This study addresses a pivotal strategic issue in hospitality e-commerce: how hotels can optimize cooperation with heterogeneous online travel agencies (OTAs). Moving beyond the conventional question of whether to cooperate, we investigate the interrelated decisions of which OTA type to partner with (quality-focused vs. price-focused) and which business model to adopt (merchant vs. agency). We develop a game-theoretic model that incorporates key e-commerce factors, including hotel capacity constraints, cross-channel spillover effects, and differential consumer acceptance of OTA types. Our analysis yields a contingent decision framework. We demonstrate that OTA cooperation becomes beneficial only when a hotel’s room capacity exceeds its direct-channel demand. The optimal strategy evolves with capacity: hotels with moderate capacity should partner with a single OTA type—predominantly the quality-focused one—while larger hotels should engage both types to maximize market coverage. In terms of business models, smaller hotels benefit from the risk-shifting merchant model, whereas larger hotels capture higher margins through the agency model. A key finding is the general superiority of a differentiated approach: applying the agency model to quality-focused OTAs and the merchant model to price-focused OTAs. This research provides a structured analytical framework to guide hotel managers in crafting e-commerce platform strategies and offers scholars a foundation for further inquiry into platform competition and contract design in digital marketplaces.
Zhang et al. (Wed,) studied this question.