OTAs accused of price steering

SEVERAL major online
travel agencies are
using web analytics
to steer prices and engage
in price discrimination,
charging some clients
thousands of rands more
than others for the same
hotel or itinerary.
This is according to a
recent study, Measuring
Price Discrimination and
Steering on e-commerce
websites, from Boston
Northeastern University.
Researchers conducted
searches on 16
e-commerce sites, including
those of six travel sellers––
Cheaptickets, Expedia,
Hotels.com, Orbitz,
Priceline, and Travelocity.
Cheaptickets was
found to implement price
discrimination by offering
reduced prices on hotels to
members who sign up free
with their email addresses
or through their Facebook
profiles.
Orbitz was found to steer
prices, which means the
OTA tailors the order of
search results so that
some customers will
see the more expensive
options first. For example,
Orbitz steered Apple
Mac OS X users towards
more expensive hotels
in selected locations by
placing them at higher
ranks in the search results.
Traditional travel agents
in the US have used the
highly publicised study
to promote the value of
using agents. In a recent
press release about the
Northeastern University
study, CookTravel.net
agent Fabrizio Peralta
said: “Algorithms act on
mathematical impulse
but live agents act on the
individual needs of their
clients – and the price
doesn’t change, no matter
who you are.”
Keith Novak,
Travelocity’s director of
communications, adds
that the study is flawed.
He says researchers at
Northeastern University
found that Travelocity
modified prices for
consumers who used Apple
mobile devices to search
for hotel rooms compared
with other devices. Keith
says the truth is that
when customers come
to Travelocity on any
recognised mobile device,
they will often see a
handful of hotels listed
as ‘Mobile Exclusives’,
which will not appear when
visiting the desktop site.
A spokesperson for
Priceline.com told TNW
it did not price steer
its customers but
personalised search results
based on a user’s history
of clicks and purchases.
Users who clicked on or
reserved low-price hotel
rooms received slightly
different results in a
different order, compared
with users who clicked
on or reserved expensive
hotel rooms or clicked on
nothing. “Because the
different orders did not
correlate with prices, this
wasn’t considered price
steering,” he said.
Andy Hedley, operations
director of Travelstart
in South Africa, admits
that OTAs practise price
steering but that they
don’t engage in price
discrimination and steering
to make an expanded profit
but to present the options
the client is most likely
to buy.
He says clients directed
to the website via metasearch
engines are most
likely to be very priceconscious
so Travelstart
will present the lowest
prices, which often come
with more inconvenient
itineraries. “We manipulate
our inventory according to
what people want to buy.
Is the client travelling with
kids? Then connections
are likely to be important.
Is the client young and
single? Then price is more
likely to be the determining
factor.”
Otto de Vries, ceo of
Asata, says that Big Data
is not just about buying
patterns. “Sometimes we
buy differently for different
reasons. For example, you
may apply business travel
policy when you’re travelling
for corporate reasons but
not when you’re travelling
for personal reasons.
That is where the role of
the travel agent emerges:
to recognise the clients’
needs and preferences and
offer suitable solutions.
“Our service is customerdriven
and not a one-sizefits-all
approach based on
the data that has been
generated by certain
patterns.” ”