Pay Now or Pay at the Hotel: The Impact of Payment Time Preference on Perceived Risks Moderated by Temporal Distance in Online Hotel Booking

Due to COVID-19 outbreaks, some individuals would experience financial difficulties, which would prompt them to reconsider travelling and making reservations for lodging. Therefore, several hotels offer the “book now, pay at hotel” options, which have become a phenomenon until now. However, paying at hotel options can lead to hotels’ losses because of the guests’ no-shows and cancellations. Hence, to encourage reservation prepayment, hotels have started offering incentives for the pay now options. This study aims to examine which payment option the guest would prefer to adopt based on the temporal distance, that is the amount of time between hotel booking and actual check-in. Furthermore, this study aims to assess how the temporal distance and the payment options jointly influence the perceived risks. This study uses quantitative approaches, specifically questionnaires were utilized in this research, using SPSS and SmartPLS. This research found that guests prefer the monetary incentive option when travel time is in the near future. On the other hand, guests will prefer to pay at the hotel option when the traveling time is in the distant future. The guest also will have higher risk perception with the pay now options compared to pay at the hotel option when their traveling time is in the distant future. This research offers some useful recommendations concerning the use of incentives for the pay now option. The hoteliers should understand the types of incentives that guests choose (monetary or non-monetary) depending on the booking time to effectively support the pay now option.