Expedia Doing Tricky Yield Pricing?
There have been several occasions when I booking travel on Expedia and stop mid-way to then come back to the task a bit later and see that the prices have increased – sometimes by just a bit, sometimes by quite a lot.
Today, I was booking a car rental and the site kept hanging. After some 10-15 minutes of wrestling, I finally got the transaction to go through and then was met by this message:
We hate it when this happens….The price of your trip has changed from $1,164.07 to $1,281.07. Rates can change frequently. Book now to lock in this price.
First of all, that message strikes me as a little sardonic, don’t you think?
I doubt that $120 hike translates into all that much for Expedia itself, but when they do it across millions of people every day? Perhaps. And that’s my question.
The airlines are masters at using yield management to maximize their returns:
One of the keys to yield management is having customers with varying levels of price sensitivity. Business flyers tend to be more willing to pay than people on a family vacation. Business flyers tend to book last minute, so one smart strategy for charging business flyers more is to charge more for reservations that are made closer to departure date.
So my question is this: might Expedia be using some sort of very subtle yield management model that tracks whether you expressed earlier interest in a flight, hotel or car? Might they slightly jack up that rate based on some real-time analysis of the probability that you really want that particular reservation and aren’t that price sensitive?
For it to work, it would have to be a pretty smart set of algorithms. You’d have to be smart enough about it so that customers didn’t just pop over to the airlines’ websites and book direct – so that means some sort of coordination between suppliers and distributors. I haven’t tried digging into what they’re for, but I do have 33 cookies in Chrome that have been set by Expedia.
This is just me wildly speculating. I have no proof that anything like this is actually happening. But it’s happened enough to me that I’m starting to get a little suspicious.