Reducing excessive fees on Vrbo
Overview
Role
Led this project as a Sr. Strategy Manager, leading data analysis, ideating ways to address the problem, presenting to leadership (including President of Vrbo), and producing designs for testing
Led a cross-functional team that included 2 product managers, 1 product marketer, and 1 analytics manager along with leads from research, legal, comms, and engineering.
Timeline
Q2 - Q4 2021 (8 months)
PROBLEM STATEMENT
Travelers experience high fees when searching and booking a vacation rental on Vrbo. The current experience drives sticker shock for travelers, as they see a nightly price when searching and only see additional fees when they checkout. This experience is frustrating for travelers and impacts overall traveler conversion for the platform.
DESIGN PROCESS
SOLUTION
When travelers are searching for a property to book, they will now see consistent and upfront pricing through their entire search process. The way pricing is currently presented leaves travelers annoyed due to sticker shock and/or discrepancy in nightly rate and total price.
The redesign addresses these discrepancies and removes sticker shock for the traveler while also incentivizing partners to set more reasonable fees.
Before
After
Problem
BUSINESS PROBLEM
Excessive fees are the #1 ranked traveler pain point on our Vrbo platform. Vrbo gives our partners total control in setting their pricing and fees for their property. With this, however, Vrbo has partners who set high fees compared to the base rate, and this impacts traveler booking conversion, as travelers are hit with the sticker shock of these fees. In addition, these high fees make Vrbo platform’s pricing uncompetitive compared to AirBnB and Booking.com.
Traveler Experience
Search Page
Property Page
Checkout Page
Price Details Page
Fee Details
Partner Experience
USER GOAL
We want to minimize excessive fees and provide more transparent pricing to travelers in their search and booking experience while still allowing partners to have total control and autonomy over their pricing and fees
BUSINESS GOAL
The primary goal is to improve traveler booking conversion (search to booking and page display to booking). An additional goal is to minimize the amount of price losses on Vrbo compared to AirBnB to become more competitive in the marketplace.
Research
TRAVELER RESEARCH
To get a better understanding of this problem, I worked with the Research Team to get a deeper understanding in travelers’ attitudes towards fees
Key Findings:
Over ⅔ of travelers say they won’t stay at property with >2 fees
Half of travelers would not book property where fees make up >15% of trip total
Other Notable Findings:
80% of travelers often avoid clicking on properties because total price indicates high amount of additional fees will be added
49% of travelers abandon checkout screen because of high cost additional fees
40% of travelers abandon checkout screen because of number of additional fees
Travelers expect utilities to be included in nightly rate
Travelers are confused around admin fees because they believe these are additional Vrbo fees
Travelers are confused around how extra guest fees work
Vrbo is viewed as having higher fees than AirBnB
PARTNER RESEARCH
Because Vrbo’s platform is a two-sided marketplace, I also had the Research Team conduct research to understand how partners set fees to help us think through possible solutions that don’t make the partner experience too restrictive.
Findings:
61% of partners who charge fees are unhappy with the idea of limits
35% of partners charge fees because their property will show up at a lower price in search results
25% of partners charge fees because they think it makes their property look like better value
61% of partners charge fees because they think guests prefer to see costs broken down
COMPETITOR RESEARCH
I wanted to see what the current traveler and partner experience is on AirBnB around viewing and setting fees.
Traveler Experience
Search Page
Price Breakdown
Property Page
Checkout Page
Partner Experience
Fees Settings Page
Extra Guest Fee Settings Page
Cleaning Fee Settings Page
Pet Fee Settings Page
OPPORTUNITY SIZING
Before diving into ideation, I did some data analysis to quantify the nature of this problem. Specifically, I was able to measure:
Having these numbers would allow me to establish a baseline and measure general progress on any implemented ideas. In addition, having an opportunity number would be helpful in prioritizing work with any teams that would handle implementation.
Ideation
PROBLEMS TO SOLVE
Before beginning brainstorming ideas, I came up with problem statements to narrow our focus of potential solutions:
How might we reduce excessive fees to enable more competitive pricing for our properties?
How might we reduce the sticker shock for travelers when searching and booking a property?
PRINCIPLES TO CONSIDER
As I brainstormed ideas with the team on how to address this problem, I came up with principles for us to abide by:
Design
TRAVELER EXPERIENCE
The idea with the design was to provide upfront pricing from the beginning of the traveler’s search process to the end of booking by rolling all fees into the nightly rate. While rolling in fees into the nightly rate does seemingly “increase the price”, including fees in all pricing means partners cannot hide fees anymore and there is no sticker shock between nightly rate and final checkout price. And, because travelers can now see fees upfront, their desire to book will ultimately drive the property’s ranking in a given search, meaning that if travelers find the property too expensive, the property will decrease in search visibility and partners will have to adjust their excessive fees.
Search Page: Before
Search Page: After
Property Page: Before
Property Page: After
Checkout Page: Before
Checkout Page: After
PARTNER EXPERIENCE
This also means that we do not have to introduce any limitations in partner’s fee amounts or numbers., as transparent pricing to travelers means they will help dictate what is too excessive to book. That being said, we also simplified the partner experience by limiting the per night and per stay capabilities for each fee. We also wanted to provide guidance and coaching to partners on what are proper fees to set by alerting them that fees will be rolled into nightly rate and giving tips on what are proper number of fees and fee amounts to set without seeing a drop in bookings or search visibility.
Fee Settings Page: Before
Fees Settings Page: After
Fees Settings Page: After
TESTING
For each of these changes to the experience, we were unable to test and implement due to lack of resourcing. All resources are currently working on convergence of Vrbo and Expedia platforms. Once we have enough traffic flowing on the converged platform (2023), we will be able to run testing on the above treatments, measure efficacy, and launch.
When we do run tests, it is possible that booking conversion takes a dip due to seemingly “higher” prices. We believe that over the long-term, conversion will end up stabilizing. However, if conversion takes a hit, we as a business would need to decide how comfortable we are with a conversion hit and if we have to pivot to different variants. For example, rather than automatically including fees in the nightly rate, we could introduce a toggle, similar to AirBnB’s newest announcement, where we allow the traveler to decide if they want to see upfront pricing or the current treatment.
Conclusion
Though I have transitioned to a new project, this initiative is far from being over. Travelers continue to complain about fees (even on AirBnB), and this is the number one driver for enhancing Vrbo’s traveler experience. If I were still on this project, I would like to continue running iterative tests on the design solutions, probably knowing that we will have to fine-tune some of the designs based on the test results. I also hope that when we run these tests, we really think about long-term value in building Vrbo’s traveler experience even if that means at the expense of short-term booking conversion loss.