A Comparative Study of Tourism Supply Chains with Quantity Competition

Abstract

This paper studies the impact of the involvement of tour operators in a tourism supply chain with multiple hotels and travel agencies. Tour operators negotiate with upstream hotels on the quantity of hotel rooms and promote the accommodation to downstream travel agencies. Two types of game models are formulated to analyze quantity competition in tourism supply chains with and without a tour operator. We conduct a comparative study of the two cases and explore the effects of various parameters. The results show that when the market size of travel agencies is lower than a certain level, then both travel agencies and hotels benefit more from the presence of a tour operator in a tourism supply chain. Furthermore, in this situation, the fluctuations in the profits of both travel agencies and hotels are more violent as the supply chain’s membership changes.