Jetsetters have their quirks, but many travelers’ needs are common. They want convenient booking tools, fast payment methods and secure reservations when planning their trips, and these needs have not changed much as millennials have come of age. This younger, tech-savvy generation now makes up 20 percent of all global travelers, and there are ample services through which they can fulfill their travel needs.
Millennials and younger generations are digitally minded and want to interact with brands that can answer their personal requests through online and mobile channels. Standing out in this market can be difficult for the hospitality services looking to claim millennials’ travel dollars, though, as it can be tough to create a reputation as a convenient, quick, digital-first, social media-savvy travel option when every company is looking to do the same.
Homesharing platform Airbnb is one of the sharing economy originals, meaning it is well-versed in bringing younger customers newer options over traditional hotels. Such platforms must be able to shift with payment and travel trends, Sam Shrauger, Airbnb’s vice president of payments, explained in a recent interview with PYMNTS. The holiday season provides a good example of the company’s approach.
“Two noted trends of this holiday season are consumers’ growing preferences for experiences over material goods … and for goods that are not new, but have already been used or can be shared,” he said. “The emphasis on authentic, even unique, as well as local and sustainable — that pretty much sums up Airbnb.”
The company has had success with this type of market vigilance, but hotels are quickly catching on. Chains like Marriott are consistently developing service add-ons and mobile apps to provide the digital experiences travelers crave. Competition is thus a multilevel event for hospitality services that need to juggle payment innovations, user perks and security.
Market Growth and Opportunity
Airbnb has lost the advantage of having a reputation as the only alternative to traditional hotels. The homesharing market is now full of players armed with niche business applications and promises of convenience and luxurious services. Airbnb is flexing its considerable assets to keep these competitors at arm’s length, developing new solutions to ensure that it is capturing users from all generations and approaching changing customer needs in multiple ways.
“We first have a team of payments-specific researchers who conduct field tests with guests and hosts to discover areas where we can innovate,” Shrauger said. “Second, we have payments-specific community support agents who gather the feedback they receive from inbound inquiries, and a product specialist who helps us prioritize the right work that will provide the biggest impact for our community.”
Airbnb also participates in industry events to keep abreast of the most notable shifts, with executives attending roundtables and forums that can help the company get a better grasp on what customers want and what competitors are doing. It has created more flexibility on the consumer side, too, including developing payment methods outside of traditional credit and debit cards or mobile wallets.
“A specific example of note is our Pay Less Upfront feature, which allows guests to pay a portion of … total fees at the time of booking and pay the remainder of the total fees at a later time, prior to check-in,” he explained.
The feature, which launched in June 2018, allows customers to pay for their trips in installments, paying half the deposit immediately to ensure that renters receive some benefit. Approximately 70 percent of guests use Pay Less Upfront when it is available, Shrauger noted.
There is no demographic breakdown of the feature’s users, but it can be assumed that millennials – who take more international trips and need more time to budget for those trips – would be interested in such a service. This generation is also making more digital payments than others, which means newer adaptations of travel methods are more of a priority than they have been for past generations.
Payments and Their Starring Role in Travel
Airbnb will continue to view payments as a customer service approach as it seeks to differentiate itself from traditional hotels and the rest of the homesharing space. The company is shaking off several platforms that are looking to entice younger consumers with perks and rewards, and is keeping its focus on payments in the process.
“It is important to note the foundational role that payments has played in our community’s trust in Airbnb,” Shrauger said. “Even in 2019, more than 10 years after we got our start when our founders couldn’t make their rent, 51 percent of hosts tell us Airbnb has helped them afford their homes. Our hosts are our partners, and our commitment to them is front and center in the payments work we do every day.”
Airbnb currently supports payments in 54 currencies from more than 20 methods, including mobile wallets like Alipay. Its robust payments ecosystem will hopefully allow it to stay competitive in the hospitality world as travel preferences shift.