Is 'Buy Now Pay Later' (BNPL) On Brand For Luxury Resorts?
According to 2022 research by The Olinger Group, luxury travel marketers typically target people with annual household incomes of $250K and up.
Olinger’s research indicates though that travelers with incomes of $100K and up are also luxury travel buyers.
I’ve been lucky enough to spend time at many luxury properties and I agree. I’ve seen many different tiers of customers there. There are the high-net worth and ultra-high-net worth folks who can spend $50K for a weeklong stay and not even feel it. But there are also many others. I remember visiting a luxury resort and met a couple who had spent 3 years saving up for that once in a lifetime trip to celebrate a special anniversary.
As Olinger CEO, Jude Olinger, writes, Being a luxury traveler is more about having a luxury mindset than how much money you earn. So while the luxury travel industry is going after the top 5% of income earners, the pie is six times bigger."
This is especially true for travelers ages 18 to 34 and 35 to 54, who are excited to explore after years in lockdown.
If you are a luxury or luxury-adjacent resort, could offering a Buy Now, Pay Later (BNPL) option expand your market and drive growth?
Many luxury retail brands like Gucci and Givenchy have partnered with advanced payment options like Affirm or Klarna to make their products more accessible, driving sales especially with younger customers. This could pay dividends down the road. By building relationships with younger customers now, you could be building loyalty as they grow older and increase their wealth.
BNPL has made inroads in travel, too, with deals made between BNPL platforms and Expedia.com and Booking.com as well as airlines like British Airways and United Airlines.
As someone in the luxury travel segment, I’ve had conversations with multiple resort brands about BNPL and whether or not it was on brand. Typically, the conversation ends in a no because most luxury resort don’t want a BNPL widget on their shopping cart. It doesn’t look good.
But recently, I spoke with the team at Accrue, a start-up BNPL service, who shared some interesting ways that brands could offer BNPL to their customers without being so public about it.
I thought this was smart in light of the fact that even some luxury travelers are feeling the pinch right now. This is especially true for millennial and Gen-Z travelers. If you limit your customer base exclusively to people who can easily afford it, you could be shrinking your guest pool in dangerous ways, especially for the long-term health of your business.
So what are some strategic ways you can offer your customer a BNPL option without publicly announcing it?
OPTION 1
Your Call Center: How much traffic pours through your call center or reservations inquiry emails? What percentage of this potential business converts? From conversations I’ve had, it could be anywhere from 20 – 40% depending on the brand.
These potential guests are highly engaged if they’ve gone through the effort to call or email.
For potential guests who make the effort to call but find it too pricey, reservations can offer a BNPL option as a closing tool that can be shared over the phone or in a follow-up email—no public hit to the brand.
OPTION 2
A Loyalty or Membership Program Benefit: Another way to communicate a BNPL offer behind the scenes is by offering this via email campaigns to your loyalty program members.
If you don’t currently have a loyalty program, an option is to create a way for web visitors to create an account on your website. As hotels and resorts, we capture emails for our newsletters, but we typically don’t ask people to create an account like you can, for example, on Cartier.com, unless you have a loyalty program.
Once a web visitor makes an account, you can track their booking habits and then email them directly and offer them a BNPL option if they haven’t booked a stay within a set timeframe.
Whether it’s via a customer account or a loyalty program, these are channels that provide a more personalized pathway to offer special benefits like BNPL and deepen your customer relationship without being so public about it.
CONCLUSION
Personally, I’m a fan of BNPL. It increases options for everyone. And if you’re tired of discounting your stay or offering a 3rd night for free or all the other levers we pull when occupancy is down – even in luxury – this is a worthwhile option to consider.
And who knows, perhaps that BNPL millennial guest will sell their start-up and come back many, many times without needing it. But they’ll always remember that you gave them a way to make a dream trip come true.
