Derrick Lawson had been looking far and wide for an airline ticket from Atlanta to Bangkok when he contacted me in exasperation.
No sooner did he find a reasonably priced flight than the online site showed the fare was no longer available or that the new price was significantly higher.
“This is so frustrating,” he told me. “I honestly can’t believe these companies can get away with this.”
But they can. The fare-no-longer-available trick is just one of many perfectly legal travel industry ploys designed to convince you to make a booking decision now and to pay more. Travel companies use methods that range from decoy prices to creating the perception of product scarcity to persuade you to push the “book” button.
And travelers keep falling for it, which makes you wonder: Are we willing participants? Do we accept being deceived?
Industry analysts say travel companies must engage in these pricing shenanigans. Travel products — and this is particularly true of airline seats and hotel rooms — are considered “perishable” products, which is a fancy way of saying you can’t make money off an empty airline seat or hotel room. So the industry created a sophisticated system to ensure money isn’t left on the table.
“Airlines are maniacally focused on squeezing every penny they can out of their travelers,” explains James Filsinger, president of Yapta, which can track price changes in airline tickets. “This approach is known as yield management.”
And that’s why you see such dramatic price differences on many travel products, depending on when you buy them. A complex algorithm, not a linear pricing structure, determines how much you’ll pay. More often than not, you fall for it.
But the games don’t end there. Here are a few other schemes they use to make you buy:
• They make you think they’re about to run out. You know those warnings: “Only three rooms left!” Be skeptical, says Vassilis Dalakas, a marketing professor at Cal State San Marcos.”This is a simple way to create the perception of a deal and a sense of urgency for the consumers that will motivate them to make the purchase soon,” he says.
• They make you nervous. Travel companies know that changing prices plus or minus 20 percent can make consumers uneasy, according to Aleksei Udachny, the founder of Airhint, a site that helps consumers find cheaper fares. Often, they’ll raise or lower prices in order to prod you into a purchase. “Customers buy because they’re afraid that the price will increase even more,” he says.
• They send a decoy. This happens when a company wants you to make a particular purchasing decision. It’s a lot like labeling something “popular choice,” except that the company will offer a less appealing choice — a more expensive seat or room — knowing it’s likely to pressure you into buying the one they really want you to purchase. “Travelers are more likely to be swayed in one direction or the other,” says Mariah Menendez, a spokeswoman for Travglobe.com, a travel agency.