Optimum commission rate of the hotel paid to the chartered travel operator

Abstract

This study aims to derive the optimal commission rate paid by the hoteliers to the chartered travel operators in order to maximize the profit of the hoteliers. This study uses the theoretical maximization model of the manufacturer's production theory of economics. The optimum commission rate of the hoteliers paid to the chartered travel operators is derived and has been proved its existence, and its value is never larger than 1/2. The maximization profit of the hotels can be obtained. This paper is novel in two respects. First, this paper explores that the commission rate is a decision variable determined by the hoteliers, not a constant as the previous studies assumed. Second, the sales channel issues of the hotel other than OTAs such as chartered travel industry have hardly been discussed. This paper explores the issue of the optimum commission rate paid by the hotels to the chartered travel operators.