Understanding How Travel Services Are Priced
Travel Tech Supports Responsible Use of Pricing Tools to Promote Transparency and Affordability in Travel
Millions of consumers research and book their travel plans through Travel Tech member companies, which help travelers find, compare, and book a wide range of travel options at the best available prices, dates, and service levels. Travel service suppliers—such as hotels, airlines, and car rental companies—set their own prices. They voluntarily choose to share their inventory and pricing information with Travel Tech members through automated online information-interfaces, enabling consumers to see and compare options transparently across the marketplace. Learn more here.
Travel services, like airline seats, hotel rooms, and car rentals secured for specific dates and times, are perishable: once a plane departs or a night passes, any unsold inventory is lost forever and is worth $0. To avoid this outcome, suppliers continually adjust prices to reflect real-time market conditions, often lowering prices when demand is weaker to fill empty seats and rooms. This practice—commonly referred to as dynamic pricing—benefits budget-conscious consumers by increasing access to discounts, off-peak bargains, and last-minute deals.
“Allowing market-based pricing tools to operate—while enforcing strong consumer-protection rules—ensures transparency, competition, and lower prices for travelers, rather than higher costs and fewer choices”
—Laura Chadwick, President & CEO, Travel Tech Association
Dynamic pricing has long existed
Long before computers existed, hotels used seasonal rate cards, manager judgment, and ad hoc negotiations at the front desk to adjust prices based on expected demand. Today, individual travel service suppliers use algorithms and increasingly artificial intelligence machine learning-based tools, allowing them to respond more accurately and efficiently to objective, market-based factors such as remaining inventory, booking pace, historical demand patterns, local events, weather, and published competitor pricing.
Unlike in the past, modern travel markets are far more transparent: consumers, using free services provided by Travel Tech members, can easily compare prices across many providers, track price changes over time, receive alerts when prices drop, and benefit from price-match guarantees that automatically refund the difference if a lower fare appears online.
Recently, concerns about so-called “surveillance pricing” have emerged, driven by fears that companies may use sensitive Personally Identifiable Information (PII)—such as income, credit history, or shopping behavior—to set individualized prices. In response, some policymakers are considering legislation that would broadly ban the use of algorithms or artificial intelligence in price setting altogether.
A pricing ban would have immediate and harmful consequences for consumers
If travel suppliers were prohibited from using pricing tools to adjust to real-time market conditions, they would be forced to set higher static prices to protect themselves from the financial risk of unsold inventory. The result would be fewer discounts for consumers, fewer last-minute deals, and fewer off-peak bargains, disproportionately harming budget-conscious travelers and reducing consumer choice.
Rather than banning widely used and consumer-friendly pricing tools, policymakers should focus on guardrails around inputs, not the technology itself. Federal and state laws already prohibit discriminatory pricing based on protected characteristics, unfair or deceptive practices, and price gouging. Policymakers can strengthen these protections by ensuring that sensitive PII is not used to set individualized prices, while preserving common and pro-consumer practices such as loyalty discounts, member-only offers, mobile-app promotions, aggregate location-based incentives, and contractually negotiated rates for corporate and managed travel. The policy goal should be clear: regulate harmful uses of data, not the tools that enable competitive markets to function.
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