Differentiated pricing based on guest location is fair and aligns with existing segmentation practices in hospitality (corporate rates, travel agent discounts, wholesale pricing, etc.). Revenue management thrives on tailoring strategies to segments that reflect different purchasing powers, preferences, and booking behaviors.
Pricing adjusted to a guest’s location can be viewed as another layer of segmentation. It leverages data and aligns rates with demand elasticity—where affluent areas might sustain higher prices due to purchasing power, and less affluent markets could be incentivized with competitive rates to boost demand. That is something airlines have been doing for a very long time.
Ethical concerns could arise, especially if the practice lacks transparency. Clear communication and guest-centric strategies, such as offering unique value for premium rates, can mitigate negative perceptions.
The key lies in execution. Technology and analytics must support this strategy seamlessly, without alienating customers or raising fairness concerns.
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