A young group of experience-driven individuals are expecting more time to pay for experiences that they’re having now. With the Afterpay payment system becoming increasingly prominent across Australia and New Zealand, and many OTAs already allowing visitors to book using the service, should hotels be letting guests create memories now and pay for them later?
Millennials are the first ‘digitally native’ generation, and according to Nick Molnar, co-founder of Afterpay, their spending habits and rising expectations are reshaping the business landscape. Afterpay, an Australian retail payments innovator which has also made its way to New Zealand, aims to fill a gap in the market by redefining ‘layby’ for millennials. Instead of paying off an item and picking it up when it’s paid for, Afterpay offers the benefits of a layby service with an immediate take-home option which spreads payments out over time.
“Australian millennials are financially responsible adults and savvy spenders looking to secure their next travel adventure today. Afterpay gives customers time, rather than finance, to pay with their own money for the things they like, while also providing an essential budgeting tool that can assist and encourage responsible spending,” Mr Molnar explained.
Many major tourism operators are already using the system and allowing customers to purchase part or all of their travel using Afterpay. Jetstar now offers customers the option to pay later, with a payment breakdown appearing on the site, as does Flight Centre, Student Flights, Contiki and G Adventures. More concerning for accommodation providers is the fact that many travel agents and OTAs are also offering the service – but does this give them a competitive edge over hotels hoping to secure direct bookings without such a service?
Retailers pay Afterpay an average commission of four percent per transaction processed through the service, so the platform needs to be attracting more customers to the store, service, or experience for there to be a benefit. According to Mr Molnar, the millennial market is becoming more dependent on such conveniences, and are looking for services that can offer them what they want, when they want it. He also said they’re more reliable that some might assume.
“Nearly three quarters of Afterpay’s customer base are millennials, and in our recent survey we found that most millennials stick to a budget, spend hours researching their purchases, and are more inclined to spend their own money than use a credit card. In fact, 85 percent of Afterpay transactions are via a debit card,” he said.
He also believes that the strong cultural impact of the ‘millennial’ means that it no longer describes a generation born between 1980 and 2000, but that it’s a mindset that permeates modern behaviour patterns and spending habits across generations.
According to Lauren Greschner, event head for the upcoming Millennial 20/20 Summit, the wants and needs of this ‘behavioural generation’ adapt quickly, and they expect companies to keep up.
“They aren’t afraid of trying alternatives, and they also won’t think twice about spending their purchasing power with companies to share and communicate values on social issues,” she said.
When it comes to travel and experiences, Afterpay appears to suit the millennial mindset to a tee.
“Millennials would rather be well-rounded than financially wealthy,” Ms Greschner explained. “They are motivated by new experiences, and are willing to save to make these a reality. Housing affordability is a key issue, and they are looking for money saving solutions so they can create both long-term wealth while also enjoying new experiences such as international travel.”
Have you considered whether Afterpay would draw customers to your hotel? Share your considerations and concerns with us in the comments.