A partnership between Airbnb and payment platform Klarna allows guests to ‘Pay Over Time’ for stays in rental properties – useful at a time of rising prices. Nick Hendry reports

Airbnb and Klarna have joined forces to launch Pay Over Time with Klarna, a new way for guests to spread the cost of a home rental over a number of months. The launch is part of a phased global roll-out that will see Klarna and Airbnb offering an alternative way to pay in for guests across three continents by early 2024.

First launched in North America in summer 2023, Pay Over Time allows UK guests to apply to pay for their next stay in three interest-free installments over two months.

Pay Over Time is also now available to guests in the UK for reservations priced between £35 and £4,000. The option also recently launched in eight other countries across Europe including the Czech Republic, France, Germany, Greece, Ireland, Italy, Portugal and Spain, with more expected early next year.

Amanda Cupples, Airbnb general manager of Northern Europe, says: “We’re pleased to bring Pay Over Time with Klarna to the UK, giving guests greater flexibility to spread their payments over a number of weeks or months. Whether you’re booking a solo trip, or organising a get together with friends, choosing the right payment plan has just become a lot easier.”

Guests are presented with the option at checkout to either pay for their reservation in full at the time of booking or to Pay Over Time with Klarna, and are seamlessly taken through to the payment platform.

Airbnb CategoriesIn the latter half of 2023 Airbnb has been making a series of upgrades to the way the platform operates. The roll-out of over 50 new features began in May of this year, ostensibly in direct response to customer feedback.

Some of the changes are more subtle than others – such as an improvement to Pins when saving potential hosts on the map, and a more intelligent auto-complete in the Search function – but arguably the most useful and interesting for travellers is the ability to spread the cost of a stay over several months, interest-free.

Consumers have become familiar with Klarna’s flexible payment options in recent years thanks to their rapid expansion throughout the online retail space, with major retailers such as Mr Porter and travel agents like Expedia already penning deals with the firm.

Airbnb predicted 2023 to be their all-time busiest summer travel period, and expected travellers post-pandemic to be more keen to connect with locals in their destination than ever before.

The initial rollout of the “Pay Over Time” scheme was limited to guests in the US and Canada, with international availability subsequently added. Applications to pay in four instalments over a six-week period are offered at checkout.AirbnbThe addition of this new payment option was not the only nod Airbnb made to more affordable travel this year.  As it forecast over 300 million guest arrivals for the year, the company also announced the launch of Airbnb Rooms, billed as an “all-new take on the original Airbnb” in an official release.

Searches have been redesigned to make accessing low-cost private rooms in hosts’ residences easier, as well as Host Passports to increase transparency and safety and clearer information on exactly how private each individual room really is.

Airbnb reports over 80 per cent of these rooms as being under US$100 per night, and see them as an important tool to help travel become more accessible, claiming the current economic climate and a reaction to pandemic “isolation” to be driving travellers’ desire to connect more with hosts.

“With Airbnb Rooms, we’re getting back to the idea that started it all – back to our founding ethos of sharing,” said Brian Chesky, Airbnb co-founder and CEO. “Airbnb Rooms are often more affordable than hotels, and they’re the most authentic way to experience a city. This is the soul of Airbnb.”

Other new features found in the most recent re-design of the app include total price display in all searches – doing away with the practice of delaying substantial portions of the price until checkout – instant availability of re-booking credit in the event a host cancels last-minute, and a reduction in fees after the third month of a long-term booking.

These changes sit alongside more than 25 updates to the hosting experience and make up what the company calls their “design-driven approach” to constantly improving Airbnb.

According to an October 2023 report in the Financial Times, Airbnb chief executive Brian Chesky said that from next year the online rental company would “go a little bit beyond its core business”, including an expansion of its experiences and services.

He pointed to more changes that would mark the “biggest update to Airbnb ever”. “Travel is our sweet spot,” he said. “Eventually the big frontier for Airbnb is to go beyond travel,” adding that “there’s an eventual opportunity for Airbnb to become a greater part of your daily life. Not just once or twice a year.” Offering rentals of up to a year represented a “huge opportunity”. It could even more into peer-to-peer car rentals.

In November 2023, Airbnb announced more upgrades to its platform including 2 million “Guest Favorites” based on the most highly rated properties around the world. (Apparently, every minute, over 100 five star reviews are submitted on Airbnb.)