A revolution has happened recently in the travel world and it started when A.I (artificial intelligence) slowly began to infiltrate the industry – and things are continuing to change at a heady pace.
A little bit of history
Possibly you are old enough to remember the days when planning a holiday or business trip was ponderous and time-consuming in the extreme? It often involved physically visiting a travel agent and awaiting the arrival through the post of tickets from the airlines and paper confirmation of a hotel booking.
There was also no "joined-up" thinking combining the flight with a good deal on accommodation.
Well, that all seems like a long time ago and the travel industry has now embraced all the modern technology that is currently available. A.I is playing a very big part in making travel as straightforward and stress-free as possible – and determining optimum prices (for travel companies, airlines and consumers) 24 hrs a day, 7 days a week.
Dynamic Pricing in the Travel Industry
The aim of dynamic pricing in the travel industry is to allow companies/airlines to adjust their selling prices in response to changing market demands.
These "dynamic" pricing changes are done automatically by software that gathers data and uses algorithms to adjust prices according to business rules and will often take into account factors such as:
- A customer's location
- Time of day
- Day of the week
- Level of demand
- How close to take off/date of travel
- Competitors' pricing
Very few people have the time or inclination to track ever-changing flight fares and hotel prices manually. So, smart tools send out alerts with the hottest deals available.
People know there are always more advantageous deals out there and want access to the information that allows them to save as much money as possible on flights, hotels, and other relevant travel services.
Hopper is one of the leading startups in this area. They launched in 2015 and have built an advanced application that uses applied predictive analytics to tell users exactly when is the optimum time to grab a flight deal; it notifies them when prices for their flights are at their predicted lowest points.
Today, Hopper is one of the fastest growing travel apps ever, with over 17 million installs since their launch.
How Hopper Works
Firstly, your search for a trip by tapping dates on the colour-coded calendar.
Hopper will give you a prediction about when your flight will be cheapest. They will recommend whether you should wait or book.
If they say "wait" you tap the binoculars to watch. Hopper will keep tabs on that trip and send notifications the instant prices drop. If Hopper says "buy" you can choose your flights and book in just a few taps and a swipe. There are also no hidden fees.
They have now launched Hopper Hotels that allows users to book accommodation as well. As with flights, the service offers pricing forecasts but Hopper Hotels can also determine users' hotel preferences to flag them up for any given destination that the user is interested in.
Hopper founder and CEO Frederic Lalonde says:
“Our goal is to go from the number one air app in the App Store to its number one travel app. The value proposition of our hotel product is very different as is the way we approach it, the way we use data for Hopper Hotels and the content we offer is also very different.”
Lalonde has said that Hopper is willing to work with hoteliers provided they will link back to Hopper's website.
However, Hopper’s program is invite-based. Lalonde says:
“We’re reaching out to hotels that have consistently maintained the best ratings in user-generated content and they can’t pay to be on the app. We approach hotels, tell them that we’d like to invest in content and we’ll go out of our way for a hotel where we know we’ll do well.”
In order to benefit from dynamic pricing, Hopper users are also expected to book both air and hotel together on the app, a strategy that typically comes with lower cancellation rates than booking them separately.
The app also sends users alert notifications, which can be instrumental in upselling those customers who have booked a room on Hopper Hotels.
These are sent 50 days prior to departure, when Lalonde believes users can be receptive to meaningful value-adds.
Travel Industry Add-Ons
Many organisations do not have a direct role in travel and tourism but offer related products and services. Some examples would be offering travel insurance, parking facilities at airports, theatre and event tickets, car hire, travel by rail or coach to airports etc. at competitive rates.
In ten years time, the A.I. technology we use now will undoubtedly seem archaic because we are only at the start of the A.I. Revolution. The technology currently available is, however, fundamentally and systematically changing the way we travel – and how we pay for that travel.
This is beneficial because it should result in consumers getting a greater choice of travel options - and more efficient booking processes.
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5 Signs You're a Pricing Genius
Sources
https://www.hopper.com/corp/about.html
https://www.tnooz.com/article/hopper-offers-hotel-bookings/
http://leannestravelandtourisminfo.weebly.com/ancillary-services.html
http://www.tourismindustryblog.co.nz/2010/03/pricing-strategy-for-tourism-businesses/
https://www.accc.gov.au/system/files/Pricing%20manual%20for%20the%20travel%20industry.pdf
https://buyingbusinesstravel.com/feature/2627252-procurement-strategies-dynamic-pricing
https://www.forbes.com/sites/erikamorphy/2014/08/31/dynamic-pricing-in-a-post-uber-world/#fa0d8a23e376