The sooner you book a flight, the best price you get. Dynamic pricing models are widely used by airline companies and hotel chains but are now being introduced in some tourism businesses, from car rentals to cruises, up to railway transportation.
The ability to analyse and correlate Big Data is surely the background to start any adaptive pricing policy. The most popular algorithms are based on standard variables such as time, although some advanced systems are already heading towards customised, 1-to-1 rates based on customers’ individual choices and preferences. Loyal customers might be then awarded with special tariffs, or being offered tailored combinations of services at their most frequent destination.
Boston Consulting Group analysts stated that dynamic pricing could boost the profitability of single touristic services up to 10%. That’s much more than can be achieved by investing in adjusting other financial parameters such as variable costs (impact on margins would not exceed +7.5%), sales volumes (+3.8%), or fixed costs (+2.8%).
However, data-driven tourism is much more than adaptive pricing. By injecting data knowledge into decision-making processes, companies are learning how to make operations more efficient, better manage their assets, improve customers experience and satisfaction. Cruise voyagers tend to spend up to 90% of their onboard time out of their cabin, thus trying to sell top accommodation with real estate-like criteria is quite ineffective nowadays. That’s why Costa Cruises pioneered a predictive model to define the best possible onboard experience for each customer, at the most appropriate rate.
Flixbus managed to optimise net earnings per mile by correlating traffic congestion data, weather forecasts and other asset-related information through machine learning systems. Lufthansa is hiring data scientists to develop its price management algorithms further and implement new, innovative solutions.
Data-driven technologies are becoming a standard among tourism businesses, growing an industry that is today valued about 4 thousand billion dollars at the global level and represents about 3.7% of world GDP.
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