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Informative Article | Data & Knowledge Engineering | India | Volume 8 Issue 9, September 2019 | Popularity: 5.3 / 10

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Predictive Analytics for Dynamic Pricing in Travel Bookings Using Machine Learning Pipelines

Arjun Mantri

Abstract: Dynamic pricing, also referred to as surge pricing or time-based pricing, is a strategy where businesses adjust product or service prices based on real-time market demand. This approach is particularly vital in the travel industry because travel products like airline seats and hotel rooms are perishable, meaning they must be sold within a limited timeframe. Unsold inventory results in direct revenue loss. By implementing dynamic pricing, travel service providers can maximize revenue by adjusting prices according to various factors such as booking patterns, seasonal demand, competitive pricing, and macroeconomic trends. During peak seasons, prices can be raised to take advantage of higher demand, while in off-peak times, prices can be lowered to stimulate demand and increase occupancy rates. Predictive analytics significantly enhances dynamic pricing by using statistical algorithms, machine learning techniques, and data mining to analyze historical data and make accurate predictions about future events. This enables travel companies to forecast demand precisely, which is crucial for setting optimal prices. Unlike traditional pricing strategies that depend on historical averages and manual adjustments, predictive analytics simultaneously considers multiple variables, including booking trends, competitor prices, customer behavior, and external factors like weather conditions or economic indicators. This data-driven approach leads to more efficient pricing strategies, improved customer experiences, and maximized revenue. This review highlights the importance of predictive analytics and machine learning in revolutionizing dynamic pricing in the travel industry. By leveraging these advanced techniques, travel companies can develop more precise and personalized pricing strategies, leading to improved revenue management and customer satisfaction.

Keywords: Dynamic Pricing, Predictive Analytics, Real-time Market Demand, Revenue Maximization, Travel Industry

Edition: Volume 8 Issue 9, September 2019

Pages: 1864 - 1867

DOI: https://www.doi.org/10.21275/SR24724145934

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