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Many businesses experienced drastic changes since the start of the pandemic. New York-based travel agency Favisbook is no exception, having had to make strategic adjustments to cope with the new reality. Founded in Brooklyn in 2017 by CEO Kareem Dus and partner Mark MacEachen, Favisbook rapidly gained traction the following year, and is now the go-to service for travelers seeking last-minute visas.
Favisbook was established to address an essential issue: the various challenges presented by the visa application process. In 2017, a friend of Dus booked a last-minute job for Paris Fashion Week. Given two weeks to obtain a work visa, she scrambled to get her documents together, but found that the consulate’s calendar was fully booked for three months; there was no way to get the visa on time! Her problem, as it happened, was common throughout the US. With many consulates booked 3 to 4 months in advance, last-minute travellers were left helpless.
Determined to help, Dus and his team diligently worked to find alternate ways to confirm last-minute appointments at multiple consulates throughout the US. “A lot of it comes down to persistence,” says Dus. “We studied their systems and devised methods to catch canceled appointments the moment they become available. We guarantee an appointment within two weeks at any consulate listed on our website.” The team tested the service in 2017 at NY’s French Consulate before expanding. For many last-minute applicants, Favisbook is the only viable option, which has significantly driven their success. Dus remains perplexed that some consulates continue to neglect the issue. “Unfortunately, the operations of bureaucracies can sometimes be inefficient,” he says. “The difficulty of obtaining last-minute appointments has been a persistent obstacle for many travelers, which leads them to use our service.”
A contingent of Favisbook customers are students who run into seemingly overwhelming obstacles when applying to study abroad. Before obtaining a visa, students must schedule an interview at the local consulate, which necessitates booking months in advance.
“Visa appointments are free when booked directly through the consulate,” Dus explained, “but before we came along, anyone looking for a last-minute visa had to sit at their computer all day, every day, for weeks, until a free appointment became available – we aim to generate solutions that make everyone happy. We recently tried out a ‘Pay What You Want’ business model.” Started in October 2021, it ran for three months.
Depending on the consulate and type of visa, Favisbook spends $300 to $500 per appointment confirmation, including operational expenses. Running ads on Google to ensure their service remains visible is pricey, though Dus says they have managed to somewhat reduce costs, via SEO optimization.
While some confirmations are automated, many consulate’s sites are designed to prevent automatic appointment bookings. Favisbook employees actively monitor these websites 24/7, saving clients the hassle of searching for newly opened appointment slots. Other costs include website maintenance and aggregate losses: while the company’s policy doesn’t allow for refunds when applications are officially denied, exceptions can be made if a traveler can’t provide the required documents in time, especially through no fault of their own.
The costs associated with the service made a “Pay What You Want” model a risky strategy. However, Dus explains that profits aren’t Favisbook’s primary concern. “We want to ensure the service remains accessible. We struggled mightily with travel restrictions during the past two years, and almost shut down a few times. Our clients were facing the same struggles, so we decided to take the risk – and frankly, we lost money. Nevertheless, we persisted.”
Data collected during the three-month period when the “Pay What You Want” pricing structure was in effect consists of conversion rates as a percentage of website traffic leading to sales, as well as mean and median prices paid. Before breaking down the results, Dus noted that customer satisfaction was evidenced by a substantial jump in conversion rates throughout that time. “Our prior conversion rate hovered around 2.2%, but over those three months, it was consistently 5.4%.” The reason for such a drastic leap is up for debate; Dus believes the obvious explanation is that the “Pay What You Want” model was appealing to customers who wouldn’t have used the service at the higher cost. Despite the three month sales boost, the company recorded losses during that timeframe. Clearly, empowering customers to pay whatever they chose failed to cover the company’s costs.
It’s common among companies offering “Pay What You Want” to implement a price anchoring mechanism that influences what customers decide to pay, such as a recommended price presented at checkout. Favisbook initially decided to forgo that, precisely because they didn’t wish to exert such an influence. “Of course, we could have set a recommended price, but we decided we’d only do that if we saw a consistent trend of payments falling far below cost.”
Tracking the lowest offers, they discovered many of these orders originated from two IP addresses, which belonged to offshore scammers who were attempting to profit by reselling Favisbook’s services.
The “Pay What You Want” pricing resumed for another month without an anchoring mechanism. Even after blocking orders from those IP addresses associated with illegitimate businesses, Favisbook continued to receive offers far below cost.
At this point, a mechanism needed to be implemented. What makes this particular situation noteworthy is that Favisbook took an alternative route to the typical implementation. “We believe that the reason customers paid such low prices is that they simply weren’t aware of the costs we incur offering the service. I’ve gotten to know our customers, and I don’t see them as exploitative; they really understand the difficulties of our business. Many of them have tried everything to secure an appointment on their own before making the decision to use our service, and we rarely receive complaints about the price.” That said, Favisbook decided to provide their customers a breakdown of actual costs incurred, at checkout.
The implementation falls in line with the trend of moving towards transparency. “We felt that as long as we provided our customers with accurate costs and explained exactly where their money was going, they would be willing to pay a fair price for the service.” The intuition was correct. “Results came immediately. It’s astounding how much of an impact we had by providing our clients with this information. It transitioned from customers paying 1/3 to 1/2 of our costs, to the majority of people being roughly on par. It makes a strong argument for transparency.”
Moving forward, their plans for expansion include expediting the visa application process at consulates for a number of new destinations in Asia and South America, in addition to the European countries that are already on offer. As Favisbook continues to fine-tune their business model, they have implemented other avenues to boost their revenue stream, such as using aggregated data to predict tourism trends, which enables them to provide travel forecasting services. Based on their analysis of historical data, Favisbook generates robust reports that can be efficiently utilized to forecast price fluctuations throughout the travel and tourism industry.