Why Hoteliers and Travel Entrepreneurs Must Automate Dynamic Pricing

Hoteliers typically resort to dynamic pricing (changing the price of rooms as per changing market conditions) twice or thrice a year. Hilton has been practising dynamic pricing since as far back as 2004. This was perhaps done manually. But with the advent of machine learning applications in the game, dynamic pricing uses predictive analytics to add variables (upcoming holidays, lifting of Covid-led lockdowns, mid-week strikes leading to office holidays etc.) in forecasting the best price.

Case in point is a predictive analytics tool developed by Starwood Hotels in 2015 which took into account a plethora of factors to arrive at the best price for a point in time. These variables ranged from weather conditions, competitive pricing data, occupancy data, booking patterns of users, and many other variables. This system can either be fully automated or help from human operators can be taken to adjust rates manually if required. When hotels get hold of the customer data as well as market data, they can get direct bookings and earn more profits than they would with third parties (such as booking portals) involved.

Among the first to adopt dynamic pricing, Hilton did it when access to technology was far less as it stands today. By using the correct revenue management software, the hotel made the shift to dynamic pricing in an absolute manner and also offered it as part of its loyalty program. The end product is flexibility, cost savings, and good revenue gains.

Matildas, a boutique hotel in Chile too is using a revenue management system with a price intelligence engine. They got better prices, more revenue, and savings on labour costs as a result of this implementation.

Hotelmize uses AI for their Room Mapping to track dynamic prices for a given room across multiple suppliers. Enter the gamechanger AI which will predict dynamic prices for a particular room, and they can now accurately know the approximate duration for which the price will remain lowest.

Flight fare forecasting: New mobile apps are helping customers find cheaper flights which they find using price forecasting applications. Bagging the best deal on flights and hotels has become that easy nowadays. Being automated, these tools scan the market and alert the users when the best deals are available. Websites such as Skyscanner and Hopper provide such services by helping customers to book cheap flights with the help of analytics. When travel agency websites add similar tools they can take a quantum leap in customer acquisition, making them book more trips, and rake in much needed revenue.

How AI helps Travel Marketers in Customer Acquisition

AI enables personalized marketing tailored to the needs of individual customers. Helping marketers in the travel industry overcome their challenges of catering to personalized product recommendations as well as information that is tailored to their needs. There is a plethora of  opportunities which marketers can explore with the sheer amount of data they have such as  geo-location data, demographic data, behavioral data et al. The obstacles are seen in the form of high customer acquisition costs and low conversion rates, diminishing brand loyalty from the customer end, and high rate of booking abandonment, which can go as high as 80%.

Getting across the apt content to customers at the right time is quintessential. Travel marketers can use a variety of tools for customer acquisition such as:

AI-based personalization

AI backed customization engines predict future behaviour of customers on the basis of customer eyeball data and their behaviour. Customized recommendations at each and every step are helpful to the brands.

Homepage Reccomendations: On the basis of the customer’s search history, they are shown information that is most relevant to them when they are on the homepage of a travel website. Example: A customer searching for hotel stay in Milan will be shown the best deals on all Milan hotels. This increases their chances of booking and such personalized home page recommendations can get the company relatively higher CTRs.

Product Recommendations: Product Recommendations help on the basis of the interest of the customer in higher conversions, especially if the recommendations are contextual. Sightseeing packages, honeymoon packages, etc. can be shown.

Category page reordering: This is a simple case of showing the preferred products of the user first. If a customer has a tendency to look at home stays rather than hotels, then the travel marketeers can recommend home stays at top resulting in good conversion rates again.

Exit popups: Customers often browse a lot before picking the end product or service. If a customer tries to leave your website a customized exit popup may just help them stay or make them think og coming back to your website.

Besides, personalized emails through tailored recommendations as well as push notifications may lead to conversions. To add to these methodologies, rule-based personalization or in simple terms, designing a whole website experience on the basis of the customer’s location, type of device used etc. can help in greater conversions. The advances in AI and ML have brought in a stream of opportunities for travel marketeers. Using AI for customer acquisition is definitely the way forward.