Imagine an event of such scale that it creates tremors in the Indian Economy leaving the travel and tourism industry leaking pennies while some get away with heavy purses due to dynamic pricing and efficient revenue management strategies. The event in question was the ICC Cricket World Cup- The premier international cricket tournament which returned to India after 11 years. Many travel industry stakeholders couldn’t make the most of this World Cup fever opportunity. The Indian travel industry loses over USD 25 billion annually because the businesses fail to predict the surge or sag in demand. While it’s humanly impossible to keep track of the VUCA environment, there are systems and intelligent bots that can surely support it. Do you think that the existing Revenue management systems have actually minted money from events such as this or the G20 summit? We believe there are many gaps in the pricing strategies being used right now. Read ahead to find out what is causing these gaps and how to close them!
Surging Demand Unleashes Ripple Effect, Propelling Prices Upward in the Travel Industry
The cricket extravaganza brought with it a high demand from the host nation India as well as from other countries for accommodations, travel tickets, and much more. Major host cities saw airline fares rise drastically while other venues experienced a smaller percentage rise too. This was due to the rise in air traffic caused by the tournament which was joined by the holiday season. This in turn caused the domino effect of increasing prices not just for the airline industry but also for other modes of transportation in the travel industry like Hotels and accommodations.
Luxury hotels (4-5 stars) had shown a 10-15 times increase in room rates. Lower star properties also experienced unprecedented increases of about twice their usual rates according to Bharatt Malik, senior vice-president of flights and hotel business, Yatra Online.
Ahead of the ICC Cricket World Cup 2023, Booking.com the online travel agency (OTA) sponsoring the tournament had seen a 15 percent annual growth in flight searches for departures between the first of October and the 20th of November from cricketing nations to India. This is very well explained in the graph above which shows a country-wise split of growth in flight searches from cricketing nations to India.
A remarkable event in the context of other sporting events affecting airline ticket prices would be the FIFA World Cup 2022 in Qatar which saw airline prices skyrocket. Where the airline fare from India to Qatar would be around 482 to 500 USD throughout the year, it was observed to go beyond 1200 USD during the FIFA World Cup. These ‘high prices due to the high demand’ cycles are more often than not left untracked. This leaves business owners with low revenue in comparison to the realistic potential profits they could have made.
The high demand for flights to Delhi during the G20 Summit led to a significant increase in airline ticket prices. For instance, a flight from Mumbai to Delhi that typically costs around ₹5,000 was reported to have been priced at ₹15,000 or more during the summit. Similarly, international fares also saw a significant increase. A flight from London to Delhi that usually costs around £500 was priced at £1,000 or more during the summit.
Static and Copycat pricing flushing revenue down the drain
If you rely completely on outdated and conventional static pricing methods, it is bound to lead you into a rabbit hole of pricing your inventory low, sometimes even lower than your operating costs. Outdated systems also fail to tackle some of the following problems::
Copy-cat or imitative pricing is where competitors mimic each others’ prices, thus limiting them from optimally pricing their inventory.
For events like the World Cup, even though some of the existing solutions in the market might be able to capture some of these events, the failure to do so well in advance actually leads to revenue losses.
None of the systems are able to capture the problem of pricing tickets according to the class demand (i.e. business class, Economy class). This problem was specifically observed during the G20 summit, where demand for business-class airline tickets and accommodations had heightened.
The consumer’s behavior is extremely price sensitive and hence they pick the mode (i.e. mode of transport- Buses: Luxury buses and intercity coaches, Trains: Indian Railways, Airlines: Domestic and International) that is the best priced for them. This Multimodal travel isn’t taken into account by existing dynamic pricing products which fail to capture the true demand picture.
Tracking Seasonality i.e. the seasonal demand fluctuations is a common practice in the industry but it must be tracked with optimum accuracy to gain actionable insights at the right time. The existing systems are often inaccurate due to their latency in making timely, data-based decisions on critical areas.
Viaje.ai: The modern price genie
Delve into a realm of unparalleled offerings as we employ distinctive parameters and competition-centric pricing strategies, harnessed through our deep-learning algorithms. These algorithms, rooted in extensive historical data, booking and cancellation patterns, and a myriad of other influential factors, alleviate the burden of making subjective, gut-feel-based pricing decisions.
Our sophisticated algorithm, comprising 83 parameters, goes beyond conventional approaches by incorporating demand forecasting on diverse routes, considerations for discounts, vigilant tracking of market trends, and much more.
Discover What's in Store: A Look at Our Offerings
We specialize in the strategic allocation of your inventory across diverse OTA channels, streamlining the pricing process through automated mechanisms rather than manual intervention.
Employing an advanced AI model, we facilitate precise pricing strategies by anticipating demand patterns across modes of travel well in advance.
Our comprehensive functionalities serve as a safeguard against revenue leaks, ensuring the inclusion of all flights on major OTAs. This becomes all the more pertinent ever since Booking.com observed a 15 percent annual growth in flight searches for departures between the first of October and the 20th of November from cricketing nations to India.
Our seamless integrations and swiftly deployable plug-and-play systems guarantee a hassle-free experience within just one week.
Experience the efficiency of our automated actionable insights, vigilant tracking of unprecedented demand fluctuations, optimal pricing recommendations, and proactive inventory allocations—all tailored to elevate your revenue prowess.
Keep up with the upcoming blogs to know more about the functionalities and solutions we offer.
Witness the power of optimised prices dynamically refreshed every 15 minutes! Embark on a transformative journey with us as we guide you through unparalleled insights driven by data, ensuring a proactive approach to prevent revenue leaks.