Re-Imagining Paying Over Time

Vacation rental property managers are breathing a sigh of relief as summer has come to a close.? The turnover for many properties slows in the latter half of September, and thinking about plans for the next booking season starts to take shape.? Looking back at the summer of 2023, there are signs of stress on the industry when it comes to attracting guests to book available properties versus 2022.

According to a recently published KeyData blog “The Summer of 2023: What the Short Term Rental Data Tells Us”, US-based property managers saw declining revenues per available rental (RevPAR) of over 14%, with average daily rates (ADR) falling over 8% in the months June, July, and August this year.? In a time of rising inflation, guests have both more choice at lower rates while thinking about how they will pay for their next vacation in 2024.

The pandemic created the expectation that guests can pay for most anything in installments - traditional retail e-commerce, medical procedures, and even groceries/necessities.? This paying over time mentality has expanded beyond just online lenders to tech companies like Apple with Apple Pay Later.? With the ubiquity of the iPhone with smartphone market share in the US, it validates the demand that consumers have for flexible payment options.

Specific to vacation rental companies, many property managers have had to support ways of taking multiple payments per booking for scenarios like the following:

• Collecting 50% payment at booking + 50% 30 days before arrival
• Collecting payments across multiple payers when extended family/friends want to split the rental cost
• Having to set up reminders and a collections process for specific guests that ask to pay over time
• Supporting guests that are avoid paying with a credit card in a lump sum whether due to ongoing interest fees or lack of available credit

I could write an article on each of these scenarios, and I just might as each has its own dynamics and administrative challenges (stay tuned).? Just recently, a property manager told me he would require installment payments for the ENTIRE booking when he sent out his leases for 2024 just to avoid having to collect from guests in two transactions.? Besides the hassle of chasing guests down closer to arrival, the risk of cancellations due to financial hardship could mean a lost booking with a very short window to attract another guest.? There are a variety of benefits to adopting a “paying over time” solution, but making it easy with automated notifications, reminders, and a great guest experience is paramount to its success.

As we gear up for our soft launch with our first property managers later this month, if you are in the vacation rental industry I’d love to chat with you about StretchBill.? It can be a payment alternative that saves you money, time, and attracts new guests without debt to pay upon arrival. For guests, it's time to pay over time.