Country/Service Bundling in International Tourism: Criteria for the Selection of an Efficient Bundle Mix and Allocation of Joint Revenues

Abstract

This paper addresses key aspects of commodity bundling decisions in business enterprises both in general and as they relate to the International Tourism industry in particular. The considerable importance and complexity of bundle mix and bundle pricing decisions on the transportation, sightseeing, and resort level of Tourism are discussed. The authors develop the basic theoretical structure and framework underlying bundling decisions and define key elements of required decision information. The complexity of the determination of optimal bundling mixes in a multiservice environment is demonstrated, and an algorithm which greatly facilitates such determination under certain assumptions is outlined and discussed. Finally, the problem of allocating joint bundle profits among associated profit or cost centers is reviewed in detail. A number of alternative allocation criteria based on commonly acceptable notions of bargaining power and fairness are proposed. Their relevance and applicability to international tourism and tourist enterprises are discussed.