Opaque vs Transparent: a Trade-off between Risk-pooling and Market Transparency
The third-party Internet booking has grown rapidly. Two distinct business models-the transparent and opaque sites have emerged. The transparent site posts the prices and hotel names on its menu, whereas the opaque site hides the hotel identities until the customers make the payments. This paper analyzes and compares these two business models. We find that the opaque site can benefit from the risk-pooling effect but may attract fewer customers because of the lack of market transparency. However, the opaque site may outperform the transparent site if there is a mismatch between the hotel room supply and customer demand; whereas the transparent site may outperform the opaque site when the room supply of each hotel is abundant. Numerical analysis suggests that the opaque site tends to offer a lower price. We also find that if the demand reduction due to the lack of market transparency can be offset by the risk-pooling effect, then the opaque model is able to generate more revenue when the number of hotels increases.
Hotel management online booking market transparency risk-pooling.
Zhaolin Li Yanzhi Li Tinglong Dai
Department of Management Sciences, City University of Hong Kong, Hong Kong SAR.
国际会议
2007 International Conference on Manufacturing & Service Operations Management(2007制造与服务运作管理国际学术会议)
北京
英文
2007-06-18（万方平台首次上网日期，不代表论文的发表时间）