Coordination Contracts for Hotels and Online Travel Agents

Qiang Guo, Chris K. Anderson, Junfeng Dong, Pengfei Zhao and Qingkai Ji
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Qiang Guo: School of Tourism, Hainan University, Haikou 570228, China
Chris K. Anderson: School of Hotel Administration, Cornell University, Ithaca, NY 14850, USA
Junfeng Dong: Key Laboratory of Process Optimization and Intelligent Decision-making, Ministry of Education, School of Management, Hefei University of Technology, Hefei 230009, China
Pengfei Zhao: School of Management, Hainan University, Haikou 570228, China
Qingkai Ji: School of Management, Hainan University, Haikou 570228, China

Sustainability, 2020, vol. 12, issue 8, 1-17

Abstract: Herein, we address a common problem of hotels in the current world of online selling, namely the management of relationships with third party resellers (also known as online travel agents (OTAs)). We highlight the role of OTAs in the current travel landscape, and we discuss the popular contracting forms between OTAs and hotels, which are the so-called merchant and retail (commission) models. We illustrate how these contracts fail to coordinate the hotel–OTA relationship, and then, we develop a new type of contract that can efficiently coordinate a supply chain consisting of the OTA and the individual hotels. We provide theoretical results and numerical examples for a one-to-one model with one OTA and one supplier and a more realistic setting with an OTA selling to consumers on behalf of numerous hotel partners.

Keywords: OTA; supply chain coordination; contract (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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