Business relationship between hotels and tour operators: the case study of the tourism industry in Phuket

Abstract

The purpose of this study was to analyse the conflicts in the business relationship between hotels and tour operators in Phuket, Thailand. The main purpose of this research was to explore whether Phuket hotels had experienced any conflicts in their business cooperation with tour operators. In addition, the research examined the influencing factors of these conflicts and the correlation between these conflicts and these factors. In addition, hidden conflicts and the research participants' suggestions for alleviating conflicts were assessed. Buhalis's (2000) framework for exploring conflicts between hotels and tour operators was adapted and was used by the researcher as the framework of this research. Two data collection methods: a questionnaire survey and informal interviews, were used to collect data. One hundred and three hoteliers working for Phuket hotels were agreed to participate in the data collection of this research. The participated hotels belonged to three main categories, namely, upmarket, mid-market and budged hotels. The results of the questionnaire survey showed that the participants regarded tour operators' delay payments as the most important conflict. The conflicts of hotels' room prices and tour operators' bankruptcies were also experienced by most of the respondents. Furthermore, the correlations between the conflicts and the influencing factors were, in general, not strong. However, some participants had revealed in the informal interviews that they experienced conflicts in their business relationships with tour operators. Some correlations, although not strong, showed the situations of hotels business in Phuket. There are some examples of these correlations that can be given here. Firstly, it was more likely that tour operators' payments to hotels were delayed if they used both direct and indirect payment methods. Secondly, high category hotels, such as upmarket hotels, were more likely to achieve the average annual increase in tour operators' contract rates than the budget hotels. The price conflict was also more important to high category hotels than lower category ones. Thirdly, if hotels achieved high average annual increase in tour operators' contract rates, it was unlikely that these hotels faced with the price conflict. Fourthly, the larger the hotels were, the higher the actual average contract coverage levels they received from tour operators. Last but not least, the higher were the total number of tour operators cooperating with hotels, the more likely that hotels could receive the coverage of tour operators' contracts. Moreover, the participants who experienced few or no conflicts in their business relationship with tour operators gave suggestions to alleviate conflicts. They also pointed out hidden conflicts within the business relationship of these two parties. Many respondents hoped that hotels in Phuket could use the research findings as guidelines in solving conflicts. Some of them also noted that hoteliers can be enable to have a perspective of future hotel industry if hotels in Phuket can cooperate and share information concerning the conflicts in business relationship between hotels and tour operators.