Online coopetition between hotels and online travel agencies: From the perspective of cash back after stay

• Analyze the cash back issue that emerges recently in online marketplace
• Provide the optimal cash back policy for OTAs in the coopetition with hotels
• Investigate the optimal decision for hotels to determine the commission fee
• Propose collaborative model and coordination contract for the supply chain

In the online marketplace, many hotels are concentrating on increasing their market share by establishing cooperation with online travel agencies (OTAs). Meanwhile, hotel websites and OTAs are marketing the hotel rooms at the same price as a result of the strong competition for the same pool of customers. Therefore, it is necessary to balance the cooperation and competition between hotels and OTAs. This study investigates the online coopetition (cooperation and competition) through an economical game analysis of an online supply chain consisting of a hotel and an OTA. It first provides an optimal solution to determine the unit commission fee of the hotel to maintain the cooperation. Afterwards, it studies the pricing process of the OTA to determine the cash back value for the customers with respect to the OTA's maximal profit. Moreover, the deeper analysis of the cooperative model demonstrates that a quantity discount contract based on the revenue sharing could eliminate the competition and coordinate the participants in the online supply chain.