HOTEL OUTSOURCING

Hotel Outsourcing

Hotel Outsourcing

ABSTRACT

1.0 INTRODUCTION

2.0 THE PROBLEM

3.0 METHODOLOGY

3.1 Area of research

3.2 Measurement variables

4.0 LITERATURE REVIEW

5.0 CONTEXT AND BACKGROUND TO THE RESEARCH PROBLEM

6.0 CRITICAL ANALYSIS AND DISCUSSION

6.1 Potential benefits

6.1.1. Cost reduction

6.1.2. Performance improvement

6.1.3. Flexibility

6.1.4. Specialization

6.2. Apparent downsides

6.2.1 Dependence on a single supplier

6.2.2. Financial difficulties faced by the supplier

6.2.3. Unmet service targets

6.2.4. Inability to manage the activities of the supplier

6.2.5. Inability to stick or negotiate acceptable contracts

6.3. Hidden downsides

6.3.1. Negative innovation impact

6.3.2. The Human resource dimension

6.3.3. Negative environmental response

7.0 APPLIED, EVALUATIVE CONCLUSION

8.0 RECOMMENDATIONS

9.0 REFLECTIVE REPORT

ABSTRACT

Outsourcing is a management concept that makes work for managers easier. This is mainly because the managers have to contend with less human resource issues and the logistics that accompany human resource management. Like every other sector that has embraced outsourcing, the hotel industry is presented with mixed fortunes by the concept. On one hand, there are benefits that are accrued by having the outsourcing vendor handle the non-core activities in the hotel, but on the other hand, is the danger associated with the managers loosing some of the managerial power to the outsourcing vendors. It also emerges that being a sector whose main resource is the customer; the hotel industry has a difficult time differentiating the core activities from the non-core activities. This is especially so because every activity in the hotel industry has a direct effect on the customer.

1.0 INTRODUCTION

Outsourcing has become the “in-thing” in the service industry and the hospitality industry is no exceptions. According to Nag (2004), “outsourcing is the arrangement where one company provides services that could be or usually have been provided in-house for another company” (59). A simpler definition of outsourcing can be gained by separating the two words that make it: “out” “sourcing”, which literally means external source. Franceschini et al (2003) defines outsourcing as a management approach which slows the delegationof responsibilities for services and processes previously delivered by the company or organisation to an external provider (246). The process also includes the transfer of responsibilities from a group of employees within a company, to a group that is not employed by the company. According to Lankford & Parsa (1999), outsourcing in the services sector also includes a reassignment of the operational control from the company to the supplier of the outsourced services.

Hotels, lodges and restaurants have caught up with the bandwagon and are outsourcing everything from food preparation, beverage preparation, house keeping, stewarding, laundry services, accounting, maintenance and payroll among others (Nag, 2004).

While the management has to contend with less human resource issues, supply chain processes (logistics, manufacturing and procurement ) and other overhead tasks such as billing, they have no power to deal with the employees of the contracted outsourcing company. This leaves the reigns of power with the contractor . As such, whenever the management notes a problem in the way things are done by the employees, they cannot address the situation directly, but would have to contact the contractor, who then contacts the employees under his direction with the instructions from managers in the ...