A Win-Win for VRMs and Modern Travelers
Vacation costs can burden guests’ finances, regardless of their budgets. Paying up front for accommodations and transportation can result in abandoned carts and lost bookings. Ascent Processing, an independently owned payment provider with deep roots in the vacation rental/lodging industry, recently revealed a new consumer travel finance product called AscentPay, powered by Uplift, that helps guests pay for their vacation rentals over time.
Tom Talley, VP of credit products at Visa USA, spoke to card-issuing banks about Visa’s extensive research on Gen Z and millennial buyers. Their research shows these buyers want 1) everything in real time instantly, 2) personalized services, 3) transparency and control, and 4) to stay engaged through experiences. Millennial spending habits tend to reflect the generation’s priorities: convenience, a focus on experience (travel) rather than things, and a delayed start to home ownership and starting a family. According to Forbes.com, traditional lenders are tightening their requirements for loans and credit extensions, so helping these guests leave their existing credit open for experiences and other vacation expenses not only solves these issues in real time, but it allows vacation rental managers to capture the additional revenue increased bookings provide.
Skeptics such as Amrita Jayakumar, author at NerdWallet, argue that financing a trip may be more expensive than charging it to a credit card, saving up ahead of time for vacation, or going on a more affordable trip.
But according to Gui Costin, author at Forbes.com, the majority of millennials, currently the largest generation with 83.1 million young people positioned as our economy’s next big spenders, have an average of less than $1,000 in their bank accounts, and more than 65 percent do not have a credit card. Millennials, roughly defined as those born between 1981 and 1996, do want to travel, so guest-financing products like AscentPay are well-positioned for this generation to take advantage of the new experiences and travel they crave with a payment plan they can handle.
“Buy now, pay later” technology is changing the e-commerce payment landscape, according to Grace Cary, author at SmarterCX.com. AscentPay is the first product designed specifically for the short-term rental industry. Guests get the instant gratification of booking a trip now and paying it off later, while property managers get paid in full at the time of booking and can rest easy knowing they are not liable for chargebacks or fraud. The vacation loan, issued instantly at the time of booking, indemnifies both property managers and homeowners against these risks.
The #BookDirect movement shows that providing benefits to guests that encourage booking directly is important to virtually every property manager. Often the OTA or channel manager with access to the technology brings new and innovative options to guests. AscentPay allows property managers to keep firm control of their own revenue, with direct access available for large property managers and access for small-to-mid-scale PMs available through partnerships with VR web-hosting industry leaders.
To further support independent growth in the industry, AscentPay was designed to be processor agnostic, working seamlessly with the property manager’s existing credit card processor.
Ascent partnered with Uplift, the premier provider of short-term travel financing, to develop the vacation loan service specifically tailored for the short-term vacation rental market. Here is what spurred Ascent to design a completely different payment option for our industry:
“We are thrilled to have partnered with Uplift to bring this modern payment option to the vacation rental industry,” says Dawn Yeskulsky, vice president of business development and partner programs. “Our expertise in the VR payments industry, coupled with Uplift’s technology, has allowed us to create a game-changing payment alternative that solves a multitude of issues for property managers and lodging providers. Instant financing is a widely accepted payment alternative in the retail and e-commerce markets, and we knew that this option would be just as widely embraced by alternative lodging guests as it would be by the property managers looking to offer state-of-the-art booking solutions. After consulting with many of our trusted property management partners, we concluded that any new payment solution we brought to the market must include reduced liability for chargebacks and fraud in addition to tools to help significantly increase direct bookings and revenue. The fact that we pay property managers 100 percent of the total reservation immediately at the time of the booking was an added bonus.”
“Ascent is a leader in payment processing for lodging and rentals, and our partnership will provide an immediate positive impact for the company’s property managers throughout North America,” said Tom Botts, chief commercial officer at Uplift. “We’re thrilled to deliver instant financing within Ascent’s own offering, which enables the company to increase their value to their property managers within a seamless customer experience.”
Property managers and lodging providers also like the impact on average reservation dollars. In similar lodging markets, Uplift has seen lodging providers enjoy an average revenue increase of 26 percent thanks to a pay-monthly option from upgraded trips and longer stays. Guests book their stays further in advance and add more upgrades and other ancillary services. For example, Uplift has seen a 50 percent increase in consumers choosing travel insurance protection with the pay-monthly planning in similar markets. Seeing their monthly payment change by only a few dollars as they add on additional services is more palatable to guests and their monthly budgets.
Moreover, because guests are only required to make their first vacation loan payment before check-in, they don’t have to come up with as much money up front. Guests are more comfortable booking sooner, which explains the 41 percent earlier average booking window identified at Uplift.
Ken Willis, COO of Peace Vacations, decided to offer this new payment alternative. “This is by far one of the most innovative ideas to come to the vacation rental industry in a very long time, and it makes perfect sense,” Willis said. “I can now offer my guests a payment plan that allows them to book nicer properties and extend their payments past their departure date. Plus, no prepayment penalty! And then I found out that I have no risk for chargebacks or fraud, and they pay us the full booking amount immediately after booking, I thought it was too good to be true. What was the catch? No catch. I love this product.”
“I am excited about AscentPay being part of our company,” said Patricia Denny, owner of Holiday Isle Properties. “I feel the added payment option to guests will be an industry first and will drive more conversions than ever before. It also allows me to have a more stable revenue forecast as I know I am getting paid upfront and not having to deal with chargebacks or fraud,”
Property managers may be concerned about offering payment options that could be considered predatory, for good reason: as of June 5, 2019, the average annual percentage rate (APR) on new credit card offers inched even higher, according to the CreditCards.com Weekly Credit Card Rate Report. The national APR recently climbed back to 17.73 percent. But not to worry—the average APR through AscentPay comes in around 15 percent and can go as low as 4.99 percent with good credit. This is a simple interest fixed-rate loan that has no prepayment penalties.
While not all vacation rental managers enforce the same terms, Ascent finds that the most common reservation requirement is a 50 percent deposit, due at booking, with the remaining balance due 30 days before check-in, leaving most companies locking up their property availability having received only 50 percent of the income. In states such as North Carolina, where disbursements to owners are allowed before guest check-in, this only leaves more risk of guest cancellations or chargebacks. AscentPay pays the PM or lodging provider the full amount of the total booking immediately, regardless of when the stay occurs.
Ascent’s partnerships with website development, rental software, and listing site companies such as Bizcor, Blizzard Internet Marketing, ICND, and Bluetent have facilitated this technology’s entrance into the vacation rental market. Brandon Sauls, CEO of Intercoastal Net Designs (ICND), said, “It was a no-brainer for us to offer this to our client base. It’s a powerful solution that benefits both vacation rental managers and guests. The product is a valuable match in that both ICND and AscentPay work to drive direct bookings and increase revenue for our clients. We bumped this to the top of our development queue as we knew this would be in high demand from our vacation rental clients.”
Peter Scott, president of Bluetent, added, “The ability to give guests an option to finance their trip was something many of our partners wanted to include with their services. So many professional managers are working to grow their brand and offer a unique way to do business. We see this option as one of those bricks in ‘brand building,’ and we are excited to see this roll out.”
Software and web development companies that integrate AscentPay are adding a feature that will differentiate them from their competition. There is already strong demand from property managers who want to make ethical vacation loans easily accessible to their guests and to partner with the software and development companies who agree with them.