In October 2017, Los Angeles-based Luxe Hotels became the first hotel company in L.A. and Beverly Hills to implement Chinese-based mobile payment options WeChat Pay and Alipay – easily China’s preferred and most popular means of spending.
HOTELS spoke with Luxe Hotels Regional GM Adam Sydenham about the why, what and how of that decision.
HOTELS: Guests have had access to Alipay and WeChat Pay at both Luxe Sunset Boulevard Hotel and Luxe Rodeo Drive Hotel since December 2017. So just over a year later, how is it going, what have you learned?
Adam Sydenham: It’s actually worked fantastically. We’ve seen more usage of it at our Beverly Hills property on Rodeo Drive, obviously due to the nature of the location. (Roughly 20% of Chinese travelers have already taken advantage of the two, with the popularity of WeChat Pay and Alipay relatively equal). But the technology is fantastic. And obviously I don’t need to tell you how important the Chinese market is for us here in California. It just provides an added level of frictionless service for our guests.
H: How was the initial implementation of that technology? From speaking to other companies, one of the things they say is making them hold back is the set up and having to coordinate with a. third party.
AS: The hardware did pose a bit of a problem, getting the scanners on board (There was an initial delay in getting them). To be perfectly honest, I’m not sure if that was an issue with our IT department here or just getting the right setup from our vendor. But once that was all squared away and we had the hardware onsite, the actual process of implementing both WeChat and Alipay – it’s very seamless. It’s obviously been very well thought out in China, but when you bring it to new countries there are kinks that have to be ironed out.
Largely speaking though, it was very straightforward and the benefit of working for a boutique brand like Luxe is – we can get these things implemented very quickly, we don’t have much corporate red tape here as it were so once we identify some kind of IT initiative that can enhance our service offering here at the hotel, we can actually get it turned around and implemented quite quickly.
H: Once you commit to something on this scale, are you paying fees to a third party who then helps facilitate the software? How does that process work?
AS: Yes, we work with a third-party vendor but to explain it in its most simplistic form, it works exactly like credit card commissions. There’s really not a vast difference between the two. It’s just about having the system set up and having the hardware on site and the relevant accounts open.
It reminded me a lot of when we brought in UnionPay a number of years back. There’s always that kind of apprehension, but once you move past that and understand and focus on the importance of what you’re trying to do, it’s all pretty seamless.
H: And are the commissions higher than what you would pay for typical credit card commissions?
AS: No, they’re in line.
H: Still though, it’s an added commission. Have you found it’s worth it so far? Have you seen a rise in bookings with the Chinese guest?
AS: That’s the million-dollar question. We hope to as we head into the summer. There’s a lot going on in China with regard to restrictions in spending and some restrictions in travel, so it’s not been a fair benchmark. But to be honest, that really wasn’t the reason we were doing it. We have a good base of Chinese travelers in both hotels and we’re all about giving them that frictionless service.
H: Projected ROI on this?
AS: Chinese travelers currently account for 1-2% of our overall business at both of our Luxe Hotels. It is our goal to double that annually. Currently Chinese tourists account for nearly 2000 room nights across both of our properties. Ultimately though, it wasn’t a business decision, it was about adding another amenity and service.
H: And what has customer reaction been like?
AS: It’s obviously a very welcomes additional amenity. And we’re leading the way for Rodeo Drive, so a lot of the local retailers have since started to introduce this service as well. And again, it just makes things easier for the Chinese traveler because some caps have been put on spending in terms of credit card usage and this allows them to continue to spend to the levels that they wish to.