The Competition and Markets Authority (CMA) has recently examined how dynamic pricing is being used across the economy. Its project, launched in 2024, culminated in findings published in June 2025, together with a set of practical tips for businesses. For the travel sector, where dynamic pricing has long been a core feature, the CMA’s work provides important guidance on how to use these practices lawfully and fairly under the Digital Markets, Competition and Consumers Act (DMCC).
What is dynamic pricing?
Dynamic pricing is the practice of varying the price of a product or service depending on demand, timing, or customer characteristics. In the travel industry, this is not new. Consumers are accustomed to flights becoming more expensive as seats fill up, or hotels charging higher rates on bank holiday weekends.
However, what has prompted the CMA’s focus is the potential for dynamic pricing to mislead consumers or undermine trust if not managed transparently. The authority has stressed that businesses cannot rely on the complexity of their pricing models as a defence. If the effect of pricing practices is misleading, the business remains responsible.
Benefits and risks
The CMA recognises that dynamic pricing can benefit both businesses and consumers. It helps smooth demand, encourages off-peak bookings, and can make travel more affordable for flexible customers. But the risks are equally clear. If consumers perceive pricing as arbitrary, unpredictable or exploitative, confidence is eroded. In the CMA’s view, fair pricing is essential to maintain trust in markets.
CMA’s five practical tips
To support compliance, the CMA has published five practical tips for businesses using dynamic pricing:
- Be upfront – Make it clear at the outset if prices are likely to change quickly or fluctuate depending on demand. Consumers should not discover unpredictability only when they reach the final booking stage.
- Do not exploit – Avoid practices that could take unfair advantage of vulnerable consumers. For example, steep last-minute price increases.
- Keep records – Businesses must be able to explain how their pricing models operate. If challenged by the CMA, a business should be able to demonstrate the rationale behind its pricing system.
- Test your systems – Monitor whether dynamic pricing produces unintended or discriminatory effects.
- Think about trust – Short-term revenue gains should not come at the expense of consumer confidence. Transparent, explainable pricing builds loyalty and repeat business.
Implications for travel businesses
For travel companies, dynamic pricing is both a competitive necessity and a regulatory risk. Airlines, hotels and intermediaries have long relied on flexible pricing to balance supply and demand. What the CMA’s work underscores is that transparency and fairness must be built into these systems.
Businesses should review their pricing algorithms, test for unintended bias and ensure that consumer communications are clear. For example, if prices may increase as demand rises, this should be explained upfront, rather than left for consumers to discover when attempting to book.
The CMA has made it clear that enforcement is not limited to egregious or unusual cases. Any pricing model that results in misleading outcomes could fall within scope. With the CMA’s enhanced enforcement powers under the DMCC, the risks are significant.
Key takeaway
Dynamic pricing is here to stay, particularly in the travel industry. But businesses must use it responsibly. The CMA’s message is straightforward: pricing strategies must be transparent, fair and explainable. If your business cannot justify how prices are set or cannot explain them to consumers, you should reconsider the model.
