Crafting a product launch strategy for Booking.com

Hotel micro stays

Summary

Background

This case study was conducted as part of EntryLevel’s Product Management program. For the program, I was tasked to launch a new online product for Booking.com in Nigeria. Booking.com is an online travel company which aggregates bookings for flights and hotel accommodation globally.

The new product is hotel micro stays, which affords customers the flexibility to book hotel rooms by the hour, and not for the full night. This case study documents the product launch strategy I formulated, which includes defining and validating the customer problem / solution / market size, prototype ideation, crafting user stories, as well as identifying and prioritizing features to be built.

Timeline

3 weeks

Role

Product Strategy | Market Sizing | User Research | Wireframing & Prototyping | Feature prioritization

Deliverables

Product launch strategy

Problem statement

Based on the product and the given objective, I first sought to define the customer problem statement. The purpose of this was to lay out in clear and definite terms, the customer segment(s) targeted, and the product’s value proposition relative to existing competitors in the market.

Problem statement to ground the research process and identify assumptions

It should be noted that this problem statement was not intended to be final, and may be iterated when more insights are collected from further research, hypotheses testing and user interviews.

Assumptions mapping

I identified and extracted several underlying assumptions from the problem statement. This is an important step in the analysis as it facilitates subsequent testing and validation of such assumptions, the results of which may be critical to determining the desirability or viability of the product in the market.

By doing so, I can avoid the pitfall of building a product that nobody needs. In addition, it allows for faster pivoting or course correction before additional business and technical resources are invested into building the product.

  • *Demand: Travelers on business trips or with long layovers will choose to book hotel rooms for a place to rest comfortably
  • *Demand: Travelers will want to book hotel rooms for several hours on an ad-hoc basis, without staying overnight
  • *Supply: From a commercial and logistical standpoint, hotels are open and willing to offer micro stays
  • Demand: Travellers want flexibility and competitive prices as it relates to ad-hoc accommodation bookings
  • Market: Travellers feel that current hotel accommodation options are expensive and inflexible
  • Target customers: Are we targeting the right customers? What about general tourists or domestic travellers?
  • Data: What is the relevant success metric(s) to consider and how it can be tracked?

Problem statement to ground the research process and identify assumptions

Plotting the assumptions on a risk-importance graph allowed me to identify the riskiest assumptions that could potentially make or break the product, and this is the core area of focus in which hypotheses testing and validation should be conducted.

Validation framework

Next, I sought to validate 3 core aspects of the product: the problem, the market, and the solution.

Validation of Market

Target customer segments

First, the core customer profiles, problems, and goals / motivations were hypothesized. This served as an anchor for the framing of user interview questions and the scope of market research.

It should be noted that the target customer profiles are dynamic and may be iterated as new insights or learnings are uncovered. In this specific case, I updated the customer profiles based on the learnings from the user interviews conducted (refer to User Interviews section below).

Target customer segment 1

Target customer segment 2

Market research

From Google Trends, there is insufficient historical data on the search term ‘micro stay’ in Nigeria, signaling that local demand is weak. For the past 12 months (Sep 2021 – Aug 2022), micro stays have had the highest search counts in the US, UK, India and Germany.

Mapping assumptions on a Risk Importance Graph

KEY INSIGHT #1

Singapore may not be an ideal market due to limited demand. In larger countries where domestic travel is a huge market on its own, the use case and demand for micro stays may extend beyond flights to include train / rail travel.

From a quick Google search, the concept of micro stays has been in existence since the early 2010s with hotels worldwide offering them. By offering micro stays, hotels benefit from having decreased excess room inventory and increased room sales, which in turn boost revenue.

Rise in demand for micro stays in London

Benefits of offering micro stays

KEY INSIGHT #2

Generally, hotels recognize the benefits of micro stays and are willing to supply it to customers.

Based on desktop research, the global online travel market is valued at approximately USD 433 billion while the global tourism industry is estimated to grow at a CAGR of ~3% over the forecast period 2022 – 2031. Furthermore, the number of international tourist arrivals worldwide is estimated to be 427 million.

As the tourism industry makes a significant recovery post-pandemic, the demand for micro stays is expected to increase as well.

KEY INSIGHT #3

The global online travel market is valued at approximately USD 433 billion while the global tourism industry is estimated to grow at a CAGR of ~3% over the forecast period 2022 - 2031.

Market research

Based on available data gathered, I estimated the market size for hotel micro stays in Nigeria. The key information I relied on were (1) international visitor arrivals that stayed in Nigeria for less than a day, and (2) the number of transit passengers.

Thereafter, the figures were used to estimate the Serviceable Addressable Market (SAM) and Serviceable Obtainable Market (SOM) for the product in Nigeria.

International Visitor Arrivals By Length of Stay

Assumptions

  • Data was only available till July 2022; extrapolated Aug – Dec 2022 data by assuming a 5% month-on-month growth
  • 20% of travellers who visited Nigeria for under 1 day book hotel micro stays
  • Booking.com holds a 7% market share

Scheduled Aircraft and Transit Passengers

Assumptions

  • There is an estimated total of 80,000 transit passengers in 2022 due to the recovering travel industry
  • 20% of transit passengers book micro stays while awaiting connecting flights

Market sizing – TAM SAM SOM

The market sizing analysis above reinforces the hypothesis that the Nigeria market may be too small, and the growth opportunities for the hotel micro stay product lie largely in other markets.

Validation of Problem and Solution

Customer journey mapping

Before penning the user interview questions, I constructed a user persona to reinforce contextual understanding of the scenario in which a user may consider booking a hotel micro stay. In addition, I mapped out a typical hotel room reservation process to better understand the potential problems, goals and sentiments of the user during different phases of the customer journey.

User persona and customer journey map

User interviews

I conducted interviews with 3 users and aimed to understand the scenarios in which they would (or would not) book a micro stay, as well as to gain further insights into their motivations, considerations, and alternative solutions that would solve the same underlying problem. The goal was also to synthesize the interview findings to validate the risky assumptions / hypotheses identified earlier.

One of the key insights gathered was that there is minimal demand for hotel micro stays in a tourist or holiday context. Reasons include:

  • Tourists are inclined to book hotel rooms for overnight stays, not for a few hours on an ad-hoc basis
  • Tourists are likely to make full use of their time exploring the destination country
  • Tourists may have alternative workarounds, such as requesting for early check-ins or leaving their luggage in the hotel lobby.

Through the interviews, I gained a higher level of assurance that the two core uses identified were indeed the scenarios in which users see a potential need to book micro stays. This raised my level of confidence in the product’s value proposition.

User persona and customer journey map

Prototype strategy

Next, I set out to brainstorm a prototype to help further validate the product, as well as define the success criteria for the risky assumptions to be validated.

Riskiest assumptions and success criteria

In the context of this case study, I focused only on the demand-side assumptions to be tested. This is notwithstanding that the supply-side assumption (i.e. hotels are willing to offer micro stays) remains a critical hypothesis to be tested and validated.

I determined that it would be most efficient to leverage the existing Booking.com product and infrastructure to implement a landing page + concierge prototype. This is because the website (and app) are natural customer touchpoints that may lead to higher conversion rates for micro stay reservations.

Prototype ideation

The option to book micro stays could trigger upon specific conditions being met. For example, when (1) user books a transit or connecting flight with a substantial layover duration (e.g. 6 – 8 hours) or (2) user books a red eye business class flight and a return flight on the same day.

High-fidelity prototype

Prototype ideation

Micro stay landing page

Auto-triggering of option to book micro stay

Strategy to find users to test prototype

Booking.com already has a large existing user base to be tapped on to test the hypotheses. One way to find users is to announce the micro stay feature to Booking.com’s email subscriber list and invite users who fit the user persona(s) to participate in prototype testing.

Another method is to run a lucky draw where participants test and give feedback on the prototype in exchange for prizes such as flight / hotel discounts.

As the key assumptions to be validated requires qualitative input, the method of testing could be in the form of a moderated user interview and moderated / unmoderated usability test.

For the usability test, the metrics that could be considered include:

  • Task completion rates
  • Duration of booking
  • Rating on user booking flow

The qualitative and quantitative data gathered during the prototype testing phase will facilitate further validation of assumptions, iterations, and improvements on the MVP prior to committing technical resources to develop the features.

User stories and features

Next, I constructed 7 sets of user stories to outline the customer’s wants and objectives, and brainstormed features for each user story.

Auto-triggering of option to book micro stay

After determining the features, I estimated the impact on the overall product offering and the complexity / effort required to build them. The must-have features include basic / primary functions of the micro stay product and result in the most value-add for the end user.

Feature prioritization by value

Effort / Value map used for feature prioritization

In practice, the prioritization process would include input from other stakeholders (e.g. software engineering team, business analysts, product designers), and consideration of budget & timeline constraints. Alignment of the prioritized features is especially important as this ensures that the members of the product team and the stakeholders have the same objectives and expectations in mind.

Effort / Value map

Combining both the value and effort required to build each of the features identified, I then prioritized the features to be built into the minimum viable product.

Effort / Value map used for feature prioritization

Next steps

After research and analysis, it seems that the market in Nigeria is limited and launching a full-scale hotel micro stay product in Singapore is likely to be a sub-optimal decision with a low return on investment (ROI). Instead, my recommendation would be to reframe the product strategy and regard the Nigeria launch as a soft launch / test market. This will allow Booking.com to test the idea with real users in the market before committing additional budget and resources to developing a fully-fledged product.

With the findings from the Nigeria market, the micro stay product can be further improved and refined, in preparation for future expansion into markets that are primed for a higher level of growth. I believe this approach will significantly improve the product’s chances of success in the market.

RECOMMENDATION

Reframe product strategy to regard Nigeria as a test market; to improve and refine the product offering in preparation for future expansion into markets that are primed for a higher level of growth.

Retrospective

Hands-on experience with the tasks of a Product Manager

Through the task, I had the opportunity to step into the shoes of a PM and consider product building from a high-level, strategic perspective. Going through the process allowed me to appreciate the sheer amount of work that goes into defining the product even before the first lines of code are written. In addition, I understood the importance of validating the market, problem and solution and how these considerations drive business and commercial decisions.

Market sizing

This was my first attempt at a market sizing exercise – it definitely helped to build my competencies in critical thinking and secondary research. This process also allowed me to appreciate the importance of identifying credible sources of data, as the quality of data gathered is very likely to impact the eventual conclusion(s) and recommendation(s) arrived at.

END OF CASE STUDY

Thank you for your time.

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