In fact, as Arival research has shown, many customers are quite willing to pay more for flexible tickets and a premium experience, while others are willing to accept the trade-off of more restricted tickets for a lower price. It does not necessarily mean travelers won’t accept it. The fact that more tour and attraction operators do not use variable and dynamic pricing is a reflection of the state of the technology and ability of operators and resellers to support more complex pricing strategies. The airline and hotel industries have used variable and dynamic pricing for decades to maximize customer spend and increase profits. Retail stores use coupons, sales, and promotions all the time to adjust their pricing and to take advantage of consumer buying patterns. Consumers have come to expect that prices will change under different conditions. Haley Ward, VP of Sales at Arival Spotlight Award-winning Hudson Yards Experiences describes her company’s challenges and learnings in moving from fixed to dynamic pricing What Visitors Want: Do Guests Want Variable or Dynamic Pricing? Do They Care?Ĭustomers usually don’t know that variable or dynamic pricing is being used, except when pricing is clearly differentiated between the most popular and least popular times. So what can operators and attractions do to move beyond static pricing and work effectively with resellers? Even in this most basic of scenarios, an annual contract with static pricing would limit an operator’s ability to make these price changes. They may also reduce pricing during their shoulder seasons or weekdays when demand is lower to encourage more sales. In the previous example, an operator may increase their pricing during peak periods or days of the week to generate greater revenue. Variable and dynamic pricing allow operators to adjust their pricing using a variety of criteria. Charging the same price all year round ignores this very basic and predictable cycle. Those same operators also have shoulder seasons when demand is lower and they may struggle to fill seats. Sometimes consumers are willing to pay more.įor example, all operators tend to have a peak season, when demand is highest and when they tend to sell the most tickets. This has been standard operating procedure in our industry, but it also leaves money on the table. The reseller has a guarantee that the prices won’t change during the term of the contract. Those prices are set for a fixed term, usually a year. Operators negotiate net prices with resellers (a net rate is the price at which an operator sells their products to a reseller, who then adds an agreed commission on top of that rate). The in-destination experiences industry has, for a very long time, worked on the premise of contracted rates, which typically means static or fixed pricing. Save up to €590 with the Holiday Savings ticket Learn More Moving Beyond Fixed Pricing Contracts: How Variable and Dynamic Pricing Increase Revenue Earning Potential? If demand is strong and supply is limited, an operator could decide to increase the price for the remaining tickets. This practice is widely used by airlines and hotels. Dynamic Pricing: this refers to changing the price of a ticket based upon factors such as demand or weather.However, these prices are typically fixed for a time period, such as for a calendar year or a season. If you charge more for a tour departure or entry ticket for Saturday afternoon than for a Monday morning entry or departure, then you currently do variable pricing. Variable Pricing: a rules-based approach whereby the price of the same ticket or product changes for different days of the week or times of day.Static Pricing: also referred to as fixed pricing, static pricing means the price of the ticket does not change. What exactly are we talking about here? First, let’s lay out some clear definitions. To bring some clarity to the confusion, we’ve put together this overview of variable and dynamic pricing for operators of tours, activities and attractions, including some top takeaways from the Attractions Forum with some attractions leading the way. Although there is a lot of interest in both, particularly among attractions and large operators, there is also a lot of conflicting information around what you can do with these pricing strategies and how best to take advantage of them. One of the primary outcomes from the Attractions Forum at Arival 360 | Orlando was that dynamic and variable pricing are totally hot… and widely misunderstood. What’s all the hype about variable and dynamic pricing? What do the terms actually mean? Should you be using one or the other (or both) in your pricing strategy? If so, which one is right for you?
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