Airbnb will now let you book by paying 50 percent in advance

Airbnb is introducing a new way for users to pay for rentals, letting them reserve accommodation by paying 50 percent upfront and 50 percent before they arrive. The feature, called Pay Less Up Front, effectively lets customers stagger the cost of accommodation. It’s perfect if you’re managing a budget, but want to make sure you don’t lose the rental for your upcoming vacation.

Before this feature was introduced, rentals had to be paid for 100 percent up front. Airbnb says it hopes the feature will encourage customers to pick pricier accommodations.

There are some requirements, though: the rental has to be booked 14 days before check-in, and must cost at least $250. Airbnb also notes that the split between paying now and paying later is usually 50/50, but might sometimes vary. The company said that when given the option to pay less up front, 40 percent of customers did so.

How “Pay Less Up Front” looks while booking accommodation on the web.
Image: Airbnb

This isn’t the first new payment feature Airbnb has introduced lately. Last November, it also debuted group payments, letting up to 16 guests book an accommodation together, splitting the cost within 72 hours of booking.

What’s not clear from Airbnb’s press statement is whether paying 50 percent upfront locks in the accommodation. Unscrupulous renters sometimes accept and then reject advanced bookings when they realize their accommodation is in high demand and they can get a better price. We’ve reached out to Airbnb to confirm that the Pay Less Up Front feature locks in the rental.

Comments

This makes no sense. When is the other 50% collected? The site says "the rest can be paid closer to the check-in date" which is ambiguous. What if the other 50% can’t get collected and the host is left without a guest?

This type of incentive only encourages worse personal finance behavior from the masses. If you can’t pay for the entirety of a trip when you book then you probably shouldn’t be taking that trip. Airbnb refers to these people as "cash flow-sensitive" when in fact they’re just terrible with their money.

I suppose when you pay the 50% up-front, you’ve essentially agreed to pay the remaining 50% 1-2 days before the check-in date.

If the guest doesn’t pay the remaining amount, and not show up, the hotel gets to keep the 50% as a "cancellation" fees of sorts.

I’ve been beta testing this for a couple of months.

1. The reservation looks exactly the same on the Host side. It appears as if I’ve paid the full amount when I booked and is locked into place.
2. I pay the other 50% two-weeks before check-in. If the money can’t be collected, my reservation will be canceled and the Host will be notified. I will be refunded based on the Host’s cancellation policy.
3. Why wouldn’t I want to pay 50% now? I’d rather hold the other 50% of my funds instead of letting Airbnb hold them for 8 months. It makes total sense and I look forward to more people booking my $1,300/night listing.

2. As long as you have to have to pay the entirety of the bill by two weeks prior to check-in, that’s fine. I was concerned someone might book two weeks in advance, pay 50%, then not pay the rest by a few days before check-in. This isn’t made clear by their language.

3. Why wouldn’t you want that option? Guess it depends on who you ask. I don’t think anyone should be spending money they don’t have, and that’s essentially what incentives like these encourage. It’s no different than a 0% loan. And it’s not even 0% if you cancel, Airbnb will still get there fee. Again, "cash flow-sensitive" is the politically correct term for "dumb with money". You shouldn’t be booking travel for 50% down just as you shouldn’t carry a credit card balance from month to month. I’d definitely turn off this "feature" if I could.

When you book an hotel don’t you have many ways to pay for it? Like a deposit of one or two nights upfront then the rest at check out ? Why can’t Airbnb have their own way of doing something a bit similar ?

I’ve never personally seen that. They can and should as long as it’s implemented correctly/favorably for everyone. I was just pointing out the social/potential personal finance (the folly of spending money when you don’t have it on non-essential items) implications.

You know, it makes more financial sense to take a 0% loan even if you have the money to pay upfront. The money you don’t pay upfront can be put to work to make more money.

The ones who continually parrot "Never take any loans, even at 0%" are either financially illiterate and don’t realise the the above, or completely lack the self-control an adult should have.

Just to add, I just booked a $6000 rental for 15 friends in 8 months. I went with the 50% option because my share is $380, and I don’t want AirBNB holding an extra $3000 for 8 months. Yes, I have the money to pay all $6000 up front, but why would I want to when I’m getting almost entirely reimbursed by friends. Choices are good sometimes.

This feature might be targeted to non-US market. In France, for instance, we don’t really like credits. We only do credits to buy a house or a car. And sometimes, we even buy them without taking any kind of debt at all. Hence the interest to spread payments : it prevents people from withdrawing bigger chunks of money than usual from their savings accounts – which are producing interests for things than, in the US, people would usually take a loan to acquire.

or maybe doesn’t go so well anymore and user count drops, so they have to find alternatives.
when the first app on blockchain is up, airbnb is useless

I happen to adhere to a "you either have the money or you don’t" kind of policy. Credit cards and things like this are something that make no sense to me.

Credit cards make sense if you pay them off every month because you’re essentially forfeiting 1.5-2% every time you shop if you don’t have one. Mortgages make sense if you need a place to live and it makes more financial sense for you to buy than rent. A (very small) car loan makes sense if you are physically incapable of biking/walking to work until you can afford a cheap car.

But a 50% loan on travel makes no sense. It’s a total non-essential item for 100% of people. If you don’t have the full amount to travel when you book, you probably should be doing better things with your money.

I agree! I am obviously not talking about credit in the broader sense, just credit cards and smaller purchases loans. I am even a fervent proponent of credit cards (I have like 5 of them, each for a specific thing). They’re a great thing for many reasons and when used correctly, allow for hundreds if not thousands in savings. I’m just not a fan of people carrying a balance on which a stupid ~20% interest is charged because they thought something they couldn’t afford to begin with and is not even a necessity would look cute on them.

Preach.

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