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Dynamic pricing in study travel still unpopular, say stakeholders

The concept of dynamic pricing in the study travel sector, which has been discussed between ALTO members in 2022, is remains unpopular, language travel stakeholders have said.

The panel discussed various topics, including inflation, price increases and the proposal of dynamic pricing. Photo: The PIE News

The ability [for dynamic pricing] was in place, but it was about whether both businesses and consumers were ready for the change

A panel at the ALTO London day on the impact of global inflation on the study travel industry discussed various topics, leading to heightened discussion from delegates within the session, showed that while dynamic pricing is a mechanism well-talked about in the sector, most companies are “not ready” for it.

One delegate pointed out that while the idea of dynamic pricing isn’t what’s necessary for the survival of the sector, price changes in the next two years are going to be integral. 

“If you’re going to book an easyJet or Ryanair flight and you see a price, you’re reasonably certain that next time you go back to it in a week’s time, it’ll have changed. And that’s the same with legacy carriers, with hotels, with pretty much all of the service-based industries except for ours.

“I don’t agree with dynamic pricing because I think we work through agencies for the most part, but it would be ridiculous to think that you commit yourself now, to a price process and some of these want to buy and sell the company 12 months time and the costs are going to remain the same,” the delegate declared. 

Another delegate, who works with student recruitment software, said the ability was in place, but it was about whether both businesses and consumers were ready for the change. 

“I think from a technology standpoint, we have the ability to do whatever it is you want to do. And I think as an industry, that needs to be a broad consensus about how you approach the issue from both schools and agents – it’s all about making a sensible decision for your business,” he commented during the panel. 

“It would be ridiculous to think you can commit yourself now to a price process”

Panelists stressed that each business would have to approach inflation in their own manners as best they can – just like the last crises that have affected the industry over the last three years. 

“Every single company needs to look at where their students are coming from, what is happening in those markets, and try to adapt their strategies accordingly. I think we have to be positive,” German Hernandez Rodriguez, CEO at ISAM Education, commented.

“We’re talking about 15% inflation rate at the moment, which might increase more in the first quarter of next year – so it’s obviously a very serious situation that we’re having to deal with,” said Andrew Hutchinson, co-owner of Kings Education

“As a company we’re looking at various different measures, having lots of different discussions with people and teams and trying to work out what is the best thing to do going forward, bearing in mind students ability to pay, affordability of courses and students’ ability to travel,” he continued.

“The only way to protect our structure was to increase the prices. Is it going to be enough? We don’t know because basically the situation is completely unpredictable,” Alberto Sarno, who runs the Sprachcaffe language schools, said during the session. 

Hutchinson said there is widespread reluctance to increase prices, but acknowledged that the sector must be “as realistic as we can”. He said additional discounting is not an option – and as a provider Kings is trying to “reduce the amount of what we call price reductions”. 

“I hate the D-word, but we want to try and avoid unnecessary devaluing of the sector through discounting,” he added.

Commenting on the panel, Reka Lenart, ALTO’s association manager who ran the conference day at County Hall in the centre of the capital, said the reluctance comes from not wanting to disappoint students; but in the case of the survival of the industry, dynamic pricing may be necessary.

“The only way to protect our structure was to increase the prices. Is it going to be enough?”

“Industry leaders are reluctant to increase their prices to reflect the true level of their increased costs and this devalues their product and ultimately the industry,” Lenart told The PIE.

The general mood of the event showed that the summer was “much better than expected” for most businesses, and that while transfers seemed to be the most hit by the recent snowball effect from cancelled flights and fire-and-rehire policies implemented by thousands of companies throughout the globe, the next six months would require even more hard work. 

“Participants were thrilled to see each other face-to-face, eager to discuss their experience about the summer and brainstorm about future opportunities,” Lenart added.

“I believe that in light of the pandemic our leaders appreciate the power of peer-to-peer networking and idea exchange that we provide to our members, which explains why we have a record number of new organisations joining the association this year.”

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