Search results

Channel coordination has become an essential part of researching hotel supply chain management practices. This paper develops an improved channel coordination approach to coordinate the profit distribution between hotels and online travel agencies (OTAs) achieved through an introduction of advertising fees. This direction further improves the decentralization of cooperation and achieves Pareto improvement to achieve mutual profitability.

The methodology used in this study involves Stackelberg game theory employed for the decision-making and analysis of both the hotel and OTA. The OTA, acting as the leader, offers a hotel a contract specifying the commission rate that the hotel will pay to the respective OTA. The hotel, acting as a follower, sets a self-interested room rate as a given response. A deterministic, price-sensitive linear demand function is utilized to derive possible analytical solutions once centralized, noncooperative decentralization and cooperative decentralized channel occurs.

Results show that a new channel coordination approach is possible, namely via advertising fees. Prior to channel coordination, the OTA tends to set a higher commission rate, and the hotel sets a higher room rate in response under noncooperative decentralization. As such, this results in a lower channel-wide profit for all. One way to reduce channel-wide profit loss is to use a method of cooperative decentralization, which can, and will result in optimal profit as centralization takes place. However, the lack of incentives makes cooperative decentralization unfeasible. Further improvement is possible by using advertising fees based on a cooperative decentralization agreement, which can reach Pareto improvement.

This paper helps the OTA industry and hotel owners cooperate by way of smoother coordination. This study provides practitioners with two important practical implications. The first one is that the coordination between the hotel industry and OTA through cooperative decentralization allows for the achievement of higher profitability than that of noncooperative decentralization. The second one is that this paper solves the outstanding problem of insufficient incentives characteristic of cooperative decentralization by means of an advertising fee as a new supply chain coordination approach.

This paper offers both the problem and solution regarding the lack of incentives that hamper cooperative decentralization without the use of advertising fees. This paper is unique in that it derives analytical solutions regarding commissions levied in a typical hotel supply chain under noncooperative decentralization.

This research aims to develop an improved model with government intervention and find the government policy for developing green tourism to induce the travel agencies have incentives to produce green tourism products.

This research employs Stackelberg game theory to study two travel agencies in the horizontal direction of the tourism supply chain. Two deterministic, price-sensitive linear demand functions are utilized for these two different tourism products to derive possible analytical solutions.

No travel agency is willing to produce green tourism products without government intervention. The solution proposed in this paper is that a government should subsidize green travel agencies for their production of green tourism products, and create a tax for non-green traditional travel agencies for the production of non-green traditional tourism products. The amount of government subsidies for green tourism products plus the tax on non-green traditional tourism products equals the difference in unit cost of the two products. The travel agency that produces green tourism products has incentive to produce if there is government intervention.

This paper provides the stakeholders with three practical implications. The first one is that the amount of subsidy for green travel agencies can be paid by taxing non-green ones. This is the optimal solution. The second one for both the tourism sector and government is that technological innovation in cooperation between government and tourism industry such as low-carbon technology is critical to reduce the cost difference between green travel agency products and non-green ones. The third one is that green travel agencies that produce green tourism products can also fulfill their corporate social responsibilities and enhance their social image.

This paper is unique in that it develops a model to resolve the problem of insufficient incentives. In terms of government intervention, this article also considers tax policy in addition to subsidy policy which is different from previous literature.