Airbnb announced that it will now let guests book with a deposit, marking a notable shift from the current state of play that requires you to pay the full amount up front.
The new “pay less up front” option was tested prior to launch, and Airbnb said that around 40 percent of guests chose to delay full payment when presented with the opportunity. According to the company, guests can choose to pay a 50 percent deposit “in most cases,” with the remainder payable around three days before the scheduled check-in date. Airbnb said that in some cases, where a host has strict cancellation fees, the deposit will be 50 percent plus an additional Airbnb guest fee.
With nearly $5 billion in equity investment, Airbnb has emerged as the poster child for the home-sharing economy, an industry that has disrupted the traditional vacation rental market. Rivals in the space include OneFineStay, which was bought out by hotel giant AccorHotels for $170 million, and HomeAway and HouseTrip, which were snapped up by Expedia and TripAdvisor, respectively.
Airbnb, for its part, is expected to go public in the next couple of years, and in the meantime it’s pushing to make its platform more appealing to guests. Back in November, the company announced it would make it easier for groups to split the cost of their stay, and it acquired Accomable to improve accessibility for travelers with disabilities.
Adopting a deposit-based approach fits into the broader picture here, as the option to pay in two installments gives guests greater flexibility. It could also go some way toward helping hosts secure more bookings, given that would-be guests may be more inclined to make a booking if the up-front payment is lower. Airbnb also said the new payment option “encourages” bookings even further ahead of time.
“We’ve found that Pay Less Up Front encourages bookings further in advance,” the company said in a statement. “Compared with ordinary bookings, the Pay Less Up Front payment option led to bookings with nearly double the lead time, helping hosts to secure and manage bookings more easily.”
The “pay less up front” option is arriving globally from today across all Airbnb platforms. The only real caveat is that to qualify the stay must be booked at least 14 days in advance and the overall value must be greater than $250.