Natural calamities like hurricanes, earthquakes, and floods can significantly impact travel demand in affected regions. If you're a PriceLabs user, you might be wondering how the algorithm adjusts to these sudden changes and what you can do to ensure your pricing remains competitive during such events. Here’s a breakdown of how the system works and tips if you’re using the older algorithm.

1. Hurricanes and Other Forecasted Events: How the Algorithm Reacts

When natural calamities like hurricanes are predicted in advance, the PriceLabs HLP (Hyper-Local Pulse) algorithm picks up on the early warning signals, such as reduced bookings and a drop in market demand. Since hurricanes are often tracked and forecasted well before they hit, the system can detect this shift in demand, factoring it into pricing adjustments.

For example, if a hurricane is expected to impact Florida, travelers start avoiding bookings in the affected area. The HLP algorithm identifies this drop in demand and lowers the forecast for bookings in that region. It then automatically reduces prices for listings in the hurricane’s path to reflect the lower demand.

The older algorithm may not handle extended periods of lower demand as smoothly. The seasonality factor in the older version is precalculated and covers a larger area. It won’t adjust as dynamically for localized events like hurricanes, so it may struggle with long-term demand dips caused by such calamities.

2. Earthquakes and Sudden Natural Disasters

Unlike hurricanes, which are predictable, sudden disasters like earthquakes don’t provide early warning signals. In these cases, neither the HLP nor the old algorithm will immediately respond to market changes.

However, as cancellations roll in and booking activity decreases, the HLP algorithm will begin adjusting prices accordingly. It relies on real-time data and market signals to lower prices as it detects lower demand due to the disaster. Over time, this helps align pricing with the new market reality.

On the other hand, the older algorithm may not adjust fast enough to such sudden drops in demand.

3. If You’re Using the Older Algorithm: Tips for Managing Pricing During Calamities

If you’re still using the older PriceLabs algorithm, here’s how to handle natural disasters effectively:

1. Manually Adjust Prices: Since the old algorithm splits market factors into seasonality (longer trends) and demand (shorter trends), it’s less responsive to sudden changes. During a natural disaster, you’ll need to manually adjust your prices by using Date Specific Overrides (DSO) or applying a non-repeating seasonality adjustment.
2. Monitor Neighborhood Data: Keep an eye on the Neighborhood Data tab to see how future bookings are pacing compared to previous years. This can help you estimate how long the market’s demand will be impacted. If bookings are slower for upcoming dates, you may want to keep your prices lower for an extended period.
3. Adjust Base Price for Long-Term Damage: If the disaster causes long-term damage, it may be necessary to lower your base price until the market starts to recover.