Payment Acceptance

16 Jul

2025

Hospitality industry trends 2025: What payment data tells us about the future

Payrails

Hospitality is undergoing a payment transformation, and data is your competitive edge.

This report compiles the latest hospitality industry trends and strategic insights to help decision-makers identify cost drivers, uncover growth levers, and understand what's next in guest payment experiences.

Hospitality payment trends shaping 2025

Artificial intelligence (AI) is reshaping everything from fraud prevention to guest messaging and personalized pricing.
Buy now, pay later (BNPL) has cemented its place across online travel agencies (OTAs) and hotel chains, with 1 in 5 U.S. travelers using BNPL to book trips.
Network tokenization is boosting authorization rates and reducing fraud, Visa and Mastercard both report 2–4% lifts in approvals.
Embedded payments and invisible checkout are becoming the norm, as guests expect frictionless, mobile-first experiences.
Compliance rules like PCI DSS 4.0 continue to influence how hotels and property management system (PMS) providers handle cardholder data.

Key highlights

Market size & growth

$975B global hotel industry revenue in 2024
Projected +6% CAGR through 2029

Payment challenges

$21B in direct payment processing costs
5–6% of hospitality revenue lost to fraud
30% YoY increase in chargebacks
31% of hotels say manual reconciliation delays growth

Guest behavior & risk

74% of travelers abandon bookings if preferred alternative payment method (APM) isn’t available
91% of guests want to pay in their home currency
89% of Brazilian travelers report payment fraud
50% of chargebacks are initiated instead of refund requests

Technology trends

BNPL usage up 50% YoY across major travel sites
AI-powered pricing increases revenue per available room (RevPAR) by 10–15%
Tokenization improves approval rates by 2–4%
73% of hotel IT budgets now include AI tools

Market growth & the digital shift

Online travel sales expected to make up 75%+ of total revenue by 2029
Cross-border payments now exceed 2019 levels: +141% for Visa, +155% for Mastercard
$1.48T in global business travel spend forecast for 2024

What this means:
More bookings, more payment volume, and more complexity. A fragmented setup will cost you and there is a big opportunity for optimizations.

Payment costs & inefficiencies

$21B spent annually by hotels on payment processing
Average 2–3% card processing fees
Hotels lose 0.8–2% of room revenue to OTA and payments friction

Action to consider:
Reduce costs and friction by consolidating PSPs, negotiating lower card fees at the corporate level, and automating reconciliation workflows to eliminate manual overhead.

Guest expectations & booking behavior

74% abandon bookings without their preferred payment method
91% want prices in their home currency
70%+ of Millennials expect fully contactless stays

Regional spotlight: EMEA

European travelers value secure and flexible checkout flows over discounts. 38% say they’re more likely to book directly when digital wallets are available.

Future outlook:
Guests will increasingly favor brands that remember their preferences, offer seamless checkouts, and support digital wallets. As OTAs and travel platforms double down on flexible UX – hotels without dynamic, localized checkout experiences risk falling behind in direct conversion.

Action to consider:
Surface the most relevant payment methods, currencies, and checkout flows for each guest using geo-location and device signals. PSP-agnostic routing can centrally configure these experiences and dynamically adapt them in real-time – helping reduce drop-offs and increase direct bookings.

Fraud, chargebacks & risk

30%+ YoY increase in chargebacks
5–6% of industry revenue lost to fraud
50% of chargebacks are guest-initiated disputes
Card-not-present fraud = 65% of fraud losses
4M+ travel-related credentials compromised since 2021

Future outlook:
As fraud tactics grow more sophisticated, static defenses will no longer be enough. Expect rising card scheme pressure, growing 3DS mandates, and fraud costs shifting from PSPs to merchants unless proactive systems are in place.

Action to consider:
Adopt 3D Secure, network tokenization, and digital authorization flows to prevent fraud at the point of transaction. These tools reduce both false declines and chargebacks without introducing guest friction – a crucial balance in high-value bookings. Better fraud tooling also gives payment teams leverage to negotiate lower processing fees.

Alternative payment methods & BNPL

Europe’s BNPL market is forecast to grow by 12.4% in 2025 to $191.3 billion, with a CAGR of 9% through 2030.
In Saudi Arabia, digital wallets are set to overtake cards in 2025. Apple Pay, PayPal, and STC Pay lead online use, while Apple Pay and mada Pay are most popular in-store. The country aims for 80% cashless payments by 2030.
BNPL adoption rose 50% YoY at OTAs like Booking.com
1 in 5 U.S. holiday travelers used BNPL
BNPL increases AOV by up to 60%
47% of Millennials and 50% of Gen Z used BNPL in the past year
Klarna’s travel payment volume up 50% in 2024

Regional spotlight: Europe

The BNPL payment market in Europe is expected to grow by 12.4% on an annual basis to reach $191.3 billion in 2025. Europe's BNPL market experienced robust growth during 2021-2024, achieving a CAGR of 20.6%. This upward trajectory is expected to continue, with the market forecast to grow at a CAGR of 9% during 2025-2030. By the end of 2030, the BNPL sector is projected to expand from its 2024 value of $170.2 billion to approximately $293.7 billion.

Regional spotlight: Middle East

The BNPL market across the Middle East is set for strong expansion, with projections indicating a 19.4% year-over-year increase in 2025 to reach $5.79 billion. From 2021 to 2024, the sector grew at a compound annual growth rate (CAGR) of 28.8%, and it is expected to maintain robust momentum with a forecasted CAGR of 15.2% through 2030, ultimately reaching $11.74 billion. Adoption is being fueled by leading providers such as Tabby, Tamara, and Postpay, alongside e-commerce platforms including Noon and Amazon MENA. At the same time, regulatory frameworks are evolving, with institutions like the Saudi Central Bank introducing lending guidelines to oversee the BNPL ecosystem.

Future outlook:
BNPL will move from a differentiator to a standard expectation, especially for younger travelers and high-value bookings. Hotels that don’t integrate regionally relevant providers risk higher drop-offs and losing share to BNPL-friendly OTAs.

Action to consider:
Adding BNPL at checkout contributes to a guest-friendly experience – it increases average booking value and conversion rates. Highlight your flexibility early in the funnel to reduce drop-off. Choose a provider that supports regional preferences (e.g., Klarna in Europe, Uplift in North America).

Tokenization & authorization rates

Visa: 4–4.6% higher approval rates with network tokens
Mastercard: 2.1% average auth lift from tokens
Tokenized payments see 30% less fraud
Tokens auto-update expired cards → less checkout friction
94% of U.S. Mastercard ecom spend is token-capable
Some merchants see up to 10% higher approval rates when using tokenization compared to non-tokenized transactions

Future outlook:
By 2026, network tokens will be the default for any platform storing cards – not just for security, but because they quietly increase approval rates. Expect tokenization to become a KPI for revenue and retention.

Action to consider:
Network tokens help resolve two of the biggest pain points in travel payments: failed transactions and card expiry. Use tokenization to securely store guest credentials and increase approval rates. Combined with account updater tools and retry strategies, this stack can meaningfully improve approval rates. Brands that rely on repeat bookings benefit especially from the ability to auto-update stored payment methods.

Data-driven personalization & AI adoption

73% of hoteliers say AI will transform the industry
77% allocating 5–50% of IT budget to AI tools
AI-powered pricing boosts RevPAR by 10–15%
AI upsell campaigns increase conversion by 15–20%
25% of hospitality brands use AI assistants for service and bookings

Future outlook:
AI won’t just recommend room upgrades, it will price rooms, flag fraud, answer questions, and run checkout flows. Leading brands will embed AI across the payment journey to deliver personalization at scale without adding friction.

Action to consider:
Use AI to personalize pricing, surface upsells, and fight fraud in real time.

Reconciliation & reporting bottlenecks

$1.5B+ lost annually to inefficient reconciliation
Staff spend 7 hrs/week on manual payment matching
Virtual card automation saves 40+ hrs/month

Future outlook:
As payment complexity rises, finance teams won’t be able to scale manual processes. Automation, central reporting, and real-time reconciliation will become foundational to reducing leakage and accelerating settlements.

Action to consider:
Automate reconciliation, unify reporting, and track settlement timelines.