Airbnb has officially rolled out its Reserve Now, Pay Later option to guests in the U.S., following months of testing.
Unlike the many Buy Now, Pay Later options that are popular today, this feature doesn’t involve financing or loans. Instead, guests can book a stay without paying anything upfront. Payment is only collected a few days before arrival, and if the guest cancels in time, there’s no charge. No fees, no friction, guests have zero skin in the game.
There’s one key limitation: Reserve Now, Pay Later only applies to listings with a Flexible or Moderate cancellation policy, which covers roughly 40% of U.S. listings. This move seems to be a part of a broader effort for Airbnb to compete with hotels, Expedia, and Booking, which all offer pay-at-hotel options.
Our Take: A Win for Guests, a Risk for Hosts
Unsurprisingly, many hosts are frustrated. They're right to be. This is a clear win for guests, and the risk is absorbed by hosts. But to be fair, there is a narrow segment of hosts who might benefit.
The Psychology Behind “Reserve Now, Pay Later”
This product is built for budget travelers. In a shaky economy with tons of economic uncertainty, people are already on the fence about taking a vacation or not.
And when money’s tight, people hesitate before booking. But Reserve Now, Pay Later makes the decision feel risk-free. Guests think, “Worst case, I’ll just cancel.”
But once a trip is on the books, they start investing emotionally and logistically. Flights get booked. Dinner plans are made. Friends get invited. Suddenly, they’re mentally committed and cancellations drop off. That’s the psychology Airbnb is betting on. It works.
But the risk is squarely on hosts. If a guest cancels three days before arrival, it’s the host who’s left scrambling. That’s why frustration is mounting, and it’s justified.
Airbnb’s data shows that flexible cancellation policies already drive higher bookings, and that 60% of travelers consider flexible payment options important. So, for hosts that are willing to risk last minute cancellations, they could have a big advantage in getting more bookings.
Who It Might Benefit
On balance, this is a net negative for most hosts. But it’s not universally bad.
Good Fit: Budget-friendly units (studios, 1–2BRs) near city centers that already attract lots of last-minute bookings. If a guest cancels 72 hours out, odds are higher that you can backfill the spot.
Bad Fit: Larger properties in destination or rural markets. If you get hit with a last-minute cancellation on a week- or month-long booking, you’re toast.
Takeaway for Hosts
Don’t let this catch you off guard.
Cancellation policies now matter more than ever. Take a hard look at:
- Where your traffic comes from
- How close to check-in guests usually book
- How confident you are in filling last-minute gaps
If you get a lot of last-minute bookings and can backfill a 72-hour cancellation window, this could be a tool. For everyone else, stick with the strict cancellation policy.
