On Tuesday, Airbnb announced the global launch of its innovative "Reserve Now, Pay Later" feature, allowing users to secure bookings without the need for immediate payment. This initiative enables customers to cancel their reservations if plans change, ensuring they do not incur upfront costs.
Initially introduced in the U.S. last year for domestic travels, this feature applies to listings with "flexible" or "moderate" cancellation policies. Users will be billed closer to their check-in date rather than at the time of booking. This model resembles the increasingly popular "buy now, pay later" schemes in e-commerce, making travel more accessible by distributing costs over time. Since its debut, the feature has seen a remarkable 70% adoption rate among eligible bookings.
During the Q4 2025 earnings call, Airbnb reported that this feature contributed to a rise in booked nights for the quarter.
"Reserve Now, Pay Later has gained significant traction among eligible guests in Q4, leading to longer booking lead times and a preference for larger homes, particularly those with four or more bedrooms, which has positively impacted the average daily rate," stated Ellie Mertz, Airbnb's CFO.
While Mertz noted an increase in the overall cancellation rate from 16% to 17% during the quarter, she emphasized that this was not significantly impactful compared to the overall cancellation trends on the platform.
In a survey conducted last year with Focaldata, a London-based market research firm, 60% of U.S. travelers indicated that a flexible payment option is important when booking a holiday, and 55% expressed their intent to use such options.
Airbnb has been exploring pay-later solutions for several years. In 2018, the company introduced a program allowing users to pay 20% or 50% of the total cost upfront, with the remainder due later. In 2023, they partnered with fintech company Klarna to offer payment options in four installments over six weeks.
