Contract design for a multi-channel hotel service supply chain

Xiaoyan Zeng, Pengcheng Shi and Wei Xie

Nankai Business Review International, 2020, vol. 11, issue 3, 371-392

Abstract: Purpose - This paper aims to reduce the confliction between different retail channels. Design/methodology/approach - By investigating a game-theoretic model consisting of a dominant hotel, a promoter and an OTA, the authors analyze the optimal amount of reserved rooms on the hotel's official website and realize the coordination between the hotel and the promoter with an appropriate contact. Findings - When the gap between promoter’s reservation profits under different promotion cost coefficients is reasonable, complete coordination can be achieved in the supply chain. In addition, numerical examples are conducted to show that the profit of hotel and supply chain can be maximized with a moderate amount of reserved rooms on OTA. Research limitations/implications - The authors only focus on one OTA scenarios, which overlooks the competition between OTAs. Practical implications - Coordination strategy can fierce the increase on profit when the customer conversion rate increases. Originality/value - The authors propose a contract menu to help the hotel avoid the profit loss under asymmetric promotion cost information.

Keywords: Promotion; Coordination; Information technology; Hotel; Contract design (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:nbripp:nbri-10-2018-0059

DOI: 10.1108/NBRI-10-2018-0059

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