Quality Externalities among Hotel Establishments: What is the Impact of Tour Operators?

Abstract

This paper is about quality decisions in a vertical structure where competitive producers sell to 'powerful retailers'. SpeciÞcally, we focus the analysis on the role played by a tour operator (TO) on quality investments when distributing the capacity of a given tourist destination. We emphasize the presence of quality externalities among hotel establishments, and see that sometimes a TO distribution can provide a solution to the 'tragedy of the commons' in quality provision. Thus, we analyze what implications do vertical relations have for quality in this industry, and then derive some policy recommendations.We thank Carmen Matutes for her most valuable contribution to the initial development of this work. Of course, any possible errors are the authors' sole responsability.

The Greening Role of Tour Operators

“…Let us now show how, as previously shown in Calveras and Vera-Hernández (2005), TOs can mitigate the underprovision of environmental quality. Thus, first consider a case in which the commercialisation of accommodation services in the destination is decentralized.…”

“…Several authors highlight the interest of TOs in promoting ''green'' management in tourist destinations (Buhalis 2000;Budeanu 2005;Calveras and Vera-Hernández 2005;Tapper and Font 2005;Tepelus 2005;Schwartz et al 2008;Font et al 2008;Zhang et al 2009). The most prominent element in this trend is the Tour Operators Initiative (TOI, http://www.toinitiative.org/), which encourages companies to improve and report their sustainability activities and which promotes a common commitment to foster environmental practices (Budeanu 2005;Van Wijk and Persoon 2006).…”

“…This trend in the market has led TOs to move from a short-term profit maximization view, as suggested by Carey et al (1997), to new business-to-business relationships. In this new vision, TOs may take on the leadership in improving the competitive advantage of the tourism supply chain (Crotts et al 1998;Calveras and Vera-Hernández 2005;Zhang et al 2009;Song 2012). Thus, there is evidence that TOs foster innovations in hotels' management (Orfila-Sintes and Mattsson 2009) and in the adoption of a corporate social responsibility (CSR) strategy by hotels (Calveras 2015).…”

“…Thus, certain parts of the tourism product are non-excludable but subtractable; as a consequence, a tourism firm imposes external costs on the rest of the sector when using CPR, which results in a socially inefficient management (Ostrom et al 1999;Blanco et al 2009a, b;Briassoulis 2002;Calveras and Vera-Hernández 2005).…”

A dynamic approach to voluntary environmental contributions in tourism

“…The strategic consequences of the existence of this premium in tourism have been previously analyzed, mostly in models of environmental competition between destinations (Calveras, 2003;Calveras and Vera-Hernández, 2005;Candela and Cellini, 2006;González et al, 2006;Calveras, 2007;Pintassilgo and Albino, 2007).…”