Product Strategy - How would you increase bookings for Airbnb?
Product Strategy - Assume you are a Product Manager at Airbnb, How would you increase bookings?
Step 1: Describe the Product
Once you are clear with the question, start by explaining your understanding of the product. Cover the following things about the product,
What does the product do?
Who uses it?
How are they using it?
What pain point is it solving for the users?
“Airbnb is a global online marketplace that enables users to book unique accommodations and experiences in destinations worldwide. The platform connects travelers (guests) with property owners (hosts) who offer a variety of stays, including private rooms, entire homes, boutique hotels, and even unconventional spaces like treehouses or houseboats.
Airbnb also offers "Experiences," allowing users to book activities led by local hosts, such as guided city tours, cooking classes, and outdoor adventures.
The platform is available on multiple platforms, including web, iOS, and Android, making it accessible to travelers worldwide.
Airbnb operates in over 220 countries and has millions of listings, competing with traditional hotels and alternative lodging options like Vrbo, Booking.com, and boutique accommodations. Unlike traditional hotel booking platforms, Airbnb differentiates itself by focusing on unique, local, and personalized travel experiences rather than standardized lodging.”
Now that we are clear on the product description and the interviewer is also onboarded.
Let’s move on to the next step: Ask Clarifying Questions.
You: “Before we move on, I have a few clarifying questions I want to ask. Shall I proceed?”
Step 2: Ask clarifying questions
Are we primarily focusing on high-intent or low-intent travelers?
A) Focus on low-intent travelers—those who are not actively planning their next trip but may become high-intent travelers in the future.
Should we focus on increasing bookings by attracting new users or should we focus on increasing the frequency of bookings from existing users?
A) You can decide.Should we consider both accommodations and experiences, or focus on one?
A) Focus primarily on accommodations, since this is Airbnb’s core business and the primary revenue driver. Experiences can be considered later but are not the main focus.
Are we targeting specific geographies, or should we consider this a global initiative?
A) Consider this a global strategy—Airbnb operates in over 220 countries, and the goal is to drive more engagement worldwide.
What constraints should we keep in mind regarding Airbnb’s current business model?
A) Keep the existing business model in mind—Airbnb primarily earns revenue through service fees on bookings. Any new strategy should align with this and should not introduce a completely new monetization model.
Are there any legal, regulatory, or privacy constraints to consider?
A) For the scope of this discussion, legal and regulatory constraints are out of scope. However, any new strategy should respect user privacy and not rely on intrusive data collection.
Should we focus on mobile, web, or both?
A) Focus on the Mobile App since it provides a more immersive and interactive user experience, which is crucial for an inspiration-focused travel discovery experience.
Are there any budget or resource constraints to consider?
A) Assume we have the necessary resources, but we should aim for an MVP approach before making large-scale investments.
Step 3: Define the Goals
Now that we have scoped the problem, the next step is to clearly define the goal of this initiative.
Goal:
Airbnb’s mission is to “create a world where anyone can belong anywhere”, making travel more accessible, inspiring, and personalized. Our goal aligns with this vision by helping low-intent travelers discover and book accommodations through an inspiration-driven experience.
While Airbnb is already a well-established platform with a vast inventory of properties, engaging and converting low-intent travelers remains a challenge. Many users browse the platform without a clear intent to book, leading to missed opportunities for conversion.
To ensure long-term growth and stay competitive, Airbnb needs to enhance its travel discovery experience, nudging casual browsers toward making bookings. This will drive revenue, improve user retention, and differentiate Airbnb from competitors who focus primarily on transactional bookings.
Key Success Metrics:
To measure the success of this initiative, we can track the following metrics:
Increase in user engagement: Measured by session duration, interactions per session, and time spent exploring travel inspiration content.
Growth in conversion rate: Tracking the percentage of users who move from exploring travel content to booking accommodations.
Increase in repeat visits: Monitoring how often users return to Airbnb to engage with the new experience.
Reduction in bounce rate: Ensuring that users who land on Airbnb for inspiration do not leave immediately.
The overarching goal is to increase the Number of Bookings (Night Stayed) per User per Year by ensuring they engage with the platform more frequently and eventually convert into paying customers.
Step 4: List the User Segments
To build an effective inspiration-driven travel discovery experience for Airbnb, we need to understand our key user segments and their pain points. This will allow us to design solutions that enhance engagement and increase booking conversions.
1. Demand Side: Travelers Seeking Accommodations
A. Low-Intent Browsers (Primary Focus Segment)
Profile:
Users who visit Airbnb without a specific destination or date in mind.
They browse listings for inspiration but don’t proceed to booking.
Includes users exploring weekend getaways, seasonal travel, or future dream vacations.
Motivation:
Seeking inspiration for their next trip.
Looking for visually appealing or unique stays but without urgency to book.
Challenges:
Overwhelmed by choices without clear guidance.
Lack of personalized recommendations based on preferences.
No easy way to save, revisit, or get nudged toward booking.
B. Spontaneous Travelers
Profile:
Users who are open to last-minute travel but haven’t planned a trip yet.
Often flexible with dates and destinations.
Motivation:
Finding unique, affordable, and exciting trips quickly.
Looking for deals or experiences they wouldn’t have considered otherwise.
Challenges:
Lack of dynamic suggestions based on real-time availability and pricing.
No easy way to match flexible travelers with flexible hosts.
C. Budget-Conscious Travelers
Profile:
Users looking for affordable accommodations and travel deals.
They may browse Airbnb but hesitate due to price concerns.
Motivation:
Getting the best value for money.
Finding budget-friendly accommodations that still provide a great experience.
Challenges:
Price comparisons across listings can be time-consuming.
Lack of visibility into price drops or deals.
Uncertainty about hidden fees or total costs.
2. Supply Side: Hosts Offering Accommodations
A. Hosts of Unique Listings (Primary Focus Segment)
Profile:
Owners of distinctive properties such as treehouses, tiny homes, or boutique stays.
Their listings thrive on Airbnb’s discovery-driven experience.
Motivation:
Attracting travelers looking for unique experiences.
Increasing booking rates by reaching the right audience.
Challenges:
Difficulty in surfacing their listings to the right audience.
Need better visibility in inspiration-driven searches.
B. New and Infrequent Hosts
Profile:
Individuals or businesses listing on Airbnb for the first time or with few bookings.
Motivation:
Gaining traction on the platform.
Optimizing pricing and visibility to attract guests.
Challenges:
Struggling to stand out among more established listings.
Uncertainty about how to optimize their property for discovery.
User Segment Prioritization Criteria
We prioritize user segments based on the following factors:
Reach / Market Size – How large is the segment?
Frequency of Use – How often does the segment engage with Airbnb?
Underserved Users – How much pain are they currently experiencing?
Focus Segments:
Demand Side – Low-Intent Browsers (Largest segment, highest opportunity to nudge toward bookings).
Supply Side – Hosts of Unique Listings (Need better discovery and visibility).
Since we are focusing on low-intent travelers, we can break them down into key personas:
Dreamers – People who love browsing travel content but have no immediate plans to book a trip.
Explorers – Users who are casually researching destinations but are undecided about their next vacation.
Planners – People who are considering a trip but are unsure about where to go or when to book.
Step 5: List down the user Pain Points
Identifying these challenges will help tailor the product to convert low-intent users,