Does the Buy-Now-Pay-Later Work For Hotels?

By Lourdes Martin | 3-21-23: Financing travel through Buy Now, Pay Later is gaining momentum in the US. According to Uplift’s survey, an impressive 79% of consumers are very or somewhat likely to use BNPL options for their hotel stays. But it’s not only hotels in the last few years, companies in all sectors also adopt the Buy-Now-Pay-Later through fintech companies like Affirm, Klarna, Afterpay, and Paypal.

More and more people have found freedom when it comes time to budget their vacation expenses. So, how does it work? Buy now, pay later is a type of short-term financing. Customers can now purchase an item/book travel and pay in four installments – usually with little to no interest fees and are easier to approve than loans, making them very appealing. The Buy-Now-Pay-Later model can work for hotels, allowing customers to book and stay at a hotel without paying upfront. This can particularly appeal to budget-conscious travelers who may need more funds available when booking but can afford to pay later. The payment can be spread out over a certain period, making it more manageable for the customer. This payment model can increase bookings, provide additional revenue, and increase hotel eyeballs. By implementing a Buy Now, Pay Later provider, merchants can drive more traffic and conversions – hotels can get customers through the door without breaking the bank.

However, hotels should carefully consider the risks associated with offering this payment model, such as increased credit risk and possible loss of revenue due to cancellations. Merchants often face hefty financial penalties when allowing shoppers to buy now and pay later. With fees ranging from 2-8% of the transaction amount or a flat 30 cents per purchase – these costs can quickly add up for merchants who offer BNPL services.

Ultimately, before hotels decide to incorporate a Buy Now Pay Later payment model, they must first weigh its pros and cons. It may be best for smaller businesses that don’t want to take on too much risk in offering such a payment option. In any case, hotel owners should research the options available and select a provider that fits their business needs. Doing so will help them maximize profits while providing a more convenient way for customers to book travel. By leveraging the power of Buy Now, Pay Later services, hotels can provide their customers the flexibility they need to book their stay without breaking the bank. It can also help increase customer satisfaction and loyalty, resulting in more repeat business.

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(Note: Lourdes Martin is a blogger, writer, and influencer with expertise in Hospitality, Travel, and International Affairs. Martin has been featured on Shoutout Miami and various other publications. Martin’s blog: Please, Do Tell & Recuerdos. Martin is a contributing writer to aavgo.com.)