Booking.com

https://www.innovationtactics.com/business-model-canvas-booking-com/

Business Aweness Questions

1. How does Booking make money?

Booking is an online travel agency that helps you find the best matching hotel for your budget and preferences, and the website will charge you nothing. As travelers prefer visiting one website to find and compare several hotels instead of opening several hotel websites, B.com specializes in being the "best platform" for finding and booking hotels.

Hotels sign up with booking and set up their properties, then booking will start advertising to the global audience. Once they've signed up, they’ll be advertised on search engines like Google, Bing and Yahoo. Only when you stay at the hotel, will they pay the commission fee.

2. Compare Merchant Model vs Agency Model

https://www.innovationtactics.com/business-models-tripadvisor-booking-com-expedia/

The majority of booking's revenue comes from:

  • Agency business model: $7.98b/$10.7b = 74%
  • Merchant business model: $2b/$10.7b = 19%
  • Advertising and other revenues = 6.6%.

The agency business model

1. Revenue Model

  • Booking.com has contracts with the hotels that it lists
  • It will take a commission on each booking through its site.
  • The hotels list their services and decide the final selling price to customer
  • The OTAs don’t have to buy anything up front.
  • Hotels pay for ranking higher with a higher commission.

Pro and Cons

  • No upfront huge investment is required
  • Preferred by hotel owners due to more control over final selling price.
  • As its easy to collaborate with many hotels, easy to scale.
  • Less profit margin for OTA

Merchant Model

  • In this model, OTA sign contract with hotels to purchase base number of hotels.
  • Hotels sell rooms to OTAs in bulk at discounted or wholesale prices.
  • The OTAs then sell them to customers at a markup price.
  • This is the most commonly used model, and it benefits both parties. Like Expedia follows this model.

Pros and Cons

  • Good bargain power due to bulk purchase leading to higher profit margin
  • OTAs can package hotel with other offers such as flight/car.
  • May not be preferred by hotel due to huge profit margin of OTA
  • Need bulk investment if contract is prepay payment
  • It's hard to scale due to heavy investment and contract involved.

3. How does booking acquire customer? In order for B.com to attract more and more customers, they engage heavily in Search Engine Marketing (that is to be in the top results when someone types "Hotel in Los Angeles" in Google), like this when travelers to book through them and generate a commission.

  • Booking advertise on Google and other travel sites.
  • Online travel agencies (OTAs) don’t need to worry which of one of the hotels the user books.
  • They make their commission either way.
  • Thus they can pay much more for their advertising on Google than any individual hotel or even large hotel chains can pay.
  • One rule is called rate parity, is that the hotels can’t offer the same (type of) room at a cheaper rate on the hotel’s web pages
  • full of persuasive elements to close the deal.

4. Why does Agency Business Model work?

  • The majority of traffic, ie.e demand, comes through other websites and Google is by far biggest one.
  • No hotel or hotel chain can afford to bid as high for a click in Google as Booking.com

5. What is booking Strategy in China?

  • Booking grows it's performance marketing, search engine and partnerships.
  • Search engine marketing doesn't work well in China.
  • It’s not that relevant for the customer to discover the journey
  • The competitive model is different, it's like "winner takes all"
  • So when you compete, you either win or die. There's one or two and there's nothing in-between.

What is performance marketing? Performance Marketing is a comprehensive term that refers to online marketing and advertising programs in which advertisers (a.k.a., “retailers” or “merchants”) pay marketing companies (a.k.a, “affiliates” or “publishers”) when a specific action is completed; such as a sale, lead or click.

6. What’s the specific strategy for marketing in China?

A long way ahead for alternative accommodation

  • Booking had already started invest heavily in acquiring more properties like guest houese.
  • The majority of the new properties were not hotels but like bed and breakfast, guest house
  • In China, what's different domestically is that there's still oversupply on the hotel side
  • As a result, the really high-quality boutique, five-start hotels are still quite affordable.
  • It’s a growing category, but it’s still relatively small compared to the hotel category.

Relationship with Ctrip and Meituan

  • Booking has had a really solid partnership with Ctrip
  • We're looking at ways how we can do more joint marketing activities.

Booking.com’s understanding of China

  • In China's mobile economy, people naturally hope they can have access to all services in one app.
  • Things to do, car rentals, train tickets, flight tickets, attraction tickets
  • That's the big difference between Ctrip and other OTAs
  • Booking attractions which are distinctively new in the city.
  • Ground transport is probably one of the first things that we want to make available
  • Chinese consumer spending continues to rise, with a growing desire for diverse and quality technology-driven travel services.

7. How you can improve the Booking.com?

  • Please think about what you feel our users would get excited
  • What would increase the amount of bookings.
  • You should be able to validate your ideas with A/B testing
  • So make sure you focus on small steps, actionable ideas, that we can experiment and test.

A/B Testing

1. What types of metrics are interesting for Booking.com to look at. The most important metric for a e-commerce is conversion. Conversion from a visit to a stayed booking, but this is only true for a business in general. What types of metrics are useful depends on the specific target and page.

e.g For landing page, the main metrics would be conversion from a visit to sign up. e.g The time needed to search for an available hotel room, for a specific day, in a specific city

Every page is built with a certain funnel in mind. You want your visitors to make a specific action on your page. And your main goal is streamlining that process, making it as easy and intuitive as possible in less steps.

Traffic source and Paid Media There are mainly three types of traffic

  • Paid Media: campaign, banner, search engine
  • Social Media
  • Organic

The main metrics for this stage are

  • Cost per click
  • Customer aquisition cost
  • Click through rate

Website or App

  • Bounce rate
  • Drop off rate
  • Pages per session

High value action

  • Customer behaviour
  • Heat map
  • User path (navigation path)

Conversions This depends on your business objective

  • Reserve form : drop off rate
  • Booking abandonment rate

2. How to attract and convert more new and returning visitors?

  • Highlight Free cancellation on most rooms to convience user's concern
  • Using just booked widget to persuade user
  • Serve both new user and return visitors
  • List the number of properties
  • Showing lowest price guarantee statement in search box
  • Messages and alert for deals
  • Price is such an important consideration for people to book.
  • Showing Credibility and Trust labels
  • No payment needed today and other convincing lines in booking funnel

3. What are some A/B testing principles?

  • Keep the customer at the center of everthing you do
  • If it can be a test, test it. Eg performance, improvements, new features.
  • No platform goes untested.
  • Teams are made for testing. Every one in the team support the hypothesis of the testing.
  • Everyone gets 100% access.
  • Test small, 9/10 test fail.
  • You still have to research.
  • Customers drive the product

4. How to do A/B Testing on iOS?

  • Define your goal, what do you want to improve?
  • Make the changes in your app and release two version simultaneiously.
  • As users perform actions in your app, Analytics sends events to its servers.
  • Your audience must be unbiased, so that you can compare the results between them and feel reasonably confident the differences are due to the changes you made, and not some external factor.
  • Analytics can help you make data-driven decisions based on numbers
  • They can also tell you which features drive conversions

5. How to prioritize your work?

  • Communicate with the team to come up with some hypothesis based on existing data.
  • Evaluate how your hypothesis will impact the business value and customers.
  • Of course how much time it would take to complete the task
  • Break it down atomically into small tasks.
  • Identify what is urgent and what is important.
  • Check to see if you have any tasks that need immediate attention.
  • Then for important tasks, identify what carries the highest value to your business and organization.

  • Order tasks by estimated effort

  • With A/B testing we can test hypotheses at scale, on our global audience

Behavior Questions

1. Why do you want to work for booking?

2. Please specify a project you are proud of?

3. Expect a conversation around your previous projects and mistakes that you have made in the past. What have you learned from these experiences?

4. How do you decide if the feature under testing should be made permanent or not?

System Design Questions

  1. How do you do a OO design on list of animals in the Zoo?

  2. System design question: Write autocomplete functionality like booking.com ?

  3. Designing monitoring system for booking.com

  4. System design question focuses on how I can design a data intensive system, handle fault and compromise between performance and UX.

Algorithms and Data Structures

  1. Union of n arrays with x elements. Output common members contained in at least 2 arrays. Explain the complexity of the algorithm used.

We have a digested server log with username, visited page and timestamp. Create a processing algorithm that will output the most visited page/areas in such a way that will match partial path as well.

i.e. { { user: "user1", page="/home" }, { user: "user1", page="/home/account" }, { user: "user1", page="/home/account/profile" }, { user: "user1", page="/home/account/login" }, { user: "user2", page="/about" }, { user: "user2", page="/about/contact" }, { user: "user2", page="/home" } }

the output user1

 - home/account
 - home

user2

 - /about

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