Happy Hour in Reverse: Where Dynamic Pricing May Creep Further

Introduction to Dynamic Pricing

• Definition: Dynamic pricing, also known as surge pricing, involves adjusting prices based on supply and demand.
• Example of Dynamic Pricing: Common in flights during holidays or cabs at peak hours.

Case Study: O'Neills Pub in Soho

• Pricing Policy: An additional £2 charge on pints after 10pm to comply with security staff requirements.
• Public Reaction: Mixed responses; some see it as exploitation, while others compare it to "happy hour in reverse."

Industries Adopting Dynamic Pricing

Ride-Hailing Apps

• Companies Involved: Uber and Bolt.
• Pricing Patterns: More expensive during weekends, bad weather, or post-events due to higher demand.

Airlines and Hotels

• Airlines: Long-standing practice of price variation based on demand and peak seasons.
• Hotels: Seasonal pricing with potential for real-time adjustments based on demand, weather, or last-minute bookings.

Hospitality Industry

• Examples: Restaurants, bars, and pubs could increase prices during busy times.
• Stonegate Group: Implemented price increases at 800 venues during peak times.

Concert Tickets

• Demand Surge: High-profile events with limited capacity lead to dramatic price increases.
• Example: Oasis fans experienced significant price hikes for tickets due to demand.

Theme Parks

• Merlin Entertainments: Plans to introduce surge pricing during peak summer weekends.

Utilities and Bills

• Potential for Surge Pricing: Dynamic pricing could apply to energy tariffs with smart meters.
• Ofgem Consultation: Exploring dynamic pricing models in the energy sector.

Technological Enablers

• AI and Machine Learning: Enhanced capabilities for implementing dynamic pricing in real-time.

Conclusion

• Future Outlook: More industries may adopt dynamic pricing due to technological advancements and data availability.