Outsourcing - the double edged sword
In the last decade or two, several hotels have resorted to outsourcing services in an effort to cut costs. Outsourcing services means less payroll burden for the operator and improves the hotel’s cost efficiency. This shift to outsourcing is gathering momentum as high payroll costs have now begun hitting bottomlines. Outsourcing can save you time, effort, overhead, operating and training costs.
Initially, only a select few services, such as security, landscaping, maintenance, housekeeping, laundrey and spas were commonly outsourced. However, as more and more hotels come up - leading to stiffer competition, more and more hotels are forced to consider outsourcing areas of operation where they do not posses core competence. Even areas such as food and beverage are now coming within the radar of outsourcing.
Previously, star-class hotels were reluctant to consider outsourcing food and beverage, insisting that these proft-centres needed to comply with a comprehensive and consistent quality check as well as having to adhere to brand standards. With the emergence of many world class restaurants, offering product and service standards that match, and in some cases are superior to food and beverage operations in the best hotels, many internaltional brand hotels are swaying towards outsourcing this division of operation as well.
Functions that involve direct guest contact however; such as concierge, housekeeping and the front desk are rarely outsourced due to the direct impact these positions can have on the hotel reputation and revenue.
Organisations use outsourcing to achieve one or more of the following benefits:-
Clearly, the key to outsourcing services such as security, landscaping and certain housekeeping tasks such as public area cleaning falls within the sphere of cost reduction. As Eric Simon states in his book ‘Pros and cons of hospitality outsourcing’’, you outsource because you can get the best talent in a highly specialized area and not have to carry them on your payroll. If you’re installing a new computer system, you might have one IT person and outsource beyond that. The big benefit is it’s a contracted price and a predictable cost.” Hotels that provide remote check-in and mobile keyless entry can pass on the costs of developing / upgrading these platforms to the outsourced partner as well as gain access to the latest technology. Outsourcing can also free employees to concentrate on looking after guests and other value-creating activities.
Outsourcing certain hotel operations can be very advantageous to your bottom line, but there are disadvantages. A recent study found 57% of people who had a bad experience at a hotel cited unfriendly employees as the catalyst. Outsourced security staff was at the top of the list. Unsurprisingly, the mostly outsourced service in hotels is security. Due to the cost saving advantage againgst hiring one’s own security, many hotels put their trust in a third party security company. And several hotels without carrying out any ‘due diligence’ study, go for the cheapest in the market. Given the large number of security companies that operate inappropriately, the complaints by hotel visitors is well justified.
Problems can crop up even with reputable providers of services. These service providers likely service many other hotels as well. That means you and your guests may not always be their top priority. Outsourced staffs work for their employer - the service provider and not for the hotel operator. Hence, there is no real connection between such security staff and hotel visitors – often leading to an unfriendly encounter.
“Hospitality industry should be open to the concept of outsourcing principally because what is choice today will become a necessity tomorrow,” said the head of hospitality of a global hospitality consulting firm. However, remember - whether you decide to outsource one hotel function or all of them, your hotel operations will invariably filter down to your guests and their hotel experience. How good or bad that experience is will invariably impact the hotels’ online reputation and long-term success.
Shafeek Wahab – Editor, Hospitality Sri Lanka, Consultant, Trainer, Ex- Hotelier.
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