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

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  • 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
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    Cited by:

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    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 & Jaremen Daria Elżbieta & Michalska-Dudek Izabela & Walesiak Marek, 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.
    11. Tsai, Pei-Hsuan, 2024. "Exploring consumer purchase intention in cross-boundary retail alliances with gamified OMO virtual-physical fusion services," Journal of Retailing and Consumer Services, Elsevier, vol. 77(C).

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