Companies of all types and sizes use outsourcing to reduce costs, increase efficiency and, often, improve their overall offering. Computer companies often outsource component production to reduce costs. Law firms often outsource bookkeeping duties to save on staffing.
Outsourcing is a growing practice in the hotel industry, especially in areas like payroll, maintenance and landscaping. Functions that involve direct guest interaction such as concierge, housekeeping and the front desk are usually kept in-house due to the direct impact these positions have on the hotel reputation and revenue. Clearly staff training in these areas is critical – a recent study found 57% of people who had a bad experience at a hotel cited unfriendly employees as the catalyst.
Outsourcing some hotel operations can be advantageous to the bottom line, but hoteliers should be aware there are disadvantages as well. We did some research and compiled the pros and cons, so you wouldn’t have to.
Advantages of Outsourcing
- Reduction of Hard Costs. This is the primary advantage of outsourcing, especially since these costs can be scaled up or down as needed.
- Better Quality of Specialized Products and/or Services. Outsourced providers that service multiple hotels generally have higher quality (and more expensive) equipment that performs better than what an individual hotel is likely to want to invest in.
- Technology. Whether it’s providing remote check-in and mobile keyless entry, or programming your website; technology has become an integral part of the hotel business. When you outsource technology, the costs of developing and upgrading those platforms falls on your outsourcing partner.
- Spend More Time On Your Core Business. When you don’t have to worry about website development or trimming trees, you have more time to concentrate on pleasing guests.
- Gain Competitive Advantage. Outsourcing can save you time, effort, overhead, operating costs and training costs, which can give you a cost advantage in your market.
- Share The Risk. For newer or smaller hotels, outsourcing is a way to provide a full complement of services without the overhead. You can share that risk with partners.
- Reduce Costs. Outsourcing can help an organization cut its operational costs by as much as 50% (or more).
- Improved Data Security. These days, any business should be cautious with the security of critical data: but in the hotel business, confidentiality (and guest confidence) is especially crucial. For that reason, many hoteliers prefer to outsource the storage of their guest data to partners that provide systems with industrial grade security measures.
Disadvantages of Outsourcing
- Reduced Control. After investing so much time (and money) into your hotels, it may be hard to trust a third party to take care of your assets. To minimize the risk of losing control over any aspect of your business, choose your outsourced functions carefully, as well as your partners.
- Communication Issues. Having to contact and work with another company as part of your daily, weekly or monthly process can be cumbersome. You might have to deal with contract misunderstandings, some communication missteps and excuses for delayed services, among other things.
You’re Not the Only Customer. Reputable providers of outsourced services and products likely service many other customers, whether in the hotel business or not. That means you – and your guests – may not always be their top priority.
Conclusion: Find Your Balance
Of course, finding the perfect balance between overhead investment and outsourcing expense is the key. Outsourcing the right functions can be a major contributor to your hotel portfolio’s profitability but proceed with caution.
Remember – whether you decide to outsource one hotel function or all of them (including the front desk), your hotel operations will invariably filter down to your guests and their hotel experience. How good or bad that experience is will ultimately impact the hotels’ online reputation and long-term success.