Determinants of contractual completeness of tour operator-hotel allotment contracts

The aim of this study is to determine the transaction hazards causing incomplete contract design in tour operator and hotel allotment contracts. Transaction hazards are constituted in relation with the transaction attributes (asset specificity and uncertainty). Environmental uncertainty causes transaction hazards by increasing opportunistic behavior tendencies as asset specific investments constrain the activities of the party that made asset specific investment with the threat of terminating the relationship. Transaction cost theory explains the roles taken by formal (contracts) and informal (trust) mechanisms to safeguard the transaction hazards. It is considered that the research depending on the assumption of decreasing the adaptation costs by designing more complete and refined contracts by the tour operator and hotel without bearing the incremental costs for constructing more detailed contracts will be valuable and important.Qualitative research techniques are used to determine the terms taken place/should take place in tour operator-hotel allotment contracts. A comparative investigation on different kinds of contracts and the interviews with some hotel managers on the determined contract terms enable to construct the scale for ?contractual completeness?. Other scales on other contextual constructs are constituted from the literature. Reliability and validity checked scale of ?the determinants of contractual completeness? is applied to first class holiday villages, 5 stars and 4 stars hotels operating in Antalya.It is precipitated that trust as an informal mechanism has a moderating effect on transaction attributes in the research. Trust increases the contracting capabilities by incentivizing knowledge sharing between tour operators and hotels in the existence of high level of uncertainty in tourism demand. Since therefore more complete and refined contracts could be constituted. The finding is supported by the explanations on which trust as a shift parameter between transaction attributes and completeness of contract and solves the transaction hazard problems without bearing any incremental costs.A tentative meaning of the study for the practitioners might be the ability to design more complete and refined contracts by the tour operator and hotel without bearing the incremental costs for constructing more detailed contracts in a relationship defined under a higher level of trust. The finding could find more support for the hotels that are less dependent to the tour operators, have prior ties and make investments to the relationship with the tour operators. It is expected to make contribution to the literature as there are not many studies on completeness of the contract. The study is considered valuable for explaining the relationship between contractual completeness and trust with the assumptions of transaction cost theory and finding empirical support for the assumptions.