The use of algorithms to set prices of common goods and services, enabled by widespread computerization and data scraping, has seeped into various parts of the economy. Proponents claim such “advances” simply promote greater market efficiency, but that increased “efficiency” benefits just the price-setting side of each transaction—buyers don’t have similar access to data that would enable them to get a more efficient price.
RVers and campers have experienced this problem first-hand. It wasn’t so long ago that RV parks provided rate sheets spelling out how much a particular site would cost on a particular night, but these days that kind of transparent pricing has been supplanted by “dynamic pricing.” How much you’ll be charged for an RV site will depend not just on the day you want to reserve, but on the day—and even time of day—when you make the reservation. Of course, which day will get you the best price is not something a consumer can learn, not least because the “dynamic” piece of that pricing system makes this a moving target. But this system wasn’t designed to benefit customers, anyway.
The industry rationalizes this two-step as simply a response to supply and demand, neglecting to acknowledge a third piece of today’s pricing puzzle: what is the competition charging? Back in pre-algorithmic days that wasn’t a question to be answered easily, since it required obtaining and looking at numerous published rates or contacting other campground operators directly, which not only was a lot of work but also raised all kinds of messy price-fixing and antitrust concerns. But then the campground industry embraced online reservation systems, and as the saying goes, That. Changed. Everything.
Or not. Digitally-driven sales and marketing have made price collusion a lot easier to implement, but the legal (and ethical) considerations have not gone away, making push-back inevitable.
This coming Tuesday, a group of U.S. senators will be introducing legislation, dubbed the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act, to make it illegal for landlords to use algorithms to artificially inflate rents or reduce the supply of housing. The proposed law apparently was catalyzed by an extensive ProPublica investigation, on which I reported in the fall of 2022, that found software used by competing landlords was collecting their proprietary data and feeding it into an algorithm that would “suggest” what rents they should charge. As price setting goes, according to bill sponsor Sen. Ron Wyden of Oregon, that’s “no different from doing it over cigars and whiskey in a private club.”
Although Wyden said he believes existing antitrust laws already apply to what data-compiling companies like RealPage and Yardi are doing, “I want the law to be painfully clear that algorithmic price-fixing of rents is a crime.” Next week’s proposal, therefore, brushes aside industry protestations that it’s only providing information—in its words, making price-fixing collusion “implausible”—by make it illegal for property owners to contract with companies that coordinate rent prices. It also would bar two or more rental owners from coordinating on such information.
The parallels between rental housing algorithms and those now available to RV park owners are stunning, as manifested most widely by Campspot, easily the big dog among campground reservation software providers. The Grand Rapids-based booking agent last year made 3.1 million reservations across more than 2,100 campgrounds, processing in excess of $1.9 billion. But as reported last July, Campspot also introduced a reporting dashboard for its RV park clients that leverages all the reservation data it is constantly accumulating, enabling “individual campground owners to compare their metrics, such as average daily rates, occupancy rates and revenue per available site, with what everyone else is doing—and to make adjustments as desired.”
Campspot’s helpful guidance to campground operators seems to fall a step short of the problem next week’s Senate bill will address among landlords, in that it apparently doesn’t suggest a specific site rate; it just provides all the information for campground owners to reach their own conclusions. Or as Campspot puts it, “With these tools at their fingertips, campgrounds are able to stay ahead of the competition, make confident pricing decisions, and unlock their park’s full potential.” Collusion? Nah—that’s so implausible.
Compared with the massive rental housing industry, RV parks and campgrounds are just an economic blip, and so may readily slip under the radar of antitrust regulators and lawmakers. But to the extent that RV parks increasingly serve as part of the nation’s housing stock, it wouldn’t be surprising to see the introduction of a Preventing the Algorithmic Facilitation of RV Park Cartels Act, enabling the public to make confident pricing decisions when reserving campground sites.