The bargaining power of the Republic of Cyprus accommodation providers in contractual and non-contractual negotiations with large European tour operators.

Abstract

This study examined the bargaining power of the accommodation providers (APs) of the Republic of Cyprus (ROC) when undertaking contractual and non-contractual negotiations with large European tour operators (TOs). Within a tourism and hospitality context there was an insufficient understanding regarding bargaining power, its antecedents, influencing factors and the implications for negotiation in business-to-business (B2B) buyer-supplier relationships. Bargaining power is embedded in B2B buyer-supplier exchanges, where parties engage in negotiations to exchange resources in order to achieve their organisational objectives and survive. A qualitative inductive approach was followed and an epistemological interpretivist Grounded Theory methodology and design adopted, combining elements from two versions of Grounded Theory: evolved and classic. Qualitative primary data were collected in two stages: an exploratory stage and a main stage. The exploratory stage was undertaken to better understand the contextual characteristics of the tourism and hospitality industry in the ROC and the actors involved and guide the main stage of primary data collection. Sixteen semi-structured interviews, using a purposive convenience sampling technique, were conducted in the exploratory stage. The main primary data collection stage used purposive snowballing sampling and forty-five semi-structured interviews were conducted. Grounded Theory’s techniques were employed to analyse the data. This study has made contributions to knowledge, theory and practice. First, in terms of contributions to knowledge this study has extended the bargaining power concept within a tourism and hospitality context. As a result, it has advanced current knowledge of power relations between B2B buyers and suppliers. In addition, extending the resource-dependence perspective in the tourism and hospitality context assisted in determining dependence patterns that can influence various aspects of B2B buyer-supplier relationship, including negotiations. This study has also contributed to knowledge by advancing understanding regarding the role of emotions in B2B buyer-supplier negotiations. Further, it has contributed to B2B pricing management knowledge by identifying that B2B pricing in tourism buyer- supplier negotiations is also influenced by culture, relative bargaining power and relational factors (emotions) and relationship constructs, and not solely by rationality and market characteristics as frequently accepted by economic models. Second, a contribution was made to theory through the development of a substantive theory combining three core categories, resources, relational factors and market characteristics, in order to fully explain the bargaining power interactions in negotiations between tourism buyers and suppliers, from the weaker party’s perspective. Third, the practical contribution was made in terms of the explanation of bargaining power interactions and the implications for the contractual and non- contractual negotiations of the APs with the TOs. This knowledge can aid perceived weaker parties such as APs to take more informed decisions in negotiations as well as to better manage their relationship with the large perceived powerful TOs. These were developed into recommendations for APs, TOs and Government.