Third party distributor in the hotel industry: an analytical study of their contract design Online publication date: Fri, 31-Dec-2010
by Jun Yang
International Journal of Intercultural Information Management (IJIIM), Vol. 2, No. 3, 2010
Abstract: Many hotels are using third party discount websites, such as expedia.com. The hotels benefit from an enlarged potential market by reaching price sensitive consumers, but also face fierce competition from those third party vendors. Meanwhile, many hotels start to use 'best rate guarantee' on their own websites to attract customers. The author discusses the characteristics of hotel industry and uses a game theoretical approach to study the contract design between hotel chains and third party vendors. The results confirm 'best rate guarantee' is the best strategy for hotel chains. Analytical results and managerial implications are presented.
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