Airfare used to change a few times per day on any given route. Now it may change several times per hour. Welcome to the new world of hyperdynamic pricing.
Artificial intelligence software has allowed what Julie Weed of the New York Times calls a “cat-and-mouse game, where travel companies are almost always the cat.” While that doesn’t preclude stumbling upon exceptional deals or even occasional mistake fares, the model is quick to act and takes in a number of new considerations in pricing airfare.
While in the past hotel rooms and airfare were based upon historical data and current reservations, software now will factor additional information in its pricing calculus:
- global news events
- weather predictions
- trending Google searches
- social media posts
- local event schedules
- other factors that could affect demand
Somehow, this software scans the webs for all of these things and then executes airfare pricing accordingly. So say a famous artist announces a new concert in a city. This A.I. software will note that, calculate potential increase in demand based upon the size of the concert venue and historic attendance data, and push airfare pricing up. Or let’s say a hurricane is coming. The system will make a demand reduction and lower airfare accordingly, updating it hourly as weather conditions change.
On the horizon are systems that can decipher so-called “unstructured data” that includes scanning hotel reviews for consumer sentiment or pinpointing seat assignments or particular hotel rooms based upon Instagram photos.
On the one hand, it is a little disconcerting that these systems are able to pull in so much information, no doubt about us as well. But on the other hand, you cannot help but to be impressed by the progression of technology which now allows such precision in airfare and hotel pricing.