Dynamic packaging is an automated approach for consumers or travel agents to create customized travel itineraries by aggregating individual component services such as flights, accommodation, and car rentals into a single straightforward transaction. Unlike traditional pre-defined tour packages, the pricing and availability for a dynamic package is generated in real-time from existing inventory data thus creating a unique product for that particular booking.
In the past, package holidays were static products developed months in advance by tour operators who bought blocks of seats and rooms (allotments). Dynamic packaging breaks this pattern by taking the power of technology to bundle inventory on the fly.
When a user selects a flight and a hotel on a travel website, the booking engine calls the APIs of multiple suppliers at the same time. It retrieves the live price of the flight (maybe from a GDS) and the live price of the hotel (Bed Bank or CRS). It then puts them together into one overall price, often incorporating a certain markup or business rule into the bundle.
For travel technology companies and OTAs, the most significant commercial force in dynamic packaging is opacity.
Suppliers (such as luxury hotels or premium airlines) tend to be contractually prevented from publicly advertising rates below a certain level (rate parity). However, in a dynamic package, the individual price of the flight and the hotel gets hidden; the customer sees only one total figure.
This means that suppliers can distribute opaque rates — deeply discounted rates designed for packages only — without tarnishing their public brand or breaching parity agreements. The OTA can transfer these savings to the consumer to make the package cheaper than booking the components separately.
Dynamic packaging is not only a feature in technology; it is a legal term. In many jurisdictions (like the EU’s Package Travel Directive), the sale of a flight and hotel in one transaction makes the person selling them a tour operator.
This means that the individual technology provider/OTA must have certain legal protections in place (the UK’s ATOL protection, for example) to ensure that the traveler can be refunded/repatriated in the event that one of the suppliers goes bankrupt.
In the case of a simple shopping cart, you purchase unique items that just happen to be paid for at the same time. In dynamic packaging, the items are mixed into one product contract, which often causes special bundled discounts that you do not get if you buy them separately.
Usually, no. Because of the opaque pricing of the package, which is sold as a single unit, the terms and conditions frequently apply to the entire trip. Changing one element usually means repricing the entire package.
Packages have a higher margin and lower cancellation rate than independent flight or hotel bookings. They also prevent prices from being compared; it is difficult for a consumer to price match a package because they don’t know the individual breakdown of costs.
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