Dynamic Pricing In Hospitality Industry

1. Introduction to Dynamic Pricing
As more and more people are purchasing products and services online companies are using different mechanism to attract and influence customers buying habits and one of these ways is through a strategy called dynamic pricing. Dynamic pricing is a term in the marketplace also known as; surge pricing, demand pricing, or time-based pricing. Dynamic pricing is the reason why things such as competition, time of day, and weather affect and change the prices for products and services. The goal for companies using dynamic pricing is to set a price that is very flexible and adjustable. Dynamic pricing is important because by setting flexible prices and monitoring competitor prices it allows companies to get the greatest …show more content…
Dynamic pricing is any shopping experience where the price of an item changes based different factors. These factors include supply and demand, competition pricing, and weather. Several different industries used the practice of dynamic pricing such as; hospitality, travel, entertainment, retail, and public transportation. In the hospitality industry prices will change based on the time of year. During the peak season which would be around the holidays and summertime the prices for hotels would increase dramatically and during the off-season prices would start to decrease. Hotels use dynamic pricing to adjust and change the price based on the supply and demand of that particular moment in time. The goals for the hospitality industry is to find the highest price that consumers are willing to pay …show more content…
Predicting customer churn is important because a company needs to keep their long-term customers. Long-term customers mean more to a company than new customers because it is more expensive acquiring a new one. Before a company can predict customer churn they need to figure out what the reason is for why a customer or client left in the first place. There are two types of customer churn voluntary churn and involuntary churn. Voluntary churn involves the company first hand the customer decided to leave based on unhappiness with the company. Involuntary churn is based on things that are out of the company’s control such as a customer’s relocation. Well analyzing a company’s customer churn involuntary churn is usually not calculated because it does not involve the company first hand. Voluntary churn is where the focus is because it involves the company with factors such as company-customer relationship. To predict customer churn and decrease a company’s customer rate there is advanced analytics tools and applications, designed to collect data for the organization, and make predictions based on that