was to implement a check acceptance program that would pre-authorize payment to the hotel, before services were rendered. In this particular case, the Banquet Manager would have been able to obtain an authorization on the Meeting Planner check either by a phone authorization, or through their credit card terminal or POS system in a matter of seconds. The cost for this solution was equivalent to the cost of accepting the credit card that the hotel had offered the Meeting Planner. In other words, the hotel could not only have confidently taken the check, it would have enriched itself with the F&B revenue, and kept their customer happy. Instead, they lost the ongoing business, and their reputation was sullied.
Another hotel had a situation where they had overbooked a Group by 50 rooms for a 2 night stay. The Sales Manager called another hotel in the area, and asked the Director Of Sales if their property could accommodate a Group that had filled their room-block. The Director Of Sales said, "When is the Group coming into town?" The Sales Manager responded, "They are standing in our lobby!" The Director Of Sales went to the Credit Manager of the hotel. The Credit Manager said, "It is hotel policy that we have to run a credit report on all Group accounts, before extending them credit. So, reluctantly, the Director Of Sales at the hotel informed his colleague that he could not take the Group. Again, was there a solution that would have helped the Director Of Sales take the "overflow" business? The answer is "Yes". Again, the solution that the Hotel needed was the ability to "Pre-Authorize payment before their services had been rendered".
It doesn't stop there. Let's say that you have a Tour Operator that calls a hotel, and the Credit Manager has enough time to run credit on the Group, and extend "Credit" to the Group on the "standard" net 30 basis, meaning that the Group will have 30 days from the time they use the Hotels services to pay the Hotel. Does that solve the Hotels problems of ensured payment? No, it does not. "Net 30" is a hope to be paid…not, a guarantee to be paid. Again, all these situations are the same. By instituting a solution that "Pre-Authorizes Payment Before Services Are Rendered", the Hotel can institute a payment solution that will increase sales.
We are not through yet. What if you have a Tour Operator that puts together an F.I.T. program with the hotel. Like Tour Operators who run Groups with the Hotel, if you extend "Net 30" (which is "standard" in the Hotel industry), the Hotel has put itself in a position where it is in the "collections business". Ask any Hotel what their "Accounts Receivable" situation is with Tour Operators and F.I.T business.
Let's say that you have a Hotel that is working with a young couple who is considering booking the Hotel for their Wedding reception. When sitting down with the young couple, they explain to the Banquet Manager of the Hotel that they have a cash-flow problem. The husband gets paid on the 15th of the month, and the wife gets paid on the 1st of the month. Is there a way the Hotel can finance the Reception here?
Again, the answer is "Yes". By instituting a Payment Solution that allows the Hotel to young couple to write them 2-4 checks that will be deposited on the dates acceptable to them over the next 30 days. The young couple simply writes the Hotel those checks, and the hotel is ensured payment on all the checks that are written, even if the young couple does not have the funds to cover the checks written. In other words, this payment solution allows the Hotel to take a piece of business that they would have turned down otherwise.
What if this young couple has their Wedding Reception and the Hotel has an unexpected mishap where the Audio-Visual vendor does not deliver the right equipment for the Wedding Reception, and the young couple subsequently puts a "Stop Payment" on the checks? Again, the Hotel is protected, even against a "Stop Payment" on a check.
Next, what do Hotels do with walk-in transient customers who arrive at their Hotel wanting to pay for their Hotel Room with a check? Some Hotels simply do not accept checks. Some Hotels will accept local checks. Other Hotels that do accept Checks require the Guest to write out the Check before they issue a room key. And, for the Guest to post $20 in order to turn-on their telephone in the room. In other words, the transaction is a hassle for the Hotel Guest, and a hassle for the Hotel.
It can even be worse. Let's say that you have a walk-in transient who has just arrived with their family at a Hotel in New York, and they are from Chicago.
They are weary after traveling the whole day, and just want to get to their hotel room and go to bed. The husband puts up their credit card; but, unfortunately, the credit card is "over the limit". The Hotel has a policy of not accepting checks. Do you think that the M.O.D. (Manager-On-Duty) can authorize the acceptance of the customer check? No. Is this the way to do business?
The answer is to implement a program that allows the customer to not only check into the hotel where they are going to pay by check, and treat them in the same way as you would a credit card paying customer. You want these check paying customers to be able to go to their room, make a phone call, order room-service, order an in-room movie, or go down to the restaurant and/or bar in the hotel and present their room-key and be order to put their tab on their bill. Again, for the same type of cost a hotel pays to accept credit card, this can be easily done.
By this time, you are probably asking yourself the question, "Why haven't I heard of this solution?" The answer is simple. The hotel industry has been looking at "check acceptance" in entirely the wrong way. They have been pitched on "check guarantee" programs that they believe are limited to the one parameter of pitching hotels that if they are taking checks from clients, then; they need to be assured that they would be guaranteed payment. The programs I have suggested are never brought up to the hotel in the form of solving hotel industry problems, because the typical sales person that is marketing services that could help hotels, have no idea on how the hotel industry operates. They don't have a hotel background. They have no core comprehension about the sales and operations dimensions of a hotel and/or motor lodge.
Furthermore, according to the Nilson Report, the banking industry newsletter, nearly 48% of consumers don't have a credit card! (The majority of those that do have credit cards tend to have two or three of them). So, why market your hotels services to half of the Public? By accepting credit cards, you may tap into markets like some wealthy immigrants who distrust credit cards because of banking problems in their home Country. If Readers would like any info on these solutions, they may contact me through my office at 800-892-0879 (M-F), or through my email at email@example.com.
The bottom line is that hotels need to provide their customers with every possible method-of-payment for them to do business with them. Think about it. If in addition to the decals your hotel has posted to accept major credit cards, if you added a new decal that said, "Checks Welcome", that is really saying, "We trust our customers". And, if in all your Yellow Pages ads, you put the verbiage, "We Accept In-State and Out-Of-State Checks", you may get yourself new customers, who may be a young couple who just got married, and want to stay at your hotel for their honeymoon. When they peruse the Yellow Pages ads, they will pick out your hotel, because you have let them know that "they are welcome".
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