Summer is just around the corner, and with it comes an influx of vacationers ready to explore new destinations. As the summer travel season begins, businesses operating within travel and hospitality must adopt robust strategies to manage the anticipated increase in transaction volumes and fraud risks. These strategies must also effectively manage disputes and chargebacks during a peak travel period that’s expected to break records.
Americans are still choosing to prioritize their vacations despite challenges like international unrest and rising prices. Projections from the Transportation Security Administration (TSA) suggest we’ll see a record-breaking summer travel season in 2024, with officials anticipating the busiest travel season ever. 52% of consumers say they plan to travel as much in 2024 as last year, with another 40% saying they expect to travel even more.
Millennials and Gen Z are the driving forces behind this trend. People in this cohort tend to prioritize experiences over material goods and seek a healthy work-life balance to explore new places and cultures. They’re also heavily influenced by social media, where many influencers showcase travel as part of an aspirational lifestyle.
This surge in travel drives global business at every level of the economy, but it also creates a heightened sense of risk. For businesses, effectively managing fraud and chargeback risk year-round is crucial to navigating the travel space.
The challenges ahead
While a travel boom is fantastic for businesses and local economies, it poses significant challenges that underscore the necessity of comprehensive fraud and chargeback management. An exceptionally busy travel season can aggravate existing chargeback triggers already intrinsic to the travel space. We may see:
- Increased Transaction Volume. The sheer volume of transactions during peak travel seasons makes managing and monitoring every transaction closely difficult, leading to errors and delays in handling disputes.
- Fraudulent Activities. Fraudsters take advantage of the busy season, increasing the likelihood of chargebacks from unauthorized transactions.
- Overbooked Flights and Hotel Shortages. High demand can lead to dissatisfaction and a spike in chargebacks from customers disputing charges for services they didn’t receive.
- Poor Customer Service. Understaffing results in unresolved complaints and poor service, driving customers to chargebacks to resolve grievances.
- Operational Strain. Handling a surge in transactions requires a well-prepared setup to promptly process payments and refunds, reducing disputes.
- Financial and Reputational Impact. Chargebacks result in financial losses and damage to a company’s reputation, leading to higher processing fees and loss of merchant processing privileges.
Considering these challenges, prioritizing effective chargeback management is crucial for businesses in the travel industry. Aside from saving time and money, it can also help boost customer trust during the peak travel season.
Managing chargebacks: In-house, hybrid, or outsourced?
Travel operators can adopt one of three chargeback management strategies to handle the increased demand and potential challenges. They can manage everything in-house, outsource everything, or take a hybrid approach combining internal efforts with external support.
While managing everything in-house offers direct control, it can be resource-intensive. Outsourcing provides specialized expertise but may lack merchant insight. A hybrid approach balances direct oversight and external expertise, offering a middle ground solution.
Industry collaboration
Improved industry collaboration could be the key to addressing fraud and chargebacks as we gear up for a record-setting summer. Open data and artificial intelligence (AI) within the tourism industry can enhance decision-making processes, personalize customer experiences, and optimize operations.
By harnessing open data and AI, businesses can gain valuable insights into traveler preferences and behaviors. This insight can be refined using AI to forecast trends and tailor services, creating a more secure environment for customers and businesses.
Ultimately, by adopting the right strategies and fostering collaboration across the industry, travel operators can thrive during this busy travel season and create a better experience for all travelers. It’s time to prioritize effective chargeback management and stay ahead of the challenges that come with a record-breaking summer travel season.