An Investigation into the Vertical Coordination in Tourism Supply Chains through Buyback Policy

Abstract

Tourism industry is supported by the network of organizations and people in the travel industry. Some tourism networks, such as tourism distribution channels and tourism supply chain (TSC), have been explored by some researchers in recent years. The inter-organizational relationships have also received a lot of attention from researchers in tourism area. However, most studies focus on adversarial relationships due to the intensive competitions among the service providers. Many studies on coordination strategies in the manufacturing supply chains have shown that it can result in improved performance and greater profitability for the entire supply chain and participants. It is believed that applying supply chain coordination strategy to the tourism industry provides a new research opportunity to generate insights into how a TSC develops a sustainable competitive advantage, especially when the demand uncertainty is high. Along this line, this paper studies a vertical coordination relationship in a tourism supply chain consisting of tour operators and their accommodation supplier. In regular intervals, tour operators and their supplier sign contracts on the volume that the supplier will allocate to them for the coming season. In the vertical coordination scheme based on return policies, the supplier buys back the unused reservations from tour operators at the end of the season. Game models are used to analyze and establish the coordination relationship. To the best of our knowledge, little in-depth analytical research on coordination strategies adopted in the tourism industry has been carried out, and there has been a particular lack of analysis using game-theoretic approaches.KeywordsTourism Supply ChainGame Models