We’ve written quite a bit about the proliferation of the buy now, pay later model in new areas. This has happened from B2B to health care, and much more. This has happened as BNPL platforms and their merchant partners look for more ways to fill (and fulfill) online shopping baskets. Allowing consumers to enjoy goods today and pay for them in future installments is a popular way to boost sales. Particularly among younger consumers.
The nadir of this trend came about a year ago when we wrote about “gas now, pay later“. This move came during peak agita over rising gasoline prices. BNPLs like Klarna and Zip stepped in to apply BNPL to the gas tank. This allowed sticker-shocked consumers to fill up and worry about the bill later. It felt like a “jump the shark” moment for BNPL.
Yet, the model has endured. BNPL has persisted despite controversy over whether it is really the icon of financial responsibility that it has presented itself as. Or at least it did in its early days. Or is BNPL, as many regulators would argue, a reckless payments model that is encouraging debt in an era where instant gratification rules the day?
I Need a Vacation. Stat.
A new partnership between Klarna and Airbnb seems to reinforce the latter view of BNPL. Here is what Klarna announced yesterday. “Guests in the US and Canada can now apply to pay for stays in four interest-free installments over six weeks, and for bookings over $500, guests in the US can apply to pay monthly. More markets will be added throughout the year.”
This payments partnership comes as part of Airbnb’s 2023 summer release, which includes the rollout of Airbnb Rooms. The company is pitching Rooms as a back-to-its-roots move. After all, Airbnb started out as a way to monetize the spare bedroom. Now, as the company looks at an expectation of 300 million guests this summer, it needs more inventory that budget travelers can afford. And it needs to make more consumers comfortable staying in a stranger’s spare bedroom.
Back to OG Airbnb
“With Airbnb Rooms, we’re getting back to the idea that started it all – back to our founding ethos of sharing,” said Brian Chesky, Airbnb co-founder and CEO. “Airbnb Rooms are often more affordable than hotels, and they’re the most authentic way to experience a city. This is the soul of Airbnb.”
As Chesky notes, Airbnb has always offered rooms as an option for rentals (in addition to entire homes, etc.) The new Rooms product adds some features to this option, mostly designed, it seems, to boost demand for spare rooms as an option. The main thrust is adding a greater sense of safety since renting a spare room means living with the host, not just renting their extra house or apartment and having it all to yourself. To encourage that sense of safety, the new Rooms includes features like Host Passport, which helps the host and guest get to know each other a little better before the stay. Airbnb is also featuring more information related to guest privacy. For instance, whether the guest room has a lock.
The partnership with Klarna is being rolled out as part of Airbnb’s summer release, so it applies to all types of rentals. The program lets consumers pay for the rental over a six-week period interest-free.
Other summer release features include improved maps and customer service, as well as an instant rebooking credit in case of a host cancellation.
