IDEAS home Printed from https://ideas.repec.org/a/eee/touman/v62y2017icp302-311.html
   My bibliography  Save this article

Pricing strategies of tour operator and online travel agency based on cooperation to achieve O2O model

Author

Listed:
  • Long, Yong
  • Shi, Pingping

Abstract

This paper studies the optimal pricing strategies of a tour operator (TO) and an online travel agency (OTA) when they achieve the O2O model through online sale and offline service cooperation. By constructing a competition model, cooperation conditions, pricing strategies and revenues are analyzed and compared in the Stackelberg and Bertrand game. Results indicate that service level, unit sale commission, service cost coefficient and unit service compensation coefficient have different influences on the TO's and OTA's pricing decisions. When the unit sale commission is greater than the threshold, the TO's and OTA's pricing in the Bertrand game are higher than in the Stackelberg game. Being a leader is the dominant strategy for the TO. In addition, the revenues of TO and OTA in sale and service cooperation are analyzed by numerical examples and some suggestions for establishing cooperation contract are provided.

Suggested Citation

  • Long, Yong & Shi, Pingping, 2017. "Pricing strategies of tour operator and online travel agency based on cooperation to achieve O2O model," Tourism Management, Elsevier, vol. 62(C), pages 302-311.
  • Handle: RePEc:eee:touman:v:62:y:2017:i:c:p:302-311
    DOI: 10.1016/j.tourman.2017.05.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0261517717301024
    Download Restriction: no

    File URL: https://libkey.io/10.1016/j.tourman.2017.05.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lu, Jye-Chyi & Tsao, Yu-Chung & Charoensiriwath, Chayakrit, 2011. "Competition under manufacturer service and retail price," Economic Modelling, Elsevier, vol. 28(3), pages 1256-1264, May.
    2. Yufeng Dong & Liuyi Ling, 2015. "Hotel Overbooking and Cooperation with Third-Party Websites," Sustainability, MDPI, vol. 7(9), pages 1-17, August.
    3. Koo, Bonwoo & Mantin, Benny & O'Connor, Peter, 2011. "Online distribution of airline tickets: Should airlines adopt a single or a multi-channel approach?," Tourism Management, Elsevier, vol. 32(1), pages 69-74.
    4. Wu, Cheng-Han, 2012. "Price and service competition between new and remanufactured products in a two-echelon supply chain," International Journal of Production Economics, Elsevier, vol. 140(1), pages 496-507.
    5. Chao Lu & Sijing Liu, 2016. "Cultural Tourism O2O Business Model Innovation: A Case Study of CTrip," Journal of Electronic Commerce in Organizations (JECO), IGI Global, vol. 14(2), pages 16-31, April.
    6. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
    7. Ling, Liuyi & Guo, Xiaolong & Yang, Chenchen, 2014. "Opening the online marketplace: An examination of hotel pricing and travel agency on-line distribution of rooms," Tourism Management, Elsevier, vol. 45(C), pages 234-243.
    8. Andy A. Tsay & Narendra Agrawal, 2000. "Channel Dynamics Under Price and Service Competition," Manufacturing & Service Operations Management, INFORMS, vol. 2(4), pages 372-391, August.
    9. Terrence Hendershott & Jie Zhang, 2006. "A Model of Direct and Intermediated Sales," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 279-316, June.
    10. Yoon, Moon Gil & Yoon, Duk Young & Yang, Tae Won, 2006. "Impact of e-business on air travel markets: Distribution of airline tickets in Korea," Journal of Air Transport Management, Elsevier, vol. 12(5), pages 253-260.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li Zhou & Chunqiao Tan & Huimin Zhao, 2022. "Information Disclosure Decision for Tourism O2O Supply Chain Based on Blockchain Technology," Mathematics, MDPI, vol. 10(12), pages 1-21, June.
    2. Wan Qin & Peng Yuhan & Yu Cuiting & Huang Yu & Liu Danping, 2023. "Optimal Strategies of the Online-to-Offline Instant Delivery Service of Grocery Retailers," SAGE Open, , vol. 13(4), pages 21582440231, December.
    3. Andrzej Dudek & Daria Elżbieta Jaremen & Izabela Michalska-Dudek, 2020. "Socio-economic factors determining the ROPO trend in the travel industry," Tourism Economics, , vol. 26(6), pages 873-907, September.
    4. Cai, Ya-Jun & Lo, Chris K.Y., 2020. "Omni-channel management in the new retailing era: A systematic review and future research agenda," International Journal of Production Economics, Elsevier, vol. 229(C).
    5. Ryu, Do-Hyeon & Lim, Chiehyeon & Kim, Kwang-Jae, 2020. "Development of a service blueprint for the online-to-offline integration in service," Journal of Retailing and Consumer Services, Elsevier, vol. 54(C).
    6. Wąsowicz-Zaborek Elżbieta, 2022. "Consumer choice determinants of online intermediary tourism platforms," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 58(2), pages 161-178, June.
    7. Feiran Wu & Qianxi Zhang & Rob Law & Tianxiang Zheng, 2020. "Fluctuations in Hong Kong Hotel Industry Room Rates under the 2019 Novel Coronavirus (COVID-19) Outbreak: Evidence from Big Data on OTA Channels," Sustainability, MDPI, vol. 12(18), pages 1-17, September.
    8. Băltescu Codruța Adina, 2017. "The Travel Agency Website – Factor for Business Success," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 371-375, December.
    9. Dudek Andrzej & Walesiak Marek & Jaremen Daria Elżbieta & Michalska-Dudek Izabela, 2022. "The Impact of the Covid-19 Pandemic Threat on Purchase Decisions of Travel Agency Customers in Poland," Polish Journal of Sport and Tourism, Sciendo, vol. 29(4), pages 37-45, December.
    10. Yong He & Peng He & Feifei Xu & Chunming (Victor) Shi, 2019. "Sustainable tourism modeling: Pricing decisions and evolutionarily stable strategies for competitive tour operators," Tourism Economics, , vol. 25(5), pages 779-799, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Seyed Jafar Sadjadi & Hashem Asadi & Ramin Sadeghian & Hadi Sahebi, 2018. "Retailer Stackelberg game in a supply chain with pricing and service decisions and simple price discount contract," PLOS ONE, Public Library of Science, vol. 13(4), pages 1-24, April.
    2. Chen, Jingxian & Liang, Liang & Yao, Dong-Qing & Sun, Shengnan, 2017. "Price and quality decisions in dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 259(3), pages 935-948.
    3. Chen, Xu & Luo, Zheng & Wang, Xiaojun, 2019. "Compete or cooperate: Intensity, dynamics, and optimal strategies," Omega, Elsevier, vol. 86(C), pages 76-86.
    4. Syed Asif Raza, 2022. "A bibliometric analysis of pricing models in supply chain," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 228-251, April.
    5. Guan, Zili & Zhang, Xumei & Zhou, Maosen & Dan, Yiran, 2020. "Demand information sharing in competing supply chains with manufacturer-provided service," International Journal of Production Economics, Elsevier, vol. 220(C).
    6. Shangyu Pi & Yang Wang, 2020. "An E-Tailer’s Operational Strategy under Different Supply Chain Structures," Sustainability, MDPI, vol. 12(5), pages 1-20, March.
    7. Yusen Xia & Tiaojun Xiao & G. Peter Zhang, 2019. "Service Investment and Channel Structure Decisions in Competing Supply Chains," Service Science, INFORMS, vol. 11(1), pages 57-74, March.
    8. He, Qidong & Wang, Nengmin & Browning, Tyson R. & Jiang, Bin, 2022. "Competitive collection with convenience-perceived customers," European Journal of Operational Research, Elsevier, vol. 303(1), pages 239-254.
    9. Hu, Qiying & Wei, Yihua & Xia, Yusen, 2010. "Revenue management for a supply chain with two streams of customers," European Journal of Operational Research, Elsevier, vol. 200(2), pages 582-598, January.
    10. Sarat Kumar Jena & Deepti Jog, 2017. "Price competition in a tourism supply chain," Tourism Economics, , vol. 23(6), pages 1235-1254, September.
    11. Yao, Dong-Qing & Liu, John J., 2005. "Competitive pricing of mixed retail and e-tail distribution channels," Omega, Elsevier, vol. 33(3), pages 235-247, June.
    12. Chen, Jingxian & Liang, Liang & Yang, Feng, 2015. "Cooperative quality investment in outsourcing," International Journal of Production Economics, Elsevier, vol. 162(C), pages 174-191.
    13. Renbang Shan & Li Luo & Baoli Shi, 2023. "The choice of recycling strategies for decision-makers based on government subsidy and service budget," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(2), pages 1441-1472, February.
    14. Xiaole Dou & Zenglu Li & Chun Liu, 2022. "Secondhand product quality disclosure strategy of the retailer under different supply chain structures," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2982-2999, October.
    15. Lee, Sunghee & Yoo, Shijin & Kim, Daeki, 2016. "When is servitization a profitable competitive strategy?," International Journal of Production Economics, Elsevier, vol. 173(C), pages 43-53.
    16. Li, Yongjian & Lin, Zhangxi & Xu, Lei & Swain, Ajaya, 2015. "“Do the electronic books reinforce the dynamics of book supply chain market?”–A theoretical analysis," European Journal of Operational Research, Elsevier, vol. 245(2), pages 591-601.
    17. Huang, Yeu-Shiang & Huang, Wei-Jeh & Fang, Chih-Chiang, 2018. "Coordination for distribution of motion pictures in the context of piracy," Journal of Business Research, Elsevier, vol. 85(C), pages 209-225.
    18. Zhang, Jianqiang & Cao, Qingning & He, Xiuli, 2020. "Manufacturer encroachment with advertising," Omega, Elsevier, vol. 91(C).
    19. Zhang, Jie & Zhang, Rachel Q., 2015. "Supply chain structure in a market with deceptive counterfeits," European Journal of Operational Research, Elsevier, vol. 240(1), pages 84-97.
    20. Huang, Yanting & Wang, Zongjun, 2017. "Values of information sharing: A comparison of supplier-remanufacturing and manufacturer-remanufacturing scenarios," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 20-44.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:touman:v:62:y:2017:i:c:p:302-311. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/tourism-management .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.