Srinagar hotel prices down by 22 pc, airfares surge 46 pc

Sciative Solutions report uncovers AI-driven pricing ethics

A report released by Sciative Solutions reveals a drop in Srinagar hotel prices and a surge in outbound airfares amid unrest, highlighting ethical challenges in AI-driven dynamic pricing during crises.

The recent unrest in Srinagar has triggered a dramatic split in pricing strategies between the city’s hotel and airline sectors, according to a report released by Sciative Solutions, a company dealing in AI-powered pricing optimisation.

As per the report, the hotel room rates in the region plummeted by an average of 22 pc in the week following the recent terror attack that claimed 27 lives, with some properties slashing prices by as much as 46 pc in a desperate bid to attract bookings, amid a steep drop in demand.

The report says that at the same time, outbound airfares from Srinagar soared by 46 pc, with the Srinagar–Kolkata route experiencing a staggering 213 pc jump, as fares shot up from INR 7,666 to INR 24,000. Meanwhile, inbound fares to Srinagar fell by up to 53 pc as tourism demand collapsed.

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According to the report, hotel occupancy rates have dropped by 30 pc, leaving many businesses struggling to stay afloat. Local hoteliers, already hit by mass cancellations, are now forced to accept lower profit margins, raising concerns about their ability to maintain quality services and retain staff.

It adds that airlines, on the other hand, have faced criticism for leveraging dynamic pricing algorithms to capitalise on the surge in outbound demand. The sharp escalation in airfares has left many travellers financially burdened as they attempt to leave the region, prompting ethical questions about the use of AI-driven pricing during humanitarian crises.

“Dynamic pricing can be a powerful tool, but during times of crisis, the human element must be prioritised. Our analysis shows how pricing algorithms, without ethical safeguards, can exacerbate vulnerabilities. Businesses must not allow profitability to overshadow the human impact of their pricing decisions. It is critical to introduce frameworks for responsible AI that focus on human welfare during emergencies,” says Vijeta Soni, Co-founder & CEO of Sciative Solutions.

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“The stark contrast between hotel and airline pricing during the unrest underscores the complexities of dynamic pricing systems. While technology enables efficiency and profitability, we must be mindful that these algorithms reflect the values we program into them. We are committed to developing AI solutions that combine business success with ethical decision-making, ensuring that pricing models prioritise customer experience and social responsibility, especially in times of uncertainty,” says Anshu Jalora, Founder & Managing Director of Sciative Solutions.