GUEST BLOG: Prepay versus postpay

The problem with business travel – particularly hotel stays – is that there’s too much choice. Not just concerning the inclusion of breakfast, airport transfers, and proximity to company offices/conference venues – but how the darn thing gets paid for.

We can pay online, in person, on arrival, at checkout, or have someone else handle it completely. Actually, when you think about it, you can group these into two primary transaction types: Pre-Pay and Post Pay.

There are many differences between the two types: in terms of the cancellation policy, changes flexibility, cost, and operational process. Let’s take a closer look…

Post Pay

When the business traveller pays at the hotel at the end of their stay. The company or travel agent just put a credit card up as a guarantee.

Main Advantages

• You can usually cancel post pay bookings at the last minute.
• Post-pay bookings are usually more flexible: so if a traveller needs to shorten his stay while he’s already there, it’s usually not an issue.
• Payment isn’t taken until the visit, which can be easier on companies’ cash flow.
• Employees can use their travel credit card and earn points as part of a hotel loyalty program.
• Reclaim VAT. The invoice is issued from the hotel directly to the business: meaning the company can claim for a VAT refund

Main Disadvantages

• The employee uses a company credit card or submits the cost via expense report.
• Some employees might not be crazy about having a £2,000 charge on their credit card bill.
• Post-pay rates tend to be more a more expensive option

Pre-Pay

The company pays for the hotel before the traveller arrives. A voucher is issued which the traveller shows during at check-in.

Main Advantages

• Employees don’t pay at the hotel (company pays directly).
• Usually more competitive rates than Post Pay.
• No need to reimburse or issue a credit card to employees.

Main Disadvantages

• Usually more restricted cancellation policy: you can cancel up to 48/72 hours before the check-in date.
• Less flexible in terms of changes: some rates even prevent a guest name change and most won’t let you shorten your stay (though often this depends on the hotel booked and the rate paid).
• Sometimes employees have problems claiming their loyalty points. Since the room was booked through a 3rd party and not directly with the hotel, some hotels will not consider their stay as valid.

While different companies and individuals will have their own preferences, Arbitrip offers the benefits of both: the flexibility of Post Pay with the cost savings of Pre-Pay. You simply set a budget and our matching algorithm finds the right kind of hotel for your stay and re-books it when a better deal becomes available.

This blog was posted by Assaf Haski, VP Business Development, Arbitrip, who are exhibiting at the Business Travel Show next week. Please register for your free visitor pass at https://www.businesstravelshow.com