BNPL Could Save Summer Travel

Even as consumers cut back on spending, much-needed vacations may not need to be sacrificed.

As the weather warms in the Northern Hemisphere and the end of the school year draws near, many consumers are considering summer escapes. After all, 2023 so far has already seen its fair share of ups and downs — enough for anyone to be craving a getaway.

However, the reality of continued inflation pressuring consumer spending may be deterring many from making travel plans. This is reflected in the January PYMNTS collaboration with LendingClub, “New Reality Check: The Paycheck-to-Paycheck Report,” which found that nearly half of surveyed consumers are planning to forgo travel for two years in a row.

There is more to the whole story. While discretionary spending may be down as consumers concentrate on essentials, shelling out for experiences rose by double-digits in February. Compared to the same period the previous year, consumers spent 43% more on lodging, 16% more on airlines and 14% more on restaurants over the month. Clearly, consumers are seeking escape from the daily grind as hotel room bookings return to pre-pandemic levels.

A popular method being offered by multiple travel providers is buy now, pay later (BNPL). Earlier this year, travel booking site Kayak announced a partnership with BNPL platform Affirm to give customers some flexibility as airline ticket prices remain sky-high. The collaboration allows travelers to split the total cost of flights, lodging and car rentals greater than $150 into monthly payments.

This comes on the heels of Expedia rolling out a similar program late last year with Afterpay, allowing travelers to split payments for flights and accommodations into four equal interest-free parts. Affirm has also partnered with Expedia since 2016.

Bank-owned travel portals are also getting into payment assistance strategies and travel rewards. Citi Travel, a Citi and Booking.com partnership, is debuting “in time to book spring and summer adventures.” The portal allows Citi customers with ThankYou rewards cards to book hotels, air travel, car rentals, and attractions through Citi Travel, via the Citi website and app.

J.P. Morgan Chase has also dipped its toes in travel, acquiring travel agency Frosch last February and cxLoyalty Group in 2020, whose digital platform powers major card rewards programs.

Additionally, in 2021, Capital One launched Capital One Travel in partnership with booking site Hopper. When booked through issuer portals, travel rewards may be boosted with value-adds like more favorable booking rates.

Clearly, no one should be spending without current or expected resources to finance travel or any other large purchases. But for consumers who need just a bit of breathing room to making payments, getting away from it all may be more than just a daydream.