COOPERATION CONTRACT IN TOURISM SUPPLY CHAINS: THE OPTIMAL PRICING STRATEGY OF HOTELS FOR COOPERATIVE THIRD PARTY STRATEGIC WEBSITES

This paper aims to find the optimal pricing strategy for tourism hotels when they operate their online distribution channel by cooperating with a third party website. The paper first gives the first-best solution when all the participants are integrated as a single system, and then leads to the second-best one under the decentralized scenario through a non-cooperative game model composed by a Stackelberg game between the hotels and the website and a Nash game among the hotels. Through a numerical example, we analyze the decision making process of the players; and give the service providers some useful suggestions for operating their cooperative relationship successfully.

► Analyzed the cooperation between hotels and third party websites about the online distribution issue.
► First best solution as an integrated supply chain and second best one in the decentralized scenario are analyzed.
► The effort investment is determined by the commission fees and available capacities of the hotels.
► The findings help hotels and websites to choose partners and improve cooperative relationship.