The trick behind dynamic pricing with Online Travel Agencies

You must have heard about Trivago’s slogan – “The same hotel, the same room, but two different prices, WHY PAY MORE?” Odd isn’t it, Let’s find it out. The technique that they use is called the art of dynamic pricing.

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Source: Trivago

What is dynamic pricing?

Dynamic pricing, also called real-time pricing is where businesses are able to change the price based on supply and demand, competitive pricing and is also determined by a customers’ ability to pay etc.

How do OTAs determine their prices?

Prisync and other similar software are one of the dynamic pricing tools that they use. According to Prisync, it is a price planning and merchandise management tool for e-commerce businesses. This software helps track competitor prices and stock levels. By using AI technology, all the OTAs collect competitor and supplier data in order to offer the best price for their consumers.

How to get better deals among OTAs?

Change the country: In fact, there are other features that I found in hotels.com that may shock you! The price of your hotel will change if you change the country that you are currently in! See this unbelievable evidence below:

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Source: Hotel.com

Just by changing the country from Australia to Canada, I received a discount of $25 AUD.

Visit a couple OTAs: If you visit only one OTA, you may not get the best price. However, visiting a couple OTAs may give you a better deal. If you visit Booking.com at first and then visit hotels.com, the second OTA that you visit will always have the same price but may even have better deals than the first one. You can save money from this because they can use dynamic pricing software to track your cookies and the price of competitors.

Final thought: How do OTAs target price-sensitive consumers on an e-commerce platform?

The best way is to build an online loyalty programme. Companies such as Agoda have established a loyalty programme called PointsMAX to appeal to price-sensitive customers, which allows consumers to gain points when they make a booking.  Consumers can then redeem a free plane ticket when they reach a certain number of points. This kind of loyalty programme can attract consumers to stick with your brand, even though your price may be slightly higher than your competitor. Furthermore, companies could offer bundle pricing deals through email. This can increase revenue and the average purchase amount, but also reward your consumers.

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Source: Agoda

What are some of the tricks that you use when you book accommodation? Leave a comment below 🙂

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14 thoughts on “The trick behind dynamic pricing with Online Travel Agencies

  1. Alex Busch says:

    Interesting! I never would’ve thought changing the country would change anything.
    I always assumed cookies would pick up that you were looking at those sites multiple times and raise the price, but I suppose they’re also trying to stay competitive as well! Insightful thanks for the info 🙂

    Liked by 1 person

    • may ng says:

      I agree, looking at the same sites a couple times generally raise the price of that site. This is because it assumes that you are very interested in it and the chance of purchasing is higher. However, it generally offers you the same price or evens lower if you visit the same hotel with the same date in other OTA 🙂

      Liked by 1 person

  2. Matt Ian says:

    Wow, thanks for the tip. I’ve also done this before to try and get better deals for myself! Did you know you can also opt for their rewards program to get better deals on these websites? Try it out sometime.

    Liked by 1 person

    • may ng says:

      I know the reward program on hotels.com, you can collect 10 nights for 1 night free. Do you know that sometimes they will give you a secret price? (price even lower than the normal discount price)

      Like

  3. winonadewi says:

    Thanks for a great insight! I haven’t been trying these tricks! It’s crazy that only by changing our country, there could be some changes in price since it’s really difficult to see the correlation there. Although one of the tips that i know is only to not visits pages too often, as they will increase their price.

    Liked by 1 person

    • may ng says:

      Hi, Kristel. For consumers that only shop based on price, I believe offering good deals will attract them. However, I don’t think this is harder to communicate on an e-commerce platform. Businesses could build an online loyalty programme, one of the examples is from Hotel.com ‘Hotel.com Reward’. This allows consumers to get one night free for every ten nights they spend in a hotel booked through their website. Furthermore, most OTAs target price-sensitive consumers and will often send deals and offers through emails.

      Like

  4. Yvonne Ou says:

    Interesting finding! I never thought about this before, it’s a very useful tip and I will follow your instruction when I need to book accommodation next time.

    Liked by 1 person

  5. victorzheng0520 says:

    I think this is the outcome of BIG DATA era because this dynamic information is gathering other information from different websites and hence form a unique comparison to its users.Also, the spending behaviors of the customer will also form a useful data to other website. It forms a functional and co-related circle.

    Liked by 1 person

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