Coordination Contracts for Hotels and Online Travel Agents

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 f...

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Bibliographic Details
Published inSustainability Vol. 12; no. 8; p. 3355
Main Authors Guo, Qiang, K. Anderson, Chris, Dong, Junfeng, Zhao, Pengfei, Ji, Qingkai
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 01.04.2020
Subjects
Contracts
Hotels
Hotels & motels
Internet
Revenue sharing
Suppliers
Supply chains
Sustainability
Travel
Travel agencies
Websites
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Summary: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.
ISSN:2071-1050
2071-1050
DOI:10.3390/su12083355