Communications of the ACM
What's the Price Now?
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It is fairly common for travelers to begin their searches for the ideal itinerary online, only to find the price of a plane ticket or hotel room has changed dramatically in just a few hours. Checking back on one of the many travel comparison websites a few days later will only result in more exasperation, as a hotel room price may have gone up, while the cost of the airline ticket has gone down.
These industries rely on pricing models that try to eke the most profit out of a plane ticket or hotel room. The constantly changing selling price is by design: travel providers have decades of experience in using dynamic pricing models based on supply and demand, which help them balance prices with seat and room availability. Yet there is far more to dynamic pricing than basic economics, and a number of industries—including some unexpected ones—are adopting this concept to capitalize on this growing trend of price optimization.
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