Afterpay partners with Expedia for BNPL on flights and hotels
The launch comes as other services say they are seeing record demand for BNPL for travel purchases and travelers are becoming increasingly budget-conscious.
Alex Fisher, Afterpay’s chief revenue officer for North America, said Expedia is the largest travel company to partner with Afterpay to date. Previously, it was used for flights, hotels and tourist attractions in Australia, as well as several hotels in the United States. Research from the company earlier this year found that travel and experiences were two categories where shoppers planned to increase their spending, so Fisher and the partnerships team went looking for a provider.
“We look at where consumers want us, where they want more flexible options, and then we look for the best partners in the space to bring that to life,” she said. “We have seen the demand for having travel partners in the United States increase dramatically as Buy Now Pay Later has just taken off in the market.”
Currently, electronics, clothing and furniture are the BNPL’s top spending areas, according to a July 2022 study by the Motley Fool. But Afterpay is far from the only BNPL service to see the travel space as a growth area. Affirm can be used to book with brands like Vrbo, Orbitz, Priceline and American Airlines. Uplift is a BNPL specializing in travel services, with more than 300 partners including Southwest and Alaska Airlines.
The timing of the launch comes as budget-conscious consumers may be looking for new financing options: Destination Analysts, a travel market research firm, found this month that only 54% of Americans say travel is a budget priority for them, a low 10 month contract. In turn, Fisher and other BNPL experts say the use of BNPL for travel may increase.
“I think there’s a broad understanding of the macro environment and how it impacts consumers and their wallets,” Fisher said. “Afterpay is in a unique position to add value, both for the merchant but also, very importantly, for the consumer.”
Tighter travel budgets
Chip West, director of category strategy at marketing firm Vericast, said BNPL is taking off in part because consumers are looking for ways to finance big purchases at a time when their budgets may be stretched with high shopping costs. energy, housing and groceries.
There is also a demographic pull, he said. Millennials and Generation Z make up the predominant share of BNPL users and they also may not have access to credit that would allow them to charge for a trip.
“It gives them the ability to buy trips where they won’t be harmed and they won’t be limited by credit,” West said.
From a retailer’s perspective, BNPL can increase the amount someone is willing to spend, West said.
“Consumers, because they don’t realize all their spending at once, can say, ‘I can actually spend more’, and they do. It drives the ticket up,” West said.
For Expedia, the launch of Afterpay comes at a time of high travel demand. The company’s own research shows travel searches in November and December are up more than 60% year-over-year. Searches for travel next year are up 65% year over year.
Christian Gerron, Expedia’s senior vice president for media and brand partnerships, said in an email to Modern Retail that Afterpay offers “a flexible way to pay for trips that fits their budget.”
A growing sector
Tom Botts, chief commercial officer at Uplift, said demand was five times higher year-over-year this holiday season, with active users up 311% year-over-year. The service expects to see a gross transaction value of $2 billion this calendar year, up from $650 million in 2021.
Yet its model is quite different from Afterpay’s interest-free, six-week payment plan. Uplift has a fixed cost of financing for its purchases, but it offers customers several options for payment terms when booking if they want to spread their payment over six months, or 18 months, for example. Botts said it gave the customer more flexibility.
“It’s affordable and allows customers to pay for their trip over a period of time,” Botts said in an email.
With the increase in demand for travel funding, it is likely that more travel options will be added to Afterpay in the future. Afterpay’s Fisher said that while Expedia is the largest travel partner for the service to date, the company hopes to add more in the future.
“It’s an area of investment for us,” she said. “And that’s where we think, as people get used to buy now, pay later in general, the demand will increase and the demand for experiences will increase.”