Online Auctions: Dynamic Pricing and the Lodging Industry [Summary]

As Internet based mediums of distribution become more prevalent, traditional pricing models are being supplanted with dynamic pricing. A dynamic pricing model represents a flexible system that changes prices not only from product to product, but also from customer to customer and transaction to transaction. Many industry leaders are skeptical of the long run impact of online auctions on lodging industry profit margins, despite the fact pricing theory suggests that an increase in the flow of information results in efficient market pricing. The future of such endeavors remains promising, but controversial.