Optimal online channel strategies for a hotel considering direct booking and cooperation with an online travel agent

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Abstract
This paper studies the channel strategies for a hotel considering alternative online distribution channels. The decision for the hotel involves whether to rely on direct booking via its official website or cooperating with an online travel agent (OTA), and if the latter is suggested, what business model to be adopted for the cooperation with the OTA. Three mathematical models, i.e., direct booking model, OTA merchant model, and OTA agent model, are developed to evaluate the costs and benefits in the three different cases. The negotiation process in the OTA agent model is studied by using the generalized Nash bargaining solution. The optimal decisions and profits are analyzed with respect to the values of key parameters. Results of numerical examples are discussed to show the implications of the established models.
Funding Information
  • National Natural Science Foundation of China (71172075, 71471066, 71271089)
  • Program for New Century Excellent Talents in University (NCET‐13‐0219)

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