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% 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.
• Maybe the worst pricing trick is what the Federal Trade Commission calls "drip" pricing. That's when you find what appears to be a low price — rooms for $99 — but then, as you go through the booking process, it adds taxes and mandatory "resort" or "parking" fees. In the end, the same room costs $139 a night.
Here's the interesting thing. As reprehensible as creating a bogus offering, obscuring the number of rooms they have in their hotel, randomly raising or lowering their prices to make you uncertain, or showing you a low, and unbookable, initial rate may be — we keep falling for it.
When the government, which is supposed to be protecting consumers, rolls over and allows these tricks to happen, it makes you wonder: Do we want to be lied to?
Perhaps, says Dalakas, the marketing professor. "I think we want to be deceived into thinking we make rational decisions even when, in reality, we don’t," he says. "The tactics used by the travel industry all cleverly capitalize on that desire by framing the decision in a way that will make it seem more rational."
Reason has nothing to do with it. If it did, then none of these methods would work. In the end, you're better off walking away from a company that plays games with you. That's what happened to Lawson, the county worker flying to Bangkok.
"I never found a reasonable ticket," he says. "Ultimately, I decided to cancel my trip."
How to avoid pricing tricks
• Watch for price changes. The price you're quoted initially will almost certainly change as taxes and fees are added. If it's too much, click off the site and find a company that will quote a complete and gimmick-free rate.
• Mind the nines. Pricing experts know that nines can push you into a purchase. For example, a $199 hotel room will get three times as many bookings as a $200 one, according to Tim Brady, a pricing strategist with Mondo Mediaworks. "We don't really know why," he says. But you can resist this so-called "charm" pricing by becoming aware of the nines. If you see them, chances are you're being manipulated.
• Just say "no." The only way these pricing lies will end is if you stop falling for them. So the next time a company offers an attractive rate or fare, but you end up having to pay more, walk away — but first, don't forget to send a note to the FTC (ftccomplaintassistant.gov) letting it know about the deceptive price you found. It's the only way things will change.
Christopher Elliott is a consumer advocate and editor at large for National Geographic Traveler. Contact him at email@example.com or visit elliott.org.