Conflicts between accommodation establishments and travel agencies

Conflicts between accommodation establishments and travel agencies

Stanislav Ivanov International University College, 3 Bulgaria Str., 9300 Dobrich, Bulgaria, tel: +359 58 655612, fax: +359 58 605760, e-mail: [email protected]

Elena Stoilova International University College, 3 Bulgaria Str., 9300 Dobrich, Bulgaria, tel: +359 58 655612, fax: +359 58 605760, e-mail: [email protected]

Steven F. Illum Missouri State University, 901 South National Ave., Springfield, Missouri 65897, USA, tel: +1-417-836-4773, e-mail: [email protected]

Corresponding author: Stanislav Ivanov

Citation: Ivanov, S., Stoilova, E., Illum, S. F. (2015). Conflicts between accommodation establishments and travel agencies. Tourism and Hospitality Research, 15(1), 54-70.

Conflicts between accommodation establishments and travel agencies

Abstract: The paper discusses sources of conflicts that arise between accommodation establishments and travel agencies in Bulgaria, their bargaining power and conflict resolution approaches. The sample includes 119 accommodation establishments and 81 travel agencies. Results reveal that agencies more often face conflicts with accommodation establishments than vice versa. From the viewpoint of the accommodation establishments, most conflicts are connected with delayed payments, level of prices, late submission of rooming lists, and timing of contract negotiation. Travel agencies consider frequent conflicts as unfavourable contract terms, prices, accommodation establishment price/quality ratio, incorrect information provided by accommodation establishments. Contrary to general belief, accommodation establishments perceive their bargaining power as equal to agencies’, while agencies consider accommodation establishments to have stronger bargaining power than them. Both agencies and accommodation establishments prefer cooperative conflict resolution approaches. Managerial implications, research limitations and directions for future research are discussed.

Key words: distribution channel conflicts, accommodation establishments, travel agencies, bargaining power, conflict resolution, Bulgaria

Conflicts between accommodation establishments and travel agencies

Introduction Distribution channels in tourism and the relationships among channel members have long been a subject of research (Buhalis, 2000; Buhalis & Laws, 2001; Karamustafa, 2000; Kracht & Wang, 2010; Lee, 2013; Marinov & Kazandzhieva, 2010; Medina-Muñoz & GarcíaFalcón, 2000; Myung et al., 2009; O’Connor, 2008; Pearce, 2008; Stuart et al., 2005). Tourism distribution channels are usually associated with travel agencies (traditional ‘brickand-mortar’ agencies and OTAs), GDSs, online reservation systems, among others (Ivanov & Zhechev, 2011). Travel agencies include tour operators (wholesalers working on a merchant model) and travel agents (retailers working on an agency model), regardless of whether they have a physical office address where they serve their customers, or operate exclusively online. Researchers emphasise the fact that tour operators have dual oligopolistic (few sellers) and oligopsonic (few buyers) power. At destinations where travel agencies (tour operators in particular) represent the demand side and the accommodation establishments are the supply side of the market, agencies exercise their oligopsonic power (Bastakis et al., 2004), while in tourist generating countries where they represent the supply, agencies enjoy their oligopolistic power (Klemm & Parkinson, 2000, 2001). This dual advantageous position gives travel agencies strong market power and bargaining position in negotiations with hoteliers, and they exert tight control over the accommodation establishments (Buhalis, 1999; Lopez & Baum, 2004; Medina-Muñoz et al., 2003) which may cause conflicts within the tourism distribution channel. Ford et al. (2012) emphasise that, due to power asymmetries within the tourism distribution network, the more powerful can force the weaker partner to accept a lower value for a product or service by threatening to withdraw from the relationship and change to a different supplier. An agency, for instance, that contributes significantly to sales of a particular accommodation establishment may use its power during negotiations and

threaten to terminate the sales contract in order to achieve specific concessions from an accommodation establishment. The opposite situation is also valid, although the accommodation establishment is usually perceived as the weaker partner in the relationship. Despite some conflicts taking the form of healthy competition, others might damage the channel (Kotler et al., 2006: 516) by destroying the trust between the partners.

This paper focuses on conflict between accommodation establishments and travel agencies in Bulgaria. The specific reasons for the choice of the topic relate to recent developments in Bulgarian tourism industry currently showing that there is much tension between them. Hoteliers, for example, accuse travel agencies of excessive aggressive negotiations and armtwisting (Ivanov & Zhechev, 2011), blackmailing them to decrease hotel accommodation rates (Moreto.net, 2009). Furthermore, in the last couple of years, several travel agency bankruptcies (the most notable case being Alma Tour in 2011) have left many hoteliers in the country empty-handed. They did not receive payment for the served guests. In this regard, this paper delves deeper into the ‘accommodation establishments-travel agencies’ relationships, and empirically investigates the statements of Bulgarian tourism industry representatives. In particular, it aims at: a) critically evaluating sources of conflict between the accommodation establishments and travel agencies in Bulgaria from both viewpoints; b) analysing accommodation establishments’ and travel agencies’ perceptions of their own and the other side’s bargaining power; c) identifying possible associations between the bargaining power/dependence perceptions of the accommodation establishments and travel agencies and the conflicts they face with the opposite party; and d) critically analysing the conflict resolution approaches of both parties. Findings may help both accommodation establishments and travel agencies better understand the perspective of the other side, which may ultimately contribute to stronger collaboration between them.

The rest of the paper is organised as follows. Section 2 provides the theoretical background of the research. Section 3 gives an overview of the accommodation and travel agency industries in Bulgaria. Section 4 explains the methodology while Section 5 elaborates on the findings. The final section discusses the limitations, managerial implications and directions for future research.

Theoretical background Conflict domains Figure 1 presents a non-comprehensive overview of the domains of the potential conflicts between accommodation establishments and travel agencies. One domain is connected with the contract between the accommodation establishment and the travel agency. The other three relate to the customer service stages – pre-stay, stay, and post-stay conflicts. Each of the four domains reflects sources of potential conflicts as discussed below. These are numerous, context- and company-specific, and impossible to summarise comprehensively. In practice, every contact point between accommodation establishments and travel agencies may be perceived as a potential source of conflict. They might be caused by objective (e.g. payment delays, late provision of booking details), subjective (e.g. personal conflicts between employees) or even political reasons (e.g. the division of the Island of Cyprus) (Webster et al., 2009). In this regard, Figure 1 presents a non-comprehensive overview of the domains of potential conflicts between accommodation establishments and travel agencies—in practice, there may actually be some particular conflicts between agencies and hotels that do not belong to any of the domains in Figure 1.

INSERT FIGURE 1 AROUND HERE

Contract-related conflicts Contract is probably the main source of potential conflicts. Potential contract-related conflict areas may include price (price level, commissions, and price/quality ratio), release periods, general contract terms (cancellation and payment terms), contract negotiation timing, and fulfilment of contract obligations. Due to the predominantly oligopsonic structure of the tourism distribution systems in the destinations (Bastakis et al., 2004), travel agencies have high bargaining power (Buhalis, 2000) and impose their conditions in the contracts with accommodation establishments. And in negotiations size does matter – Aguiló et al. (2003) stress that the more tourists an agency sends, the higher its market power and ability to negotiate lower accommodation rates. The latter often accuse travel agencies (especially large tour operators) of ‘arm-twisting’ during negotiations. They expect to achieve better contract terms for themselves – e.g. negotiating for lower prices during/immediately after weak sales periods, or confronting/playing accommodation establishments against each other (see Buhalis (2000) for a detailed overview of techniques used by tour operators to decrease accommodation establishment prices). However, one could argue whether these techniques are really ‘arm-twisting’ or just part of the general business negotiations arsenal, better utilised by agencies. Anyway, due to the high bargaining power of travel agencies, especially in ‘sea, sun, sand’ destinations, accommodation establishments depend heavily on tour operators for the distribution of their product (Andriotis, 2003; Karamustafa, 2000).

Porter (1980: 24-26) stipulates that distributors of a product (the role travel agencies serve in regard to accommodation establishments) have high bargaining power when they are concentrated or purchase large volumes relative to seller sales, earn low profits, face few switching costs, pose high and credible threat of backward integration, have full market

information and can influence customers’ purchasing decisions; when the product is standard, it represents a significant fraction of distributors’ costs or purchases and has low importance to the quality of the distributor’s product. In a similar vein, Coff (1999: 122) pinpoints that the bargaining power is highest when parties are capable of acting in a unified manner (e.g. when through mergers and acquisitions travel agencies form travel groups and decrease competition), have access to key information (e.g. on supply and demand), have a very high replacement cost to the firm (i.e. when substituting one agencies with another by the accommodation establishment is difficult), and face low costs if they move to another firm (e.g. travel agencies redirecting can easily redirect their customers to other establishments). In tourism practice, most of the conditions defined by Porter (1980) and Coff (1999) are fully or partially fulfilled for the relationship between travel agencies and accommodation establishments. This establishes the strong power of the former over the latter. French & Raven (1959) decompose the power of one partner over another into reward, coercive, legitimate, expert and referent power (cited in Turner & Guilding, 2013). In the context of the ‘accommodation establishments-travel agencies’ relationship, the greater bargaining power of travel agencies stems from various sources. Their reward power comes from their access to customers and facilitation of the distribution of the hotel product. Their coercive power is related to their ability to direct customers to other accommodation establishments and/or withhold payments due to them. The market and customer knowledge of the agencies is the basis for their expert power. The legal coverage of the contracts is the source of their legitimate power, while accommodation establishment’s desire to be associated with a travel agency’s brand is a manifestation of the referent power.

Levels of price and commissions cause much tension between accommodation establishments and travel agencies (Andriotis, 2003; Buhalis, 2000; Karamustafa, 2000;

Myung et al., 2009) because, from a game theory perspective (Geçkil & Anderson, 2010; Hillier & Liebermann, 2010), the relationships between them in the context of prices and commissions follow a ‘zero-sum’/ ‘constant-sum’ pattern. Due to the limited budget of the tourist, one euro more for one of the parties means a euro less for the other. In this regard, accommodation establishments and travel agencies are particularly sensitive toward price and commissions. Both parties aim at maximising their profits. In the short run, achieving this goal means that each party concentrates on extracting the maximum from every deal/contract. Therefore, both the accommodation establishments and travel agencies enter negotiations with highly antagonistic positions that may yield conflict. In the long run (strategic perspective), the interests of both organisations align – both sides are interested in attracting more tourists who generate higher revenues for both. This transforms their relationship from a ‘zero-sum’ to a ‘cooperative’ game. Ku et al. (2011: 736) emphasise that ‘hotels that value travel agents’ business can do much to build their trust and thus maximize their investment in global distribution networks. However, both parties will cooperate in the long-run if they see that their interests are protected, even in the short run. The opportunistic behaviour of an accommodation establishment or travel agency in a particular deal/contract could ruin the other party’s trust and decrease their willingness to renew their contract (see also Samaha, 2011). Therefore, achieving the long run strategic goal of maximising profit by each party does not necessarily require their maximisation in the short run. Of course, an accommodation establishment and travel agency may cooperate in the short-run and coordinate their pricing (Guo & He, 2012), but this might require some sort of ownership, personal or other relationship between them to facilitate that cooperation. Nevertheless, the uncertainty of the accommodation establishment-agency contract renewal, fuelled by bonus systems based on monthly or quarterly profits, stimulates both parties to pursue short- rather

than long-term gains in their contract negotiations, thus leading to potential conflict during their negotiations.

Price/quality ratio may be a source of conflict generated by both sides. Travel agencies, for example, request highest possible quality accommodation establishments can provide at the contracted rates (Bastakis et al., 2004). On the other hand, hoteliers accuse travel agencies that prices they pay them are much less than required to maintain the respective quality of service. Of course, both parties have their arguments. Providing high quality service at low prices makes a travel agency’s product competitive which will ultimately generate revenues for the accommodation establishment as well. However, higher quality of accommodation service is more expensive to produce and hoteliers expect to be compensated with higher prices. When travel agencies exercise excessive bargaining power and depress accommodation rates, hoteliers incapable of increasing the rates react by decreasing the quality of their service in order to reflect lower prices, e.g. by using less expensive bathroom cosmetics, less variety and poorer quality food and beverage in all-inclusive properties, fewer staff, delayed repairs, etc. (see also Karamustafa, 2000). However, this may trigger a counterreaction by agencies that might use lower quality of accommodation service as an argument for even lower rates. This may lead to a vicious downward price-erosion spiral, the only escape from which is diversification of distribution channels used by an accommodation establishment to eliminate dependence on any single one of them. Of course, working with travel agencies may have a positive externality on accommodation establishment service quality (Calveras & Hernández, 2005) if agencies put more emphasis on quality than price as their competitive advantage.

Release periods determine when a travel agency should unblock unsold rooms from their allotment. Obviously, the interests of accommodation establishments and agencies are opposing. Accommodation establishments prefer longer release periods that allow them enough time to sell unused rooms from agencies’ allotments. Agencies prefer shorter release periods in order to maximise time available to generate sales. With increased bargaining power of travel agencies and competition among accommodation establishments, release periods are shortened at the expense of accommodation establishments. In some cases, especially for urban properties, release periods are at 6 p.m. on the expected day of guest arrival, nearly eliminating any chance of an accommodation establishment to sell the unused rooms.

The coverage of the allotment itself by a travel agency is a separate area of concern for accommodation establishments (Bastakis et al., 2004). Practice shows that tour operators often block larger allotments than they are able to sell in order to secure available rooms (so called ‘overcontracting’), but later fail to fulfil their obligation on their allotment and release much of it (Andriotis, 2003). Accommodation establishments, expecting such behaviour from agencies, protect themselves by signing allotment contracts for a greater total number of rooms than the available capacity of a property which, if not managed properly, will lead to overbooking and generate conflict.

Timing of signing and renewing contracts may be a source of conflict too (Buhalis, 2000). While hoteliers may negotiate a contract at any time, they are most vulnerable during slow business periods, especially when their occupancy and revenues are lower than expected. Faced by the need to pay their expenses, hoteliers become more compliant and receptive to travel agencies’ requests for lower prices, shorter release periods, later payment due dates,

etc. Therefore, they may perceive agencies’ requests as opportunistic behaviour, taking advantage of their vulnerable position. This may inevitably increase anxiety during contract negotiations and cause conflict.

Pre-stay conflicts Pre-stay conflicts include those that may arise before guests arrive at an accommodation establishment. They may relate to the timeliness, completeness and correctness of information provided by each party to the other and to customers concerning booking details, prompt confirmation/rejection by the accommodation establishment; compliance with cancellation terms as stipulated in the contract.

Information provision is important in any business relationship. Ku et al. (2011: 736) stress that ‘hotels that have historically provided complete and accurate information have reaped the benefits of reliance on travel agents and have therefore profited from increased bookings.’ Not reporting repairs in and/or around the property or malfunctioning of some of their facilities, and non-updated website are just some of the potential conflict points that may cause tension between accommodation establishments and travel agencies in regard to information provision. Travel agencies may also be responsible for these types of conflicts. They may provide, intentionally or not, wrong information to their customers, although the information was provided correctly by the accommodation establishments. For example, large tour operators often have their own accommodation establishment rating systems and, as Clerides et al. (2008) report, an accommodation establishment’s rating by a tour operator might be different from its official category. When an accommodation establishment has been downgraded by a tour operator in its website/brochures, this may create conflict between the two parties. Furthermore, travel agencies might project a different image of a

destination (Klemm & Parkinson, 2001) than that preferred/projected by local destination stakeholders. They may publish misleading information about a destination and/or an accommodation establishment, thus effectively diverting consumer demand to other destinations or establishments. When tourists receive incorrect information, regardless of whether it was an accommodation establishment’s or agency’s fault, a gap appears between their prior expectations and service perceptions. They may become dissatisfied with the service process (Ivanov & Zhechev, 2011) and may have a legal right to complain.

Provision of booking details may be considered as a potential source of conflict (Buhalis, 2000; Karamustafa, 2000). Travel agencies may delay sending already confirmed bookings from their allotments to accommodation establishments claiming that sales are slow and press them for lower promotional prices to stimulate demand. After agencies are granted lower rates, they may send those previous bookings to the accommodation establishments. In the end, customers do not benefit from the lower rates. The difference between the originally contracted rates and new promotional rates is unethically pocketed by agencies. On the operational level, hoteliers might protect themselves against such opportunistic behaviour by agencies by checking whether agencies’ websites show the new lower rates (for packages and/or accommodation only). On a strategic level, diversification of distribution channels is the only feasible solution for hoteliers to decrease their dependence on any particular distributor. Accommodation establishments may cause conflicts related to booking details. A travel agency might lose a customer due to lack of or late feedback from an accommodation establishment on a booking status (confirmed/rejected/amended). Considering that time is now one of the sources of competitive advantage (Stalk, 1988), being late in responding to a customer request inevitably leads to losing them to the faster competitors.

Cancellation terms per se are part of contract terms as discussed above. However, an accommodation establishment or travel agency may not wish to comply with them. For example, the accommodation establishment may confirm different cancellation terms on a particular booking than the terms stipulated in their contract. If these new terms are in favour of the agency and the customer, this will not cause any problems and they will be accepted by the agency. If they are much stricter, they will be a source of conflicts. On the other hand, the agency might cancel a booking after the cancellation deadline. If the booking is nonguaranteed (e.g. the customer pays on arrival and no credit card details have been provided in advance), the accommodation establishment will not have the tools to be compensated for the potential loss of revenues (in the case that a room remains unsold).

Stay-related conflicts Stay-related conflicts have been identified in two areas – operational error and overbooking. Overbooking is a normal business practice used by the accommodation establishments to protect themselves from unused rooms due to no-shows, late cancellations, and terminationof-stay by already accommodated guests (Ivanov, 2006, 2014). If managed properly, overbooking will not cause any problem as the plan is for the number of overbooked rooms to equal the number of no-shows. However, if the number of overbooked rooms is much higher than the number of no-shows, then the accommodation establishment must walk guests and this will generate conflict between the property and the agency that sent the walked tourists. Operational mistakes are inevitable (e.g. accommodation of customers in the wrong room type) but, if the tourist has been compensated appropriately for the inconvenience, this would signal a professional attitude of the hotelier and the relationship with the agency may even be strengthened.

Post-stay conflicts Post-stay conflict areas are related to payments, customer satisfaction surveys and handling of complaints. Delayed payments by agencies are a major conflict area (Buhalis, 2000; Klemm & Parkinson, 2001) because they limit the capabilities of an accommodation establishment to cover its own payments to its suppliers. In extreme cases, like default of a travel agency, this might even cause default of the accommodation establishment. Travel agencies are motivated to pay as late as possible, while accommodation establishments prefer payment as early as possible. While regulated in contracts between the parties, these obviously opposing positions sow the seeds of potential conflict when payment terms are not complied with by a travel agency.

Manipulated customer satisfaction surveys (Buhalis, 2000) may be used by travel agencies as a motive to lower prices during contract renewal. Considering the fact that hoteliers do not have access to primary data, travel agencies may be tempted to take advantage of the situation and present whatever customer satisfaction survey results they wish.

Handling complaints by accommodation establishments and agencies may be a source of conflict if it does not follow accepted business practice to reach a timely and relevant solution. Travel agencies often compensate their customers for complaints against accommodation establishments and deduct the amount paid as compensation from the amount due to the accommodation establishments, which is a ground for conflict.

Conflict resolution approaches The literature on conflict resolution (d'Estrée, 2009; Deutsch et al., 2006) identifies various specific methods which may be grouped into the following basic approaches: conflict

accommodation, cooperative (collaborative) conflict resolution and competitive conflict resolution. In the conflict accommodation approach the party in the conflict decides to eliminate discussions with the contender by accepting fully their terms and conditions. In the cooperative (collaborative) approach, the parties perceive the other as a partner and search for a ‘win-win’ solution to satisfy both sides, although perhaps to a different degree (Fisher et al., 2011). In the competitive approach, the parties perceive themselves as adversaries, apply hard negotiation tactics (Camp, 2002) and try to impose their terms and conditions over the other side, it may even mean terminating their contract. To summarise, considering the ‘constantsum’ pattern of the relationships between accommodation establishments and travel agencies, especially in the context of pricing and commissions, in an event of a conflict each party may approach a case in one of the following ways:  Accept the conditions of the other side (conflict accommodation)  Try to find a solution that is beneficial and acceptable for both parties (collaborative approach)  Try to impose entirely or predominantly one’s own conditions on the other side (competitive approach)  Terminate the contract with the other party (competitive approach)

Of course, parties may address a conflict with a completely different approach – conflict avoidance, i.e. ignoring the conflict and the other party. However, this approach does not actually lead to conflict resolution. In practice, accommodation establishments and travel agencies that follow this approach will either submissively accept the conditions of the other side without negotiations (similar to the outcome of the conflict accommodation) or they will not sign a contact (e.g. accommodation establishments not using travel agencies as a distribution channel).

Empirical setting In 2012 Bulgaria boasted 301140 beds in 2758 accommodation establishments (NSI, 2013) with an average capacity of 109 beds. They were quite concentrated geographically – 67.94% of the bed capacity is located in the three administrative regions with access to the Black Sea Coast (Dobrich, Varna and Bourgas). In the same year, the country was visited by 8866552 foreigners, 2632062 of which used the services of accommodation establishments, generating nearly 600 mln BGN (310 mln euros) revenues from 13451440 overnights. The main source markets included Germany, Russia, Romania, UK, and Poland, whose tourists visited the country mostly for vacation during the summer months. In 2012, these markets accounted for 50.98% of the foreign tourists and 60.67% of the overnights. The average stay was 5.11 overnights but varied greatly from 5.95-7.17 overnight for the coastal regions to less than two overnights for some of the inland regions. As of July 2013, the Bulgarian Ministry of Economy and Energy issued certificates of registration (the official name of the document according to Bulgarian legislation) to 2640 travel agencies (MEE, 2013), 1142 of which were registered as travel agents only, 542 as tour operators only, and the rest (956) as both tour operators and travel agents (which is permitted by the legislation). Many foreign travel agencies operate in the country, either directly contracting with accommodation establishments or through local representatives, but their number cannot be determined properly and comprehensively.

Methodology Research questions For the purpose of this study, six groups of exploratory research questions were formulated. The first group examined the influence of accommodation establishments’ size (up to 50, 51-

100, 101-150 and over 150 rooms), location (seaside, rural, mountain, urban), category (1-2, 3 and 4-5 stars) and dependence (0- 25%, 26-50%, 51-75% and 76-100% of accommodation establishment’s revenues coming from travel agencies) on their perceptions about conflicts that arise between them and travel agencies. The following include the specific research questions:

RQ1a: Do accommodation establishments of a higher category experience more frequent conflicts with travel agencies compared to lower category establishments? RQ1b: Do accommodation establishments with a larger number of rooms experience more frequent conflicts with travel agencies compared to smaller establishments? RQ1c: Do accommodation establishments at holiday destinations (seaside and mountain properties) experience more frequent conflicts with travel agencies than establishments at other types of destinations? RQ1d: Do accommodation establishments that receive higher share of their revenues from travel agencies experience more frequent conflicts with them compared to other agencies?

Second, the study investigated the impact of the type of customers travel agencies serve (individuals/groups, mass/niche market segments) on their perceptions about the same conflicts. The expectation is that a travel agency, ceteris paribus, will experience more conflicts with accommodation establishments if it serves more customers, i.e. if it serves group and mass tourism market segments. The formulated research questions are:

RQ2a: Do travel agencies serving groups experience more frequent conflicts with accommodation establishments compared to those serving individual tourists?

RQ2b: Do travel agencies serving mass tourists experience more frequent conflicts with accommodation establishments compared to those serving niche tourists?

Third, the issue has been raised in the literature (Bastakis et al., 2004; Buhalis, 2000) that travel agencies have greater bargaining power than accommodation establishments. Thus the following two research questions were formulated:

RQ3a: Do accommodation establishments perceive their bargaining power as lower compared to the bargaining power of travel agencies? RQ3b: Do travel agencies perceive their bargaining power as higher compared to the bargaining power of accommodation establishments?

Fourth, considering the fact that the samples of accommodation establishments and travel agencies participating in the research are located at the same destination (Bulgaria) they should be reporting similar frequencies about the conflicts they experience with each other. Thus, the research question is:

RQ4: Are there statistically significant differences between the perceptions of accommodation establishments and travel agencies regarding the frequencies of the conflicts they experience?

Fifth, it is expected that perceptions about the bargaining power of the opposite party in the relationship and the overall dependence on it will positively influence perceptions about how often conflicts are encountered, i.e. accommodation establishments that feel more dependent on agencies or evaluate agencies’ bargaining power as higher will consider that conflicts with

agencies arise more often. To the contrary, perceptions of one’s own bargaining power will have a negative impact on the perceptions of the conflicts. Therefore, the following research questions were formulated:

RQ5a: Is there a positive and significant correlation between the perceptions of accommodation establishments about their conflicts with travel agencies and their perceptions of the bargaining power of agencies? RQ5b: Is there a negative and significant correlation between the perceptions of accommodation establishments about their conflicts with travel agencies and their perceptions of their own bargaining power? RQ5c: Is there a positive and significant correlation between the perceptions of accommodation establishments about their conflicts with travel agencies and their perceptions of their dependence on agencies? RQ5d: Is there a positive and significant correlation between the perceptions of travel agencies about their conflicts with accommodation establishments and their perceptions of the bargaining power of the establishments? RQ5e: Is there a negative and significant correlation between the perceptions of travel agencies about their conflicts with accommodation establishments and their perceptions of their own bargaining power? RQ5f: Is there a positive and significant correlation between the perceptions of travel agencies about their conflicts with accommodation establishments and their perceptions of their dependence on the establishments?

Finally, considering the high bargaining power of travel agencies reported in the literature (Buhalis, 1999; Lopez & Baum, 2004; Medina-Muñoz et al., 2003), it is expected that

agencies would prefer competitive negotiation approaches for conflict resolution (e.g. trying to impose their conditions on accommodation establishments or even terminating the contract). Accommodation establishments would prefer a more cooperative approach (e.g. trying to find solutions satisfying both parties) or would accept the conditions of agencies. In this regard, these research questions were formulated:

RQ6a: Do accommodation establishments prefer a cooperative conflict resolution approach more than other conflict resolution approaches? RQ6b: Do travel agencies prefer a competitive conflict resolution approach more than the other conflict resolution approaches? RQ6c: Are accommodation establishments more cooperative than agencies in conflict resolution?

Sample and data collection Data collection took place February-April 2013. Two web-based questionnaires were distributed by email to 2089 accommodation establishments and 1839 travel agencies in Bulgaria, including foreign travel agencies’ representatives in the country. The questionnaires reached 75.74% of all accommodation establishments and 69.66% of all travel agencies in Bulgaria. Two reminders were sent to potential respondents. From these, 127 accommodation establishments and 81 travel agencies completed the questionnaire, resulting in a 6.08% response rate for accommodation establishments and 4.4% for travel agencies. Eight of the accommodation establishments indicated that they do not work with travel agencies but rely exclusively on direct sales. They were removed from the sample, resulting in a final data set of 119 questionnaires used for analysing the accommodation establishments. The questionnaire was sent to all travel agencies operating in the country whose contact details

could be identified by the authors – licensed Bulgarian travel agencies and local representatives/offices of foreign agencies. The latter include large German, British and Russian travel agencies that generate many visitors to the country and have extensive travel agent networks in their countries. Foreign agencies working directly with local accommodation establishments could not be identified properly and comprehensively because their relationships with the accommodation establishments are considered a trade secret. As Bulgarian legislation does not make a distinction between incoming and outgoing travel agencies in terms of their licensing, a filtering question was included in the questionnaire asking the agencies if they worked with accommodation establishments in the country. All of the responding travel agencies indicated that they worked with accommodation establishments in Bulgaria. That is why all their responses were considered for the analysis. The low response rate may be attributable to two factors. First, generally unsolicited online surveys generate very low response rates (Evans & Mathur, 2005; Illum et al., 2010). Second, Bulgarian respondents, specifically, are suspicious of surveys and fear breach of anonymity. Similarly, a low response rate from the Bulgarian tourism industry has been reported in other studies (e.g. Ivanov, 2014; Ivanova & Ivanov, 2014; Lucas et al., 2009).

Questionnaire Two separate questionnaires were prepared and distributed to the respondent groups that included several blocks of questions. The first block was the filtering question asking whether the accommodation establishment worked with travel agencies and vice versa. The second block included demographic data about the respondent (category, location, types of tourists served, etc.). The third block asked the respondents about the most frequent types of contracts used between them and the other party (commitment, allotment, free sale, upon request

basis). The fourth group focused on the frequency of encountering particular conflicts with the other side. Frequencies were measured on a scale from 1 (very rarely) to 5 (very often). If the respondent had not encountered a particular conflict the response was coded with 0. The fifth block included questions about the bargaining power of the accommodation establishment, the travel agency and their dependence on the other party measured on a scale from 1 (very low) to 5 (very high). The final block consisted of questions regarding the ways conflict resolution may be used by respondents.

Data analysis The Kolmogorov-Smirnov test showed that the answers are normally distributed for both samples of accommodation establishments and of travel agencies. Therefore, parametric tests (one-way ANOVA and t-test) were adopted in order to investigate differences within and between the two respondent groups (Baggio & Klobas, 2011). In particular, ANOVA was used to identify any statistically significant differences in the accommodation establishments’ answers on the basis of their size, location, category and dependence on travel agencies. The Tukey's HSD post-hoc test was used to further analyse differences identified with ANOVA. Independent sample t-tests were used to determine any differences in the responses of travel agencies on the basis of the predominant type of customers they serve – individual tourists vs. groups, and mass market segments vs. niche market segments. The t-test was also adopted for the comparison between the responses of accommodation establishments and travel agencies. Relationships between respondents’ perceptions about conflicts they have with the other party, their bargaining power and overall dependence on the other side was determined via correlation analysis.

Discussion of findings

Accommodation establishments’ perspective on conflicts Table 1 presents the accommodation establishments’ perspective regarding conflicts they have with travel agencies. Results revealed that the three most common conflicts from the viewpoint of the accommodation establishments arise from delayed payments by the travel agency, disagreements regarding prices, agencies misinforming customers. Other potential conflicts are perceived as less frequent. The accommodation establishments, however, did not express uniformity in their opinion. As Table 1 shows, there are many statistically significant differences between accommodation establishments on the basis of their category, size, location and level of dependence on travel agencies. Luxurious accommodation establishments (4-5 stars) have conflicts with travel agencies more often than do lower category establishments (1-2 stars). Differences are especially significant regarding delayed payments (where Tukey’s HSD p