A growing number of shops including restaurants are adopting dynamic pricing amid the surge of the novel coronavirus, setting higher prices at peak hours. This pricing strategy is frequently employed by hotels based on the season and demand.
--Pay more for speed, space
At the 12-seat Oshokuji-dokoro asatte in the Sendagaya area of Shibuya Ward, Tokyo, there is only one item on the menu for lunch. Before the pandemic, the set lunch was offered at a fixed price of 1,000 yen at any time of the day. Since June, however, the restaurant lists the prices according to the time slot via posters and social media every morning.
On July 30, the lunch set of stir-fried ground pork and eggplant in miso was 1,200 yen during the peak hour between noon and 1 p.m. While a line usually forms during that hour before dynamic pricing, only eight people came to the restaurant during that time.
"It's actually not expensive because I didn't have to wait in line and can sit with ample space between me and other customers," said an employee of a nearby real estate company.
When the price dropped to 1,000 yen after 1 p.m., 11 people showed up in about 30 minutes, and people kept coming as the price dropped to 900 yen later in the day.
The restaurant initially set the peak price at 1,500, yen but then changed it to 1,300 yen in about two weeks because few customers came, before settling on 1,200 yen on July 14.
After 2 p.m., the rate, which once stood at 800, yen was raised to 900 yen due to congestion, and it has frequently changed the price since then.
"Dynamic pricing is the best way to prevent infection while pursuing sales," the manager said.
-- Higher prices, larger room
Tsuetate Onsen Hizenya, a long-established hotel in the town of Oguni, Kumamoto Prefecture, has made money by raising prices during high season and lowering prices during the off-season, using dynamic pricing to boost its sales for a long time. Since the outbreak of the novel coronavirus, however, it has been using this strategy to control the number of customers.
To avoid crowded situations in its main building, which can accommodate 700 guests, the hotel had raised the fare by several thousand yen per guest until early July if the overall reservations exceeded 100 people, venturing to set a price that would make many guests feel the charge as "expensive." Currently, the hotel uses dynamic pricing to keep the number of guests at around 300.
Even while booking the same accommodation plan, the fare may change depending on when someone makes the reservation. To avoid unfairness, the hotel prepares larger rooms or gorgeous dinners for guests who pay higher fares.
"We want to do our best so that customers do not feel it is unfair," a sales manager said.
-- Railway industry
The railway industry, which is trying to reduce commuting congestion, is also considering the introduction of dynamic pricing.
"We can take account of flexible fares that shift peak time congestion," said East Japan Railway Co. President Yuji Fukasawa during a regular press conference in July.
It is not clear when such rates will start or how it will be implemented, but prices may rise in the morning when it is crowded and fall when there are fewer passengers.
"Consumers are more sensitive to losses than gains," said Senshu University Prof. Yoshiyuki Okuse, who specializes in consumer behavior theory. "When introducing dynamic pricing, it is important to determine the price that consumers will accept."
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