Contract design for a multi-channel hotel service supply chain

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.

Citation

Zeng, X., Shi, P. and Xie, W. (2020), "Contract design for a multi-channel hotel service supply chain", Nankai Business Review International, Vol. 11 No. 3, pp. 371-392. https://doi.org/10.1108/NBRI-10-2018-0059