The Credit card has become the most preferred mode of payment for the rich as well as the corporate traveller in India. This is borne out by a study, which found that 37.5 per cent of receipts of five-star deluxe category and 35.8 per cent of five-star category hotels were through credit cards during the year 1998. Against this, cash sales figure was 20.2 per cent and 27.6 per cent for the two categories, respectively, during same period.

At the lower end of the market, namely the three, two and one-star hotels and heritage hotels, however, cash is the preferred mode of payment.

Interestingly, cash sales increase as one goes from five star deluxe to one-star and the reverse is true for credit card sales (see table: Rich prefer credit cards). At the same time, credit sales, those from corporate contracts, too move in tandem with credit card sales.

Payment through electronic fund transfer (EFT) system plays a marginal role in the hotel sector, thanks to poor electronic infrastructure availability in the country. Such is not the case in developed countries. Industry sources put the EFT sales figure at 2% in developed countries. In India, however, EFT sales constitute a mere 0.3 per cent of the total revenue of a hotel.

Analysis of payment pattern on the basis of the hotel size also reveals some interesting facts. Large hotels with more than 150 rooms show 35.8 per cent sales through credit cards while cash sales contribution stands at 28.3 per cent. However, the trend is different in smaller hotels, where 61.7 per cent of the sales is through cash and only 20.2 per cent is by way of credit cards.

Similarly, credit sales is low at smaller hotels and the figure goes up as the size of the hotel increases (See table: Rich prefer credit cards).

Among the various international credit cards used in hotels in India, Master, Visa, Amex and Diners Clubs take the lion's share of card payments at more than 93 per cent of the total card sales. Master and Visa cards are the most preferred cards, having a share of 66.3 per cent. Surprisingly, these two cards dominate all the segments of the hotel industry, be it five-star deluxe at the higher end or one-star hotel at the lower end.

The American Express (Amex) card appears to be the favourite of the rich, what with about 28.8 per cent of card payments in five-star deluxe hotels being made through Amex cards. Contribution from Amex goes down as we travel down towards one-star hotels. Amex also charges the highest commission from hotels, its all-India average currently being 2.8 per cent.

While its nearest competitors -- Master and Visa -- charge 2.3 per cent each, Diners Club charges 2.2 per cent of the total card sales.