The Operations Research / Management Science Blog

According to a recent article titled “Thomson Holidays automates online pricing adjustments” written by Ian Grant and published on ComputerWeekly.com, a new automated pricing system has been developed and is being used by Thomson Holidays, the UK’s biggest tour operator, to maximize their revenue.

This type of OR system is not new, especially to airline companies. However, according to Alan Sugarman, Thomson Holidays’ general manager of Operations Research, this system is the first one to combine travel (aircraft seats) and sleeping (hotel beds) arrangements.

The application can adjust the prices of holidays to ensure that it uses all available flight and hotel capacity. It takes the demand forecast, available capacity and incremental costs of sale to adjust the offered price for maximum profit.

With more than one million people visiting its website each week, Thomson Holidays’ makes almost 40% of its sales online. The software automatically increases prices when demand is high, or drops prices when demand is low. 50,000 to 100,000 price change recommendations are made each day in response to consumer demands. Nearly 90% of the changes are made by the automated system without human intervention. In addition, the system helps provide the travelers the flexibilities to decide when they want to travel, what transport they want to use, which destinations they want to go and what types of accommodation they want to take.