TIMONIUM, MD— In an industry where consumers are forced to pay before they stay, a deferred billing plan for vacations and/or business travel was unheard of… until now. A new delayed billing program has emerged on the travel scene that is already boosting sales for one third-party online distributor. Called Bill Me Later, the innovative payment alternative allows purchasers to buy now and pay later. While not a totally new concept— it has been used for some time in other industries such as automotive and furnishings— the model is new to the hospitality market, which traditionally has operated under a system of pay first, enjoy later. Typically, the hospitality industry lags behind on new trends, just look at the delay with which we implement new design and technology ideas. This could be considered a good time for hotels to get proactive. Developed by I4 Commerce, the program was designed as an alternative to credit card purchases, which can turn away some consumers due to security concerns, mounting debt, or unwanted finance charges. Instead of being forced to charge an online purchase, the plan approves credit-worthy customers in a few seconds after they answer several questions. If approved, they receive a statement within 30 days, which they can pay in full or choose to finance. Anticipating a boost in sales through yet another untapped market for which this program was designed, Hotels.com forged an alliance with I4 Commerce late last year to offer Bill Me Later. Already the company has noted an increase in volume booked on its website. “We’re very happy with the Bill Me Later program, which we found opened new doors of opportunity,” said Jack Richards, vp/product marketing, Hotels.com. “By offering Bill Me Later,” says Mel Robinson, executive vp, Hotels.com, “we expected to tap into a new market of tens of millions of consumers who don’t have credit cards. While we did see incremental business from this group, we were pleasantly surprised to find that our greatest revenue gains were driven from people who already had credit cards— both new and existing Hotels.com customers— who now feel empowered by Bill Me Later to make larger purchases. Our average transaction value from Bill Me Later customers immediately increased by 10% compared to credit card users. We also found that 35% of our sales to people that had credit cards, but opted to pay with Bill Me Later, was completely incremental and would not have happened without Bill Me Later.” Hotels.com heavily markets the new “customer-enhancing service,” giving it choice placement on its website. A banner at the top of the home page, as well as information on the program at a few other areas throughout the site, capture the customer’s attention with data and opportunities to try it out. With slogans such as “Buy Fast. Feel Secure. Bill Me Later,” and “No Credit Card Required,” the website tries to pique the interest of as many customers as possible, particularly those looking for options in payment since, until now, credit cards were the only way to buy travel online. Hotels.com offers Bill Me Later in two different formats. The standard program is available on purchases less than $300. A promotional program was launched March 1 that provides deferred payments until June 2004 on minimum purchases of $350. “The promotion has been very well received. Customers look at it as a way of planning their purchase ahead of time. Not to mention it really has resulted in bigger average transactions in terms of dollars,” Richardson said, who noted the program would be a big part of Hotels.com revenue for 2004. According to executives at Hotels.com, the company is the only online travel provider to offer this new billing service. This begs the question to the rest of the industry, why not make it easier for customers to book?
