A step ahead: Life House lodging company test-drives an experimental pricing algorithm
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A step ahead: Life House lodging company test-drives an experimental pricing algorithm
TOHOLOGY, 27 December 2018

While most big hospitality companies like Marriott International as well as small operators offer loyalty programmes and perks to their best guests, a new boutique lodging company Life House is trying out a brand new pricing system based on multifaceted guests’ profiles, which has been recognized as “next generation” by Scott Berman, the principal of PricewaterhouseCoopers hospitality and leisure group.

The gist of the algorithm is this: a first-timer books a room at a standard rate, and from this moment on the client’s personal profile starts to fill up with his/her spending habits, conduct and preferred activities during their stays, travelling frequency and even social media involvement. This data will define special perks, discounts and pricing policy for each particular guest in future.

One of the co-founders of Life House, which opened the first hotel in Miami in the beginning of December, is Rami Zeidan, who worked for Starwood Hotels, Deutsche Bank and TPG and has degrees in finance and economics. Using his experience in real estate and hospitality industry, Mr. Zeidan sees the newly launched pricing system also as a way of promoting the brand.

All guests fill in questionnaires, which help to gather data for targeted offers and rewards. For example, guests with many Instagram followers who share their Life House experience with their friends will enjoy special discounts, while light spenders cannot count on too many goodies. Troublemakers and messy guests will face penalty in the form of higher rates for further stays.

Bjorn Hanson (an adjunct professor at New York University’s Jonathan M. Tisch Center of Hospitality) marked the whole concept as unique and noted that instead of classical price adjustment Life House chooses to define the inventory completely by individual characteristics of each guest.

Such an approach to pricing and incentivizing the customers will sure require very clear and accurate grounding for personal discounts or perks and their absence. The ongoing experiment of Life House, which plans to open six more hotels during 2019 in Denver, Brooklyn, Los Angeles and Miami, will remain in the spotlight of the hospitality world.

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