Research Insights Predictive pricing and personalized bundles

Predictive pricing and personalized bundles

June 2018
Phocuswright Research

Predictive pricing and personalized bundles

This personalized offer was created just for you! The concepts of personalization, big data analysis and dynamic pricing/offers have been discussed and debated in the press for a number of years, though limited evidence exists of any wide-level adoption in the travel industry today. The field of AI has been around for decades, but over the past few years, advancements in big data analytics, machine and deep learning, natural language processing and predictive analytics have ushered in a new era of AI-impacted applications. At the heart of these efforts is to better understand and anticipate the needs of the traveler. The question still remains on whether the desire for greater personalization will actually meet the needs of the traveler, particularly based on their specific context and persona.

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Complicating this effort is the potential backlash on the use of personalized information without the consumer's permission. With the EU's General Data Protection Regulation (GDPR) rules enforcement now in place, travel companies may potentially be subject to heavy fines for non-compliance.[1] GDPR requires travel companies to seek consumer consent when using a consumer's data. The consent must easily be understood and accessible with an equally uncomplicated way to withdraw consent.[2] In the U.S., Senator Minority Leader Chuck Schumer recently sent a letter to the Federal Trade Commission asking the federal agency to investigate the person-specific pricing technology in use and under consideration by airlines. Senator Schumer's concern is that airlines will collect information on customers' purchasing behaviors, web search history and even their incomes, and then use it to charge them higher airfares.[3]

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[2] ibid.
[3] Robert Silk, "Sen. Schumer concerned that dynamic airline pricing will be predatory," Travel Weekly (March 14, 2018).