Housekeeping

Outsourcing

Outsourcing is an increasingly attractive option for accommodation providers. To many accommodation providers there is an aversion towards outsourcing of management functions, like revenue management or cleaning duties.  

It seems acceptable to outsource reservations or  land and building maintenance functions, why not other areas? There are very real advantages that come with outsourcing.

One of the challenges we face in the in the hospitality and strata industry is that we do not separate operational tasks from strategic ones. Meaning that managers are responsible for and get confronted with operational challenges as when they need to work on pricing and positioning for the hotel.

This ancient culture prevents management in many accommodation complexes from focusing and dedicating the adequate attention required to either field of attention. Through this over stretched multi-tasking environment and culture hotels tend to mainly recruit, hire or promote people with ambivalent skills.

To improve results, the hotel industry however should focus more and more on recruiting and working specialists or experts in each field. For instance revenue management requires preferably someone without operational hotel experience. We should hire business analysts, economists or mathematicians. In the end this is what revenue management boils down to, simple old fashioned business analysis.

The challenge may lie in the recruitment of such a person. Do we have anyone qualified in our hotel to assess the skills? Or are we perhaps afraid or uncomfortable to hire someone with other skills than our own? Do we see someone with better skills in certain areas as a threat to our position and possibly employment?

So if you want to strategically and substantially improve the financial results of your hotel but cannot find or afford a qualified revenue manager, outsourcing is indeed a very good option. Outsourcing has a few key advantages that should be considered.

Improve quality – Achieve a step change in quality through contracting out the service with a new service level agreement.

Knowledge – Access to intellectual property and wider experience and knowledge.

Operational expertise – Access to operational best practice that would be too difficult or time consuming to develop in-house.

Access to talent – Access to a larger talent pool and a sustainable source of skills, in particular in IT and engineering.

Enhance capacity for innovation – Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation.

Reduce time to market – The acceleration of the development or production of a product through the additional capability brought by the supplier.

Cost savings – The lowering of the overall cost of the service to the business. Experts or specialists might not come cheap to hire directly. Through outsourcing you basically share the overhead cost

Focus on core business – Resources (for example investment, people, and infrastructure) are focused on developing the core business.

For example often organizations outsource their IT support to specialised IT services companies.

So looking at these benefits of outsourcing there is quite an upside. We should be able to overcome the negative connotation it has to it. Truth be told, it would be hard to find an accommodation provider that doesn’t outsource
something – almost by definition outsource. We have an account, audit company, lawyer, BC manager right? These are all specialists in their field.

The main reason to outsource revenue and yield in hotel management would be to improve results by getting expertise on board you normally would have access to or that would be too costly. There is always the fear that such a core task could not be given to an ‘outsider’. But in reality the outsourcing company and account manager could be very well integrated into your organisation. Outsourcing doesn’t have mean that you give away the keys to your car or
house. There are different levels of cooperation. It is also called co-sourcing.

Co-sourcing is a business practice where a service is performed by both staff from inside an organisation and also by an external service provider. It can be a service performed in concert with your hotels internal structure and operations in terms of reservations, sales and marketing. The scope of work may focus on one or more elements of the revenue management or yield function.

The idea of outsourcing innovation might seem counterintuitive to the pressures of a recession but it’s a strategy that accommodation providers can use to provide fresh perspectives. Some accommodation providers were hit hard by the GFC and are suffering substantially. But crisis is a great opportunity. If you have downsized in staff, you have the possibility to consider restructuring for instance.

It is time to consider if you want to make a better come back than the competition. And getting outside knowledge, talent, and operational expertise can save you hours of work in achieving this. Specialists can provide you with a method of working that can get your hotel to rebound faster in your market place than the competitors around you.

Now is the time to prepare to come back strong! 

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