The Mews Blog > What are point of sale transactions in the hospitality industry?
You may be wondering: what is a POS transaction and how does it work in the hospitality industry? POS stands for point of sale and it’s used to charge guests throughout their stay at your hotel. Not only does it improve the guest experience by allowing payments to be made electronically from anywhere on the hotel premises, but it also helps hoteliers keep better track of sales in order to optimize and improve the customer journey as well as your bottom line.
Since a POS is such an important part of the sales journey, it’s important to understand what is a POS transaction, what are the different types of transactions and why they’re important in the hospitality sector. Let’s take a closer look at each of these points below.
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What is a POS transaction?
A POS transaction is when a customer makes a payment at a terminal or on your hotel’s website in exchange for services like a hotel room, a meal at the hotel restaurant, add-on services like upgrades and more. It is a transaction involving a customer and the provider of services, in this case your hotel. Normally, the customer swipes or touches their credit or debit card, and the transaction posts immediately for the amount charged.
Point of sale are systems that include hardware and software in order to keep track of these transactions. It allows hoteliers to better monitor the amount of sales taking place weekly, monthly or on a yearly basis, which can better inform a hotelier’s sales and marketing strategy with the right information from the device.
What are the different types of POS transactions?
Of course, there are many different types of transactions that can take place with a point of sale system. Let's take a look.
When a sale is made, whether at one of the various departments in your hotel or a direct booking on your website, the payment is directly received by your hotel via a credit or debit card that is registered online, swiped at a terminal or manually entered online.
You can use information like the transaction amount, the date and time of the sale, and the customer information to better make forecasts about revenue and to understand the spending habits of your guests.
Once a transaction is effectively made, the POS generates a receipt with the amount paid, the service purchased, as well as the date and time. Generally, hotels don’t have to deal with returns, but receipts are a good proof of payment should there be a dispute about whether the guest was charged correctly or not. It serves as an electronic backup for both the guests and hotelier about transactions carried out.
Returns are not a usual type of transaction in the hospitality industry because in the service industry returning is not as common, but that is not to say that it doesn’t ever happen. Usually a return would be executed as compensation should a guest be unhappy with a service received, such as if something went wrong in their hotel room, or if they were unhappy with their meal at your hotel’s restaurant.
While POSs of course have the possibility of executing returns, ideally by providing the best guest experience possible, you can avoid having to make this kind of transaction. Learn tips to improve the guest experience.
In the case of the hospitality industry, online transactions occur when a guest purchases services online, either from an OTA or directly from your hotel’s website. Read more about increasing direct bookings at your hotel. Guests essentially input their credit card information, and then payment is received by your hotel once it posts. Digital ordering at your hotel’s restaurant is also another type of online transaction that can be executed with a hotel restaurant POS.
On the other hand, offline transactions at a hotel occur when a guest pays for their room or other added services in person at a physical terminal. Now, with wireless technology, your hotel can be equipped with different terminals throughout the hotel’s facilities to help execute payments more efficiently.
Discover the eight best payment terminals.
Why are POS transactions important in the hospitality sector?
With the advent of cloud technology, POS systems have gone above and beyond regular cash tills. They can essentially expedite and optimize your service, as well provide key learnings and information that has the possibility to improve your hotel business.
Execute quick payments
There is nothing that boosts guest satisfaction more than being able to execute quick and effective payments with the tap of a phone or credit card, or even by entering purchase details online. Payments with a POS can be so streamlined that guests barely have time to realize that they are paying for services before they are already charged.
Reporting and analytics
When you work with a point of sale system, all transaction information is easily accessible from anywhere, and is updated quickly. This means you have access to real-time data about spending patterns and payments made. This helps you make more accurate predictions about revenue forecasting based on monthly, daily and yearly transactions.
Communication amongst departments
With information readily updated on the cloud system, that means payment information can easily be shared across departments, avoiding double charges and calculation errors. Plus, you can see which departments are performing better to allocate your marketing and sales budgets accordingly.
Apply special offers and loyalty programs
Charges on the POS can be set up so that you can better manage your loyalty program and special offers by storing payment information. This makes it easier for guests to take advantage of their loyalty benefits and of any special coupons or deals.
Improve staff productivity
With a POS, staff can be more efficient because they don’t have to manually process payments. This allows more time to dedicate to tasks that create additional revenue or improve guest satisfaction. It also means that there’s no need to settle up at the end of the day; the system automatically takes care of it for you.
We’ve looked at what is a POS transaction, the different types of transactions, and why it’s an important component of the hospitality industry. When implemented correctly and exploited to their full capacity, point of sale systems have the power to provide key learnings that will allow your hotel to increase its bottom line, while improving sales and marketing strategies based on payment profiles and patterns.
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Eva has over a decade of international experience in marketing, communication, events and digital marketing. When she's not at work, she's probably surfing, dancing, or exploring the world.
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