Billback – what’s the story?

Back in July I posted an exclusive interview between Hotel Insight and Andy Craddock from Pegasus Solutions.  I received so many comments and emails about this interview and there was a recurring theme, especially from those readers that sell hotels – billback.  More specifically, people wanted to know the opinions of Pegasus on this topic, so I am pleased to post their response below.

Firstly for those who do not know what we mean by billback, and for all of those who mean something different with this term, I thought it was useful to try to define the term.  Basically, we term billback as the process where by a hotel booking agent confirms a reservation, and contacts the hotel to make a pre-payment, so that the guest is not charged for the room when they check-out.  This is especially true when booking via the GDS channel where almost all rates are paid for by the traveller, and only a guarantee is added to the booking for the hotel.  You can quickly see where this process could fail – manually contacting hotels, front desk not knowing what billback is, payment needing to be by a “virtual credit card”… there are so many reasons why this process can be long-winded and often go wrong.  And to date, there is no easy way to enter this information into any GDS and the hotel to action this 100% of the time.  There is also a big problem, especially for UK travel agents, where they need to get an invoice from the hotel for V.A.T purposes – but that’s for another discussion!

So as you can see, this is a complex problem which the major GDS, hoteliers and companies such as Pegasus all have views on, and try to address in different ways.  So, as promised, Hotel Insight spoke to Jenn Sampson, Senior Director, Financial Services Product Management at Pegasus Solutions to get her take on defining billback and where Pegasus are with it.  Here’s the highlights of our discussion:

“Billback is a methodology of allowing a traveller to stay at a hotel and not have to pay his hotel bill on departure.

Historically, an agent would have a credit line open with an agency, the agency would make the reservation citing “Billback or similar.” The agency would then be invoiced by the hotel and would bill this on to the customer after paying the hotel – incurring debt on the part of the corporation making the booking.

Agencies are desperately trying to find a methodology to resolve this as the biggest issue is reconciling guest stays in their back office to the bills received from hotels. In order to actively and effectively re-bill clients, they need to ensure a 100% match between booking records in their back office and the invoice received from the property.

The methodology of choice at the moment to do this is single use credit cards. Every transaction in their back office then has a unique credit card number in its record. Instead of being sent an invoice by the hotels, they simply match their back office against the credit card bill, and send this as documentary proof to the corporation to pay the debt.

For VAT purposes, the agencies in Europe need to be able to provide a VAT receipt for every transaction. Typically when a guest checks out of the hotel, the receptionist hands the receipt for the virtual credit card transaction to the guest, which never makes it back to the agency, so the agency cannot reclaim the stay from the corporation. Provided that Pegasus is supplied with the transactions, we can generate the VAT invoices on behalf of the agencies/hotels”.

I’d be very interested to hear your own thoughts and experiences on billback and what you would like to see change on the side of companies such as Pegasus, GDS’s (Travelport, Sabre, Amadeus) and hoteliers.  There are some companies, such as Conferma who have developed a working solution for HBA’s (separate post to follow) but that’s really it.  My view is that all the major technology players need to sit down, decide a process and agree to develop a solution together – but this may never happen.  Feel free to leave your comments or email me at hotelinsight@outlook.com

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10 thoughts on “Billback – what’s the story?

  1. Thanks Hotel Insight for talking about such a big topic and for trying to get people like Pegasus involved. I have one question: It’s great to hear that Pegasus can in fact generate a VAT invoice, but if they are not talking t any of the GDS, how can we ever get this invoice? Why not work with the three big GDS and work on a solution to initiate billback, send the vcc details to the hotel, and then deal with the invoice, so everyone has a standard process. I simply know that will never happen but we can but dream.
    I believe that Hotel Insight should take this forward and represent the industry in such discussions!! Please Hotel Insight, represent us!

  2. What we need are the GDS (Preferably Sabre in my case!) to come up with an automated , integrated solution within the platform so I can process a billback request with a hotel booking. Pegasus, you could help do this!

  3. Good post Hotel Insight.
    @Pegasus – is this invoice service you talk about free? And presumably, only available to hotels who are switched by you or represented by you?

  4. Hello, I’ve just started my own HBA in the UK and am becoming increasingly concerned with not only billback (and the fact the most of the time my travellers are still asked to settle the bill on check out) but of TOMS, this new way of VAT Working my HMRC. Totally confussing, so if Hotel Insight want to write a post about TOMS too, then fee free!

  5. Why book with a GDS in the first place if you want a pre-paid rate? why not go straight to a bedbank or aggregator? That way it’s always pre-paid and the commission can be higher than through a GDS too.

  6. One other problem with billback – more often than not, the only way to actually get an invoice is for the traveller to bring it back with them and pass to the TMC/HBA. Do you think this ever happens successfully?
    I agree with this post – all parties need to sit down, agree a universal process, and develop it together. Simple.

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