Tourism Supply-Chain Coordination: The Cooperation between Tourism Hotel and Tour Operator

Abstract

This paper examines the cooperation problem that occurs when a tour operator cooperates with a tourism hotel with regard to two types of tour packages – luxury and economy. The authors first analyse the effects of basic utilities and prices on demand for the packages. They then build a sequential Stackelberg game model to study this cooperation in a decentralized scenario, and find that the tourism hotel acquires more revenue from the packages than the tour operator owing to its stronger bargaining power. Finally, a quantity-discount contract based on revenue sharing is designed to achieve full coordination in the cooperation, under which the total revenue from the packages is identical to that in a centralized scenario.