Flexible payment options to pay for holidays online over time in installments would improve consumer confidence, spend and loyalty, new research claims.
Stretching out payments would encourage people to go ahead and book as it alleviates the stress of upfront payments.
More than one in five (22%) said they would feel more excited to book if they could pay over time, as well as less guilty about making such a large purchase (20%).
With staggered payments easing the financial burden of booking a holiday, the research revealed almost a third (31%) of consumers would be more likely to buy travel if they had the option to spread the cost over time.
More than a quarter (26%) would be more likely to repeat buy and 18% would spend more on their holiday overall.
This presents a “significant opportunity” for travel retailers who do not offer flexible payment options.
They stand to benefit from higher first time, repeat and add-on sales of travel products by helping customers by spreading the cost of their trip, according to payment provider Klarna, which commissioned the research among more than 1,000 respondents.
In February, Thomas Cook introduced a payment plan to help its customers spread the cost of buying a holiday. ‘Buy now, pay later’ allows customers to pay their balance in instalments through a direct debit, and offers a chance to pay no deposit.
The need to pay for holidays upfront is causing widespread frustration among online shoppers, the study found.
As many as 16% admit to spending their holiday budget before they travel.
The steep upfront costs of buying travel online is having a negative impact on people’s holiday experience.
Eighteen per cent of travellers said they have to scrimp and save when they arrive at their destination, as well as having to settle for a lower standard of trip – with 12% saying they would prefer to upgrade, but can’t afford the upfront cost.
A quarter of respondents reported missing out on holidays with family and friends as a result of not everyone in the group being able to afford the lump payment.
The study found that 16% consumers are choosing to book smaller breaks to avoid big upfront payments and 12% not buying a holiday at all over the worry about putting the cost on their credit card.
Unexpected costs throughout the online purchase journey are a big source of frustration for shoppers.
Hidden airline charges (31%), additional costs at checkout (27%) and credit card fees (20%) and a lack of flexible payment options (17%) are the main areas of criticism.
Klarna UK managing director Luke Griffiths said: “The holiday countdown begins at the moment of booking, so browsing for and buying travel should be as exciting as packing for your trip or heading to the airport.
“Sadly, our research shows this isn’t the reality for many UK holidaymakers.
“It’s clear that travel providers need to do more to make shopping for travel online more accessible and enjoyable for consumers, from providing quality customer support throughout the purchase journey to offering deferred payment options at checkout.”