Tourism supply-chain coordination

What is it about?

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. We first analyse the effects of basic utilities and prices on demand for the packages, 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.

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Why is it important?

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. We first analyse the effects of basic utilities and prices on demand for the packages, 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.