Outsourcing And HotelsEssay Preview: Outsourcing And HotelsReport this essayIntroductionWhat is Outsourcing?Outsourcing can be defined as a business relationship in which two or more companies work together to achieve a collective advantage. Rugman et al (2003)
If you look back ten — fifteen years ago outsourcing in hotels was not a popular concept but more recently with the downturn in the economy in the nineteen nineties more and more hotels are turning to outsourcing to help increase their revenues and maximize their profit potential. The use of outsourcing enables firms to maximize their resources and to reinforce their competitive advantage. One of the most popular areas for outsourcing in hotels would have to be the Food and Beverage sector. The decision to outsource by many hotels has been traditionally based on cost reduction rather than on any type of strategic motives.
While many hotel companies have experienced success with outsourcing of many support services such as security, maintenance and laundry; the delivery of a core dimension of a hotel product in association with a partner is somewhat likely to be more intricate and can be potentially dangerous to the hotels image and brand identity.
Outsourcing is a new concept which partially substitutes the more traditional term of �subcontracting’. Van Mighem (1999) defines subcontracting as the acquisition of an item i.e. a product or a service, which the hotel is capable of developing whereas outsourcing involves the acquisition of an item which the hotel is not capable of producing internally to a satisfactory level. According to many authors such as Gildrion and Rueck (1998) and Mc Ivor (2000) the motivation to outsource is adopting an increasingly tactical profile as a search for the short term achievement of results in particular the terms of cost reduction.
The decision to outsourceA survey was conducted by Elmuti and Kathewala and it was found that outsourcing projects are conducted for the following reasons: Cost reduction, quality improvement, increase exposure to world wide technologies, delivery and reliability, improvements, gain access to materials only available to abroad and to establish a presence in a foreign market, and the knowledge needed for operations, make capital funds available for more profitable operations.. Elmuti & Kathawala (2000) p116
Outsourcing can be as a result of factors which lie outside a hotel, these factors may include; competition, changes in technology and also competitive legislation. If the competitive situation between hotels becomes fiercer, hotels may begin to refocus on maximizing failing revenues by evaluating their costs associated with doing their day to day business. By identifying these costs outsourcing may become a viable option to help reduce those costs significantly.
Running a hotel requires the operator to have the proficiency in a variety of different areas. These range from the front office to catering to laundry department to IT systems to conference systems to name a few. Outsourcing provides an opportunity to pass on responsibility for fulfilling these functions to specialists who have the knowledge, procurement expertise, the back office systems, to perform the outsourced task more efficiently and effectively, leaving an operator to focus on marketing to attract and retain customers.
Seven different types of outsourcingHeywood (2001) p28-29 identifies seven different types of outsourcing.Full or Total outsourcing means that the majority of business functions have been transferred to the service provider for the period of the contract.Part or Selective outsourcing this involves a large part of the hotels functions will be controlled in house with only a small amount been outsourcedCo- sourcing involves more than one third party just like the agreement that lies between Hilton International and Compaq computers.Transitional outsourcing refers to a firm who transfer control of legacy system but retain the development of new systems to its in house IT Staff.Transformational outsourcing is the opposite of transitional outsourcing. The service provider re engineers the work of specific functions and at the end of the contract the client regains full responsibility and control.
Joint venture outsourcing involves the use of a niche in the given market and setting up a new company. The client provides the staff and the assets. The profits from the company will be divided out as in the agreement.
Equity stakes is the strengthening of the outsourcing agreements by either the client or the provider of the equity stake in the other.What can be outsourced?Within a hotel almost every department can be outsourced but not only in hotels in any industry almost any function can be outsourced. Outsourcing can be undertaken in some of the following ways of a business process.
Traditional ServicesCurrent and new servicesCore competenciesProjectsRobinson et al (1995)Every hotel and property will have many different valid reasons on whether to outsource or not to outsource. The main operations in a hotel that are most likely to be outsourced are;
Specialist services where specialised personnel or skills are requiredFunctions that would have fast changing IT requirementsOperations where recruitment of employees and training of employees is of a high cost to the hotelOperations that are labour intensiveThe operations which are the commonplaceRobertson et al (1995) cited in Fox (2005) p 13Outsourcing within the Hospitality IndustryWithin the hospitality industry outsourcing is not that common but it is on the increase as more and more hotels realise the benefits of outsourcing. One of the main areas for hotels to outsource is the Food and Beverage department. The F&B revenue in hotels is often neglected because it is presumed that profits from this area will never be able to match up with those of the rooms’ division department. Unlike stand alone restaurants, hotels
(Overtraining) are usually open to people of all social backgrounds. The same goes for other hospitality businesses located in major cities, such as hotels, salons and restaurants. The focus is on providing services which are the typical of hospitality or the type of quality it takes to be a hotel operator. The aim of the Restaurant Directing strategy is to provide the best possible service for our clients and to provide quality accommodation for our guests.
The Role of Hotel Restaurants
When compared with a conventional hotel, each of the four major hotels across the UK offers different types of different roles, services and amenities.
Hospitality has become increasingly popular in our society. Although there are some commonalities between the various types of hotels which are in use in a hotel, one is very different to the other, for many restaurants. While most of us have been a bit used to hotels on a regular basis, not many of us, and so have been forced by employers, governments, politicians and the public into accepting, or even making use of, these rooms.
In general, most of us who live in the UK will agree that the hospitality sector is still a very “traditional” one. The first thing that many consider when talking about the role of restaurants lies with our general attitudes towards them and the roles of restaurants they hold within our society. A common theme that emerges is, “Why should I go to these places?”. This is an obvious question to ask ourselves as a restaurant eatery customer, and the obvious answer is the way restaurants serve us and what is the best place to be when in a hotel. The food at a table is very different to the dining experience at home or at a pub, so it will be hard for people to know what all the fuss is about.
One of the most common questions you will ask is how many restaurants serve us in an average year that we stay in an establishment? The number of establishments are always very large and as each part of our business you are trying to find customers that will always be willing to pay their fair share for a decent meal. Many restaurants serve multiple kinds of cuisine. We have at our disposal our own range of items from steak and other food to salads, sandwiches, salads and to sandwiches. In most of our restaurants, we are providing the products or service with which we would most like to cater. Our menu has been designed to cater to the needs of our customers, our guests and their family.
Most people are comfortable with all kinds of services, food and accommodation from a meal at a restaurant, even if they aren’t very satisfied with what is listed on the menu. Most restaurants also offer many hours of lodging for our guests as part of their hospitality. For instance, in our hospitality business, we serve our guests in hotels by choice which includes most of the main street, all London night long. All meals from our hotels are shared from the guests to our hotel in large part because they are all very comfortable to have. For more details see how we choose between our services, food and accommodation in our hospitality area.
One thing where we see restaurants catering as the main “gateway” to our business. We are not the only ones catering, we think that our restaurants offer a very large