Travel Podcast Ep. #10: How it Works: Air and Hotel Pricing
How it Works: Air and Hotel Pricing
Have you ever been tempted by an unbelievable flight deal, only to discover it’s gone by the time you get to check out? Do booking sites really increase their prices based on how long you spend on the site? Travel is dynamic and prices can change based on demand and so much more. Expedia’s own Director of Revenue Optimization, Amy Cisneroz, is helping us fact-check as we get the bottom of pricing trends and how you can score the best deal on your next trip.
Nisreene Atassi: One topic that comes up all the time from our social media community and whenever I’m talking to travelers or friends and family is pricing. How does Expedia or any of these other places set their prices? What goes into it? Why do prices change so quickly? What’s the best way to get the ultimate price? So, that’s why in today’s episode we decided to peel back the curtain, take a sneak peek under the hood, and really dive into the world of pricing. I’m Nisreene Atassi and you’re listening to Out Travel the System. Today, I’ve got Amy Cisneros, Director of Revenue Optimization at Expedia. This is a really big topic, I think one that’s got a lot of meat to it. I really appreciate you coming on and helping to give all of these travelers out there, the low down and the 411 on how pricing really happens at Expedia and even some of these other sites because I think a lot of what you’re going to talk to us about today isn’t necessarily specific to our website, but it’s pretty common for a lot of the industry as well.
One of the biggest questions that I get all the time is how come we don’t necessarily always have the cheapest price on our site?
Amy Cisneroz: Well, prices are really determined by suppliers so pricing can vary from day to day. One day, a specific flight might be available on a Friday, where that flight at a cheaper price is not available on a Saturday. I would say alter some of your search parameters. If you are open to a weekend to weekend travel, look at that Friday and look at that Saturday leave date. Also, look at different times to come back, times can play into it.
Nisreene Atassi: From what you’ve seen, looking at the pricing on a regular basis, is it cheaper to buy things separately, or would it be cheaper to buy things as a package? Or does it vary?
Amy Cisneroz: Suppliers, whether it’s flight or hotel, definitely will give better deals on the package path than they will if you were to shop the standalone and the reason being is there’s something that we have in the industry called opacity, which means it’s hidden to competitors. So, a certain airline might give you a price that’s half off on the package path for a flight that you would not see on the standalone path. Everybody loves a package customer, suppliers want our customers to bundle and save and they’re highly incentivized to give better deals in the package path.
Nisreene Atassi: Okay, but it can still vary depending on where you’re and that kind of stuff. So, it still probably might be worth it for a customer to take a look at some of the standalone prices, but then also look at maybe what it’s showing in the package path as well.
Amy Cisneroz: On the package path, we have a strikethrough component, so whenever you see a strikethrough on the price, on the left it will show you how much you would pay if you searched for the standalone components. When you see that, that means there’s a deal in there, then you don’t necessarily have to search for the standalone components.
Nisreene Atassi: I actually personally did not know that. That is frankly a really good tip because I would actually go in and I’m one of those people that searches excessively because that’s just who I am. So, that’s actually a really good tip. That’s probably going to actually save me a couple of hours of my life every time I plan to travel.
Amy Cisneroz: Another thing about the strikethrough pricing is it gives you what the total would be. In some cases, you can see the package price is $700 and then the total would have been $1,000 on the standalone for the flight and the hotel. It’s really a good indication of what kind of savings you’re getting. I, too, am a crazy shopper when it comes to travel being that I’ve been in the industry for 20 years I always want to make sure about the deals I’m getting. The more you add, the more you save, that’s our value proposition at Expedia so I am a firm believer in bundling versus shopping standalone.
Nisreene Atassi: People can see those same types of savings no matter what their combination is like a flight and a car, or a hotel and a car, or anything along those lines?
Amy Cisneroz: That’s absolutely correct.
Nisreene Atassi: Would somebody get more savings the more things that they add on?
Amy Cisneroz: We don’t have that capability today. That’s definitely something that we’re looking to build out, but those different combinations do have different savings. Flight plus a car might have a different savings value than a fight and a hotel. It really depends on what day of the week, what’s the inventory like for those suppliers. Obviously, if it’s Super Bowl weekend suppliers are going to give not as good of deals as they would if it’s just a regular weekend that doesn’t have any holiday travel.
Nisreene Atassi: Speaking of holiday travel or special events, prices can start to really fluctuate, so when those prices do change is that still the supplier, the hotelier or the airline? That’s really just supply and demand at that point, right?
Amy Cisneroz: It’s true. I can speak from an airline perspective since I have that background. At the beginning of the year, those holiday periods are laid out. You know when Easter falls and so maybe for those two weeks, prices are going to be a little bit higher. For the whole year that’s done and that really helps them manage what the demand is going to be because we know everybody travels during Easter. We know people travel on President’s Day, we know people travel Memorial Day weekend, and so suppliers set pricing accordingly. Now, close in what you’ll see sometimes is they’ll make changes, but typically they stay pretty hold and fast. From an airline perspective, they like people to purchase further out. Now from a hotelier, it’s a little bit different because they’ve got set inventory and I think when it’s close they may be more apt to drop prices. It’s going to be really related to how well did the hotel book up from Memorial Day, or if it’s two or three weeks out then some of them also may raise the prices.
Nisreene Atassi: There are a lot of other myths out there when it comes to pricing. I’ve heard a lot of people say things like, “Oh, if you clear your cookies, then you’ll get a better price because they’re watching how many times you search and that means that they know how badly you want the ticket.” Or I’ve heard things like, “If you book through a Mac versus a PC, you’ll see different prices.” Are these actual myths or are these legitimate things that actually happen?
Amy Cisneroz: They are absolute myths, that’s something that we cannot do. We don’t consider anything on a person by person basis. Pricing that we do today is based on what type of hotel and what type of flights are available.
Nisreene Atassi: You can’t actually tell who these people are, nor do you set prices based on who these people are?
Amy Cisneroz: No, not where they’re searching from, not who they are, not whether you have an iPhone or any of that. That’s data that we just don’t have and it’s not legal to do those kinds of things.
Nisreene Atassi: So then what about cookies? Say I’m searching for four hours if I clear my cookies, will I get a different price just because I cleared my cookies?
Amy Cisneroz: You should not get a different price because you cleared your cookies. The only thing that could happen is in the case of some kind of price change, like with the flights changing, or with the hotel changing their inventory you may see a price difference there, but not from clearing your cookies.
Nisreene Atassi: So, that would just be a coincidence then?
Amy Cisneroz: Exactly.
Nisreene Atassi: One complaint that I’ve seen a lot through social media is people will go through a meta-search site or something like that and then once they actually get to the checkout, the price changes. Or sometimes they step away from their computer, they come back, they hit refresh and the price is completely different. What’s actually happening in that time frame that might cause that price to change?
Amy Cisneroz: Well travel is extremely dynamic and the airlines can change a fare at any moment. The systems are working hard to make sure that they’re up to date and the longer you stay stagnant on the site as if you go away and you’ll go cook dinner and you come back, the more chances you have of that happening. We typically want customers to either do a fresh search or just purchase if you know you want it because sometimes that price won’t be there later.
Nisreene Atassi: Yeah, dynamic pricing is something that you hear come up all the time. What are those factors that might go into this dynamic pricing?
Amy Cisneroz: Airlines typically monitor each other. That’s a constant thing, looking at the competition and seeing what the fares look like that come through. Another factor is my changing capacity. Are there fewer planes or more planes? Right now, you’re dealing with the 737 Max, so you have certain airlines that have a lot of capacity sitting. That means that they’re running other planes, so their pricing might be a little higher. They could also price lower because they want to keep the demand going. Typically you’ll see prices fluctuate as you come in closer to a weekend, especially if it’s a holiday. Also for hotels, it’s all again going to be a play on what’s going on, how’s the inventory? Let’s say they had a convention and it canceled. Well, there’s 80% capacity that they’ve got to fill all of a sudden so all of this stuff is so dynamic. That’s why they don’t have algorithms running their revenue management, they’ve got hundreds of people doing this because the environment changes quite a bit.
Nisreene Atassi: Which is a little bit nerve-wracking I guess for a traveler, but that’s sort of the nature of the industry.
Amy Cisneroz: It just proves how dynamic the environment really is.
Nisreene Atassi: Yeah, absolutely. Amy, what are some of the tips that you give your friends and family?
Amy Cisneroz: Well, my family thinks I’m a travel agent. They still don’t understand what I do, they still call me to book all their travel. Typically, for me, when I’m looking at going somewhere, it’s always where do I want to be close to? Do I want to be by the beach? Do I want to walk, do I want to rent a car? I base where I’m going to stay on those factors. We’ve got some great maps on the site that show you where the hotel is located. I think that’s key. I’ve had a couple of friends who’ve booked packages and they were going to Cancun and they ended up in Tulum, and didn’t realize you had to take a 45-minute car ride to the hotel. It’s understanding if I’m traveling with three kids, I probably want to get to my destination pretty quickly. Traveling is super stressful with security and with everything else nowadays that I look at how can I get to my destination the easiest, the most comfortable, and obviously in a cheaper way.
Nisreene Atassi: What are some of the ways to do things a little bit cheaper then?
Amy Cisneroz: Typically staying over a week, you get some better deals when you have a Saturday night stay, both flight and hotel do offer better deals in that way. If I’m going on a weekend, then the key is obviously coming back on Monday or Sunday, that’s what everyone does. If you can come back on a Tuesday that would be better, so look around at different days. Typically Sundays, that’s what everybody’s going to return, so you can save quite a bit even coming back on a late Saturday.
Nisreene Atassi: Check-in for the one day later or the one day earlier and seeing how that affects your trip and the costs of things?
Amy Cisneroz: Exactly, on the departure and on the arrival, on both. I traveled around New Year’s Eve in the past and we came back on New Year’s Eve and I saved $800. I didn’t really need to be on that island on New Year’s Day, so it’s just little things like that.
Nisreene Atassi: Well, you saved $800, you can go do something else with that money.
Amy Cisneroz: Yeah, absolutely. $800, that’s some pretty crazy saving.
Nisreene Atassi: We talked a lot about bundling, are you a big proponent of that as well? Have you seen some decent savings yourself?
Amy Cisneroz: I have. I have booked some great packages for Saint Martin before the hurricanes. It was such a beautiful place and I am a proponent just because I’m in the industry and I know how the filing works — the filing of the fares and the filing of the rate plans. Hoteliers value package customers in that they know they’re less likely to cancel. They’re less likely to change, meaning they’re in and it’s a different kind of customer that books a package. You don’t book them all the time and it’s usually a family trip or a romantic vacation or a honeymoon. So hoteliers are definitely incentivized, as well as flights, to give better deals when you bundle. And again, it goes back to them being able to give a better deal that their competitors can’t figure out.
Nisreene Atassi: Last summer, my cousin was getting married and I very classically waited until the last minute to book it, even though I knew a year beforehand that she was getting married in Spain. About maybe six weeks out, I go in to book for me and my husband. I just knew that the prices were going to be really tough. So, I started searching and we had some flexibility because we wanted to have a little bit of free time before or after the wedding. I was checking all these different options and then I actually decided to add a hotel for one night. And I started searching as a package because at that point I needed a hotel, and at the time when I was just looking at the flights, each one was $1,500. After I added the hotel in Madrid for one night, the entire trip for two flights plus the hotel became $ 1,500. So, literally adding a hotel for one night in Madrid saved $1,500. I was shocked, which is really funny because I work at Expedia and I know that bundling helps you save. Typically, I’ve saved at most, $100 or $200. I’ve never saved anything to that tune. Ever since then, I feel like whenever I go to search for our flight I always look at packages.
Amy, so where are you headed to next? Where’s your next vacation to?
Amy Cisneroz: Oh, that’s a good one. My dream vacation is Bora Bora, but I’ve heard Maldives is the cheaper version. That’s more romantic though, so I probably will pick something for me and my daughter and my mom. We might just go chill out at a beach. And I did some cruising to Aruba and Curacao, so I’d like to go back and stay in Aruba.
Nisreene Atassi: I recently saw some research about the importance of mothers and daughters traveling together and how it creates an extra moment of connection and bonding. So, very on-trend for you to do. You’re really on top of the trends these days, I must say! Thank you so much for coming on the show today, it was a pleasure to have you.
Thanks for listening to Out Travel the System. We’d love to hear your tips, tricks, and stories too. Email us at firstname.lastname@example.org. To hear more about these tips and tricks, be sure to come and find us on Instagram, Twitter, and Facebook. You’re listening to Out Travel the System and I’m your host, Nisreene Atassi, happy travels.
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