# Coordination Analysis of Sustainable Dual-Channel Tourism Supply Chain with the Consideration of the Effect of Service Quality

^{1}

^{2}

^{*}

## Abstract

**:**

## 1. Introduction

- (1)
- How can pricing decisions be made, considering the effect of service quality factors in the operation of tourism enterprises?
- (2)
- How does service quality affect the profits of members of the tourism supply chain?
- (3)
- How can the distribution of benefits be optimised to provide high-quality and efficient tourism services through the coordination of the tourism service supply chain?

## 2. Literature Review

#### 2.1. Tourism Supply Chain

#### 2.2. Tourism Supply Chain Decision and Coordination

#### 2.3. The Impact of Service Quality on the Tourism Supply Chain

## 3. Research Methods

#### 3.1. The Problem Description

#### 3.2. Assumptions

- (1)
- Considering the dual-channel travel supply chain, the OTA and TA provide consumers with the same single tourism product, regardless of tourism product mix or bundled sales.
- (2)
- The tourism supply chain members have no risk preference, are all risk-neutral rational people, regardless of shortages, and both TPP and TA aim to maximise profits.
- (3)
- ${p}_{i}\left(i=o,t\right)>w$, tourism products are sold at a higher price than the discounted price, so as to ensure that the tourism business is profitable.
- (4)
- Since the TPP masters tourism resources, the TPP is the leader and the TA is the follower in a Stackelberg game, and it is assumed that consumers have different channel preferences.

## 4. Model Formulation and Analysis

#### 4.1. Decentralized Decision

**Theorem**

**1.**

**Proof.**

**Proposition**

**1.**

- (1)
- The service quality of the TPP is always positively correlated with the sales price of each channel $\begin{array}{c}\begin{array}{c}\frac{\partial {p}_{t}^{{D}^{*}}}{\partial {s}_{s}}>0\end{array}\end{array}$, $\begin{array}{c}\begin{array}{c}\frac{\partial {p}_{o}^{{D}^{*}}}{\partial {s}_{s}}>0\end{array}\end{array}$;
- (2)
- The service quality of the TA is positively correlated with the price of the offline channels. The effect of the OTA service quality on the online channel prices is related to consumer sensitivity to price and service quality.$$\{\begin{array}{c}ab>\frac{4-3k}{4-4k},4\beta \gamma -4\lambda \sigma -4\beta \gamma k+3k\lambda \sigma >0,\frac{\partial {p}_{o}^{{D}^{*}}}{\partial {s}_{o}}>0\\ ab<\frac{4-3k}{4-4k},4\beta \lambda -4\gamma \sigma -4\beta k\lambda +3\gamma k\sigma <0,\frac{\partial {p}_{o}^{{D}^{*}}}{\partial {s}_{o}}<0\end{array}\phantom{\rule{0ex}{0ex}}\begin{array}{c}b>\frac{4a-ak}{6{a}^{2}-2},6{\beta}^{2}\gamma -2\gamma {\sigma}^{2}-4\beta \lambda \sigma +\beta k\lambda \sigma >0,\frac{\partial {p}_{t}^{{D}^{*}}}{\partial {s}_{t}}>0\end{array};$$
- (3)
- The sales prices of the online and offline channels and the service quality of cross-channel are also affected by consumer perceptions of price and service quality.$$\{\begin{array}{c}\frac{a}{b}>\frac{4-3k}{4-4k},4\beta \lambda -4\gamma \sigma -4\beta k\lambda +3\gamma k\sigma <0,\frac{\partial {p}_{o}^{{D}^{*}}}{\partial {s}_{t}}>0\\ \frac{a}{b}<\frac{4-3k}{4-4k},4\beta \lambda -4\gamma \sigma -4\beta k\lambda +3\gamma k\sigma >0,\frac{\partial {p}_{o}^{{D}^{*}}}{\partial {s}_{t}}<0\end{array}\phantom{\rule{0ex}{0ex}}\{\begin{array}{c}b>\frac{6{a}^{2}-2}{4a-ak},6{\beta}^{2}\lambda -2\lambda {\sigma}^{2}-4\beta \gamma \sigma +\beta \gamma k\sigma <0,\frac{\partial {p}_{t}^{{D}^{*}}}{\partial {s}_{o}}>0\\ 1<b<\frac{6{a}^{2}-2}{4a-ak},6{\beta}^{2}\lambda -2\lambda {\sigma}^{2}-4\beta \gamma \sigma +\beta \gamma k\sigma >0,\frac{\partial {p}_{t}^{{D}^{*}}}{\partial {s}_{o}}<0\end{array}$$$$(a=\frac{\beta}{\sigma},b=\frac{\gamma}{\lambda}).$$

**Proof.**

- (1)
- $\begin{array}{c}\frac{\partial {p}_{t}^{{D}^{*}}}{\partial {s}_{s}}=\frac{\delta \left(4\beta \left(1-k\right)+\sigma \left(4-3k\right)\right)}{8\left({\beta}^{2}-{\sigma}^{2}\right)\left(1-k\right)-{\sigma}^{2}{k}^{2}}>0\end{array}$$\begin{array}{c}\frac{\partial {p}_{o}^{{D}^{*}}}{\partial {s}_{s}}=\frac{\delta \left(1-k\right)(\beta \sigma \left(4-k\right)+2\left(3{\beta}^{2}-{\sigma}^{2}\right)}{8\left({\beta}^{2}-{\sigma}^{2}\right)\left(1-k\right)-{\sigma}^{2}{k}^{2}}>0\end{array}$
- (2)
- $\begin{array}{c}\frac{\partial {p}_{o}^{{D}^{*}}}{\partial {s}_{o}}=\frac{4\beta \gamma -4\lambda \sigma -4\beta \gamma k+3k\lambda \sigma}{8\left({\beta}^{2}-{\sigma}^{2}\right)\left(1-k\right)-{\sigma}^{2}{k}^{2}}\end{array}$$\begin{array}{c}\frac{\partial {p}_{t}^{{D}^{*}}}{\partial {s}_{t}}=\frac{\left(1-k\right)\left(6{\beta}^{2}\gamma -2\gamma {\sigma}^{2}-4\beta \lambda \sigma +\beta k\lambda \sigma \right)}{\beta \left(8\left({\beta}^{2}-{\sigma}^{2}\right)\left(1-k\right)-{\sigma}^{2}{k}^{2}\right)}\end{array}$

- (3)
- $\begin{array}{c}\frac{\partial {p}_{o}^{{D}^{*}}}{\partial {s}_{t}}=-\frac{4\beta \lambda -4\gamma \sigma -4\beta k\lambda +3\gamma k\sigma}{8\left({\beta}^{2}-{\sigma}^{2}\right)\left(1-k\right)-{\sigma}^{2}{k}^{2}}\end{array}$$\begin{array}{c}\frac{\partial {p}_{t}^{{D}^{*}}}{\partial {s}_{o}}=-\frac{\left(1-k\right)\left(6{\beta}^{2}\lambda -2\lambda {\sigma}^{2}-4\beta \gamma \sigma +\beta \gamma k\sigma \right)}{\beta \left(8\left({\beta}^{2}-{\sigma}^{2}\right)\left(1-k\right)-{\sigma}^{2}{k}^{2}\right)}\end{array}$

#### 4.2. Centralized Decision

**Theorem**

**2.**

**Proof.**

**Proposition**

**2.**

**Proposition**

**3.**

- (1)
- The service quality of the TPP has a positive effect on the price and demand of both channels$\begin{array}{c}\frac{\partial {D}_{o}^{{C}^{*}}}{\partial {s}_{s}}=\frac{\partial {D}_{t}^{{C}^{*}}}{\partial {s}_{s}}>0\end{array}$, $\text{}\begin{array}{c}\frac{\partial {p}_{o}^{{C}^{*}}}{\partial {s}_{s}}=\frac{\partial {p}_{t}^{{C}^{*}}}{\partial {s}_{s}}0\end{array}$;
- (2)
- The quality of channel service is positively related to its own channel price and demand$\begin{array}{c}\frac{\partial {D}_{o}^{{C}^{*}}}{\partial {s}_{o}}=\frac{\partial {D}_{t}^{{C}^{*}}}{\partial {s}_{t}}>0\end{array}$, $\begin{array}{c}\frac{\partial {p}_{o}^{{C}^{*}}}{\partial {s}_{o}}=\frac{\partial {p}_{t}^{{C}^{*}}}{\partial {s}_{t}}>0\end{array}$;
- (3)
- The service quality of competitive channels is negatively related to the channel demand, and the effect on the price is related to the type of consumers$\begin{array}{c}\frac{\partial {D}_{o}^{{C}^{*}}}{\partial {s}_{t}}=\frac{\partial {D}_{t}^{{C}^{*}}}{\partial {s}_{o}}<0\end{array}$, When$\begin{array}{c}\frac{\beta}{\sigma}>\frac{\gamma}{\lambda}\end{array},\text{}\begin{array}{c}\frac{\partial {p}_{o}^{{C}^{*}}}{\partial {s}_{t}}0\end{array},\text{}\begin{array}{c}\text{}\frac{\partial {p}_{t}^{{C}^{*}}}{\partial {s}_{o}}0\end{array}$, $\begin{array}{c}\frac{\beta}{\sigma}<\frac{\gamma}{\lambda}\end{array},\text{}\begin{array}{c}\frac{\partial {p}_{o}^{{C}^{*}}}{\partial {s}_{t}}0\end{array},\text{}\begin{array}{c}\text{}\frac{\text{}\partial {p}_{t}^{{C}^{*}}}{\partial {s}_{o}}0\end{array}$.

**Proof**.

- (1)
- $\text{}\begin{array}{c}\frac{\partial {D}_{o}^{{C}^{*}}}{\partial {s}_{s}}=\frac{\partial {D}_{t}^{{C}^{*}}}{\partial {s}_{s}}=\frac{\delta}{2}0,\frac{\partial {p}_{o}^{{C}^{*}}}{\partial {s}_{s}}=\frac{\partial {p}_{t}^{{C}^{*}}}{\partial {s}_{s}}=\frac{\delta}{2\left(\beta -\sigma \right)}0\end{array}$;
- (2)
- $\begin{array}{c}\frac{\partial {D}_{o}^{{C}^{*}}}{\partial {s}_{o}}=\frac{\partial {D}_{t}^{{C}^{*}}}{\partial {s}_{t}}=\frac{\gamma}{2}>0,\frac{\partial {p}_{o}^{{C}^{*}}}{\partial {s}_{o}}=\frac{\partial {p}_{t}^{{C}^{*}}}{\partial {s}_{t}}=\frac{\beta \gamma -\lambda \sigma}{2\left({\beta}^{2}-{\sigma}^{2}\right)}>0\end{array}$;
- (3)
- $\begin{array}{c}\frac{\partial {D}_{o}^{{C}^{*}}}{\partial {s}_{t}}=\frac{\partial {D}_{t}^{{C}^{*}}}{\partial {s}_{o}}=-\frac{\lambda}{2}<0\end{array}$,$\begin{array}{c}\frac{\partial {p}_{o}^{{C}^{*}}}{\partial {s}_{t}}=\frac{\partial {p}_{t}^{{C}^{*}}}{\partial {s}_{o}}=-\frac{\beta \lambda -\gamma \sigma}{2\left({\beta}^{2}-{\sigma}^{2}\right)}\end{array}$

- (1)
- The improvement of the TPP’s service quality will win more consumers. Consumers are willing to buy tourism products through any channel, the market demand of the channel will increase, and the price will also increase;
- (2)
- In order to deal with channel conflicts, the OTA and TA win more consumers and increase market share by improving service quality, but service quality improvement will also bring a cost increase, and the OTA and TA will balance the extra service cost by increasing the price of goods;
- (3)
- The improvement in the service quality of the competitive channel will lead to a decrease in the demand for their own channel. When the service level of their own channel is constant, the service sensitivity of the competitive channel is greater than that to the price of the competitive channel, the improvement of the service quality of the competitive channel will increase the sales volume of the competitive channel. The OTA or TA will attract consumers by reducing prices. When consumers are not sensitive to pricing, the improvement of the service quality of competing channels reduces the demand for their own channels. At this time, their own channels can only rely on raising prices to maintain profits.

#### 4.3. Model Comparison Analysis

**Proposition**

**4.**

**Proof.**

**Proposition**

**5.**

#### 4.4. Supply Chain Coordination

^{o}, the sum of profits obtained by the TPP, OTA, and TA is allocated to the TPP in proportion t

_{1}, the OTA according to a certain proportion t

_{2}, and the rest is distributed to the TA. We then need to determine the optimal wholesale price w

^{o}and the value range of the distribution proportion t

_{1}and t

_{2}.

## 5. Numerical Analysis

#### 5.1. Analysis of the Effect of the TPP Service Quality

#### 5.2. Analysis of the Effect of the OTA and TA Service Quality

- (1)
- The effect of the OTA and TA service quality on channel prices.

- (2)
- Effect of the OTA and TA service quality on the channel demand.

- (3)
- The effect of the OTA and TA service quality on profits.

#### 5.3. Comparative Analysis under Contract Coordination

## 6. Conclusions and Managerial Implications

#### 6.1. Conclusions

- (1)
- The effect of service quality on price and demand: whether under centralised decision-making or decentralised decision-making, TPP’s service quality and service quality have a positive effect on online and offline channel sales prices and channel demand. This shows that travel consumers are more willing to pay for high-quality travel experiences. For the OTA and TA, the quality of channel services will also affect the price and demand of channels in the process of selling tourism products. The demand for the online channel will increase with an improvement in OTA service quality. The demand for the lower channel will increase with an improvement in TA service quality. With the improvement of the OTA service quality, the sales price of the channel will also increase with an improvement in the service quality of the channel, but the price of the competitive channel will not necessarily decrease, and the price of the competitive channel will change, as it is affected by consumer sensitivity to price and service. Improving the service quality of the OTA and TA will increase the profit of the TPP. The profits of the OTA and TA always decrease with an improvement in the service quality of competing channels, and an improvement in the service quality of their own channels will make their own profits first rise and then decline.
- (2)
- The effect of service quality on profits: the improvement of TPP service quality can attract more consumers to buy travel products, and the profits of OTAs and TAs will increase. The service quality of TPP should not be too high, however. The excessive pursuit of service quality will increase the cost burden for TPP, but will reduce TPP’s profit. TPP service is therefore always beneficial to OTA and TA, but under certain conditions, it is beneficial to TPP. This conclusion is roughly the same as that of Peng et al. [54]. The overall profit of the supply chain will also increase with an improvement in TPP service quality.

- (3)
- By designing a wholesale price contract, TPP provides a lower wholesale price, so that the revenue of the tourism supply chain under the coordination mechanism can reach the revenue level of the tourism supply chain under centralised decision-making. Under the wholesale price contract, the profits obtained by all members of the supply chain are higher than the profits obtained by each member under pre-contract decentralised decision-making. The wholesale price contract can perfectly coordinate the dual-channel tourism supply chain, which contributes to the research on the sustainable development of the tourism supply chain.

#### 6.2. Theoretical Contributions

#### 6.3. Practical Implications

#### 6.4. Limitations

## Author Contributions

## Funding

## Institutional Review Board Statement

## Informed Consent Statement

## Data Availability Statement

## Conflicts of Interest

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**Figure 2.**(

**a**). The effect of TPP service quality on price. (

**b**). The effect of TPP service quality on demand. (

**c**). The effect of TPP service quality on profits under decentralized decision. (

**d**). The effect of TPP service quality on profits under centralized decision.

**Figure 3.**The effect of OTA service quality on channel prices. (

**a**) Price sensitivity coefficient is lower than the service sensitivity coefficient; (

**b**) Price sensitivity coefficient is more than the service sensitivity coefficient.

**Figure 4.**The effect of TA service quality on channel prices. (

**a**) Price sensitivity coefficient is more than the service sensitivity coefficient; (

**b**) Price sensitivity coefficient is lower than the service sensitivity coefficient.

**Figure 5.**The effect of TA (OTA) service quality on channel demand. (

**a**) The effect of TA service quality on channel demand; (

**b**) The effect of OTA service quality on channel demand.

**Figure 6.**(

**a**) The effect of OTA and TA service quality on profits under decentralized decision. (

**b**) The effect of OTA and TA service quality on profits under centralized decision.

Author | Supply Chain Structure | Whether Consider Service Factors | Game Process | Coordination |
---|---|---|---|---|

Dong, J., Shi, Y., Liang, L., and Wu, H. [32] | One tour operator and two tourism destinations | N\A | Stackelberg | Quantity discount contract |

Yang, L., Ji, J., and Chen, K. [28] | Dual-Channel | N\A | Bertrand and Stackelberg | Wholesale |

Jena, S. K., and Jog, D. [11] | Two-Echelon TSC | N\A | Local operator, tour operator, integrated Stackelberg | Cooperative advertising Two-part tariff contract |

Peng, H., He, Y., and Xu, F. [54] | Two-echelon tourism supply chain | TAP and TA provide services | Stackelberg | N\A |

Jena, S. K., and Meena, P. L. [55] | Two-Echelon TSC | Only tour operator provides services | Stackelberg | Sharing Surplus |

Wan, X., Jiang, B., Qin, M., and Du, Y. [33] | Single-Channel | N\A | Stackelberg | Revenue-sharing contracts |

Huang, L., and Zhang, M. [56] | Dual-Channel | Only tour retailer provides extra service | Stackelberg | Two-part tariff contract |

Huang, X., Zhu, S., and Wang, J. [30] | Single-Channel | N\A | Stackelberg and Nash | N\A |

This study | Dual-Channel Consider OTA participation on sale | Consider TP, OTA, TA provide services | Stackelberg | Wholesale Price, Income distribution contract |

Decision Variables | Description |

${p}_{t}$ | Offline sales price of tourism products |

${p}_{o}$ | Online sales price of tourism products |

$w$ | Wholesale price from the TPP to the TA |

Symbol | Description |

${s}_{s}$ | The TPP service quality |

${s}_{o}$ | The OTA online channel service quality level |

${s}_{t}$ | The TA offline channel service quality level |

$A$ | Potential market demand |

$\alpha $ | $\mathrm{Consumer}\text{}\mathrm{preference}\text{}\mathrm{for}\text{}\mathrm{offline}\text{}\mathrm{channels}\text{}\left(0\alpha 1\right)$ |

$\beta $ | Price Sensitivity of Demand |

$\sigma $ | $\mathrm{Cross}\text{}\mathrm{price}\text{}\mathrm{sensitivity}\text{}(\beta \sigma 0)$ |

$\gamma $ | Sensitivity of channel demand to service quality |

$\lambda $ | $\mathrm{Sensitivity}\text{}\mathrm{of}\text{}\mathrm{Service}\text{}\mathrm{Quality}\text{}\mathrm{of}\text{}\mathrm{Competing}\text{}\mathrm{Channels}\text{}(\gamma \lambda 0)$ |

$\mu $ | $\mathrm{TPP}\text{}\mathrm{service}\text{}\mathrm{cos}\mathrm{t}\text{}\mathrm{factor}\text{}\left(\mu 0\right)$ |

$\theta $ | $\mathrm{OTA}\text{}\mathrm{service}\text{}\mathrm{cos}\mathrm{t}\text{}\mathrm{factor}\text{}\left(\theta 0\right)$ |

$\epsilon $ | $\mathrm{TA}\text{}\mathrm{service}\text{}\mathrm{cos}\mathrm{t}\text{}\mathrm{factor}\text{}\left(\epsilon 0\right)$ |

$c\left({s}_{s}\right)$ | $\mathrm{TPP}\text{}\mathrm{service}\text{}\mathrm{cos}\mathrm{t}\text{}c\left({s}_{o}\right)=\theta {s}_{o}^{2}/2$ |

$c\left({s}_{o}\right)$ | $\mathrm{OTA}\text{}\mathrm{service}\text{}\mathrm{cos}\mathrm{t}\text{}c\left({s}_{o}\right)=\theta {s}_{o}^{2}/2$ |

$c\left({s}_{t}\right)$ | $\mathrm{TA}\text{}\mathrm{service}\text{}\mathrm{cos}\mathrm{t}\text{}c\left({s}_{t}\right)=\epsilon {s}_{t}^{2}/2$ |

$k$ | $\mathrm{The}\text{}\mathrm{percentage}\text{}\mathrm{of}\text{}\mathrm{commission}\text{}\mathrm{paid}\text{}\mathrm{by}\text{}\mathrm{TPP}\text{}\mathrm{to}\text{}\mathrm{OTA}\text{}(0k1)$ |

${D}_{o}$ | Online channel demand |

${D}_{t}$ | Offline channel demand |

${\mathsf{\Pi}}_{s}$ | Profit of the TPP |

${\mathsf{\Pi}}_{t}$ | Profit of the TA |

${\mathsf{\Pi}}_{o}$ | Profit of the OTA |

$\mathsf{\Pi}$ | Total profit of the TSC |

$\begin{array}{c}{\mathit{p}}_{\mathit{o}}^{*}\end{array}$ | $\begin{array}{c}{\mathit{p}}_{\mathit{t}}^{*}\end{array}$ | $\begin{array}{c}{\mathit{w}}^{*}\end{array}$ | $\begin{array}{c}{\mathit{D}}_{\mathit{o}}^{*}\end{array}$ | $\begin{array}{c}{\mathit{D}}_{\mathit{t}}^{*}\end{array}$ | $\begin{array}{c}{\mathbf{\Pi}}_{\mathit{s}}^{*}\end{array}$ | $\begin{array}{c}{\mathbf{\Pi}}_{\mathit{o}}^{*}\end{array}$ | $\begin{array}{c}{\mathbf{\Pi}}_{\mathit{t}}^{*}\end{array}$ | $\begin{array}{c}{\mathbf{\Pi}}^{*}\end{array}$ | |
---|---|---|---|---|---|---|---|---|---|

Centralized decision | 113.99 | 121.01 | N/A | 18.50 | 31.00 | N/A | N/A | N/A | 5348.6 |

Decentralized decision | 119.63 | 136.25 | 116.08 | 24.74 | 20.17 | 4284.2 | 560.00 | 374.66 | 5218.8 |

$\begin{array}{c}{\mathit{t}}_{1}\end{array}$ | $\begin{array}{c}{\mathit{w}}^{{\mathit{O}}^{*}}\end{array}$ | $\begin{array}{c}{\mathbf{\Pi}}_{\mathit{s}}^{{\mathit{O}}^{*}}\end{array}$ | $\begin{array}{c}{\mathbf{\Pi}}_{\mathit{o}}^{{\mathit{O}}^{*}}\end{array}$ | $\begin{array}{c}{\mathbf{\Pi}}_{\mathit{t}}^{{\mathit{O}}^{*}}\end{array}$ | $\begin{array}{c}{\mathbf{\Pi}}^{{\mathit{O}}^{*}}\end{array}$ |
---|---|---|---|---|---|

0.801 | 98.22 | 4284.3 | 560 | 504.38 | 5348.6 |

0.804 | 98.73 | 4300.3 | 560 | 488.33 | 5348.6 |

0.807 | 99.25 | 4316.4 | 560 | 472.29 | 5348.6 |

0.81 | 99.77 | 4332.4 | 560 | 456.24 | 5348.6 |

0.813 | 100.29 | 4348.4 | 560 | 440.19 | 5348.6 |

0.816 | 100.81 | 4364.5 | 560 | 424.15 | 5348.6 |

0.819 | 101.32 | 4380.5 | 560 | 408.1 | 5348.6 |

0.822 | 101.84 | 4396.6 | 560 | 392.06 | 5348.6 |

0.825 | 102.36 | 4412.6 | 560 | 376.01 | 5348.6 |

0.8253 | 102.41 | 4413.94 | 560 | 374.66 | 5348.6 |

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## Share and Cite

**MDPI and ACS Style**

Wang, X.; Lai, I.K.W.; Tang, H.; Pang, C.
Coordination Analysis of Sustainable Dual-Channel Tourism Supply Chain with the Consideration of the Effect of Service Quality. *Sustainability* **2022**, *14*, 6530.
https://doi.org/10.3390/su14116530

**AMA Style**

Wang X, Lai IKW, Tang H, Pang C.
Coordination Analysis of Sustainable Dual-Channel Tourism Supply Chain with the Consideration of the Effect of Service Quality. *Sustainability*. 2022; 14(11):6530.
https://doi.org/10.3390/su14116530

**Chicago/Turabian Style**

Wang, Xiangping, Ivan Kai Wai Lai, Huajun Tang, and Chuan Pang.
2022. "Coordination Analysis of Sustainable Dual-Channel Tourism Supply Chain with the Consideration of the Effect of Service Quality" *Sustainability* 14, no. 11: 6530.
https://doi.org/10.3390/su14116530