Now! is the time for hotels to outsource or Co-Source..
In our hotel industry the term “outsourcing” often elicits a negative reaction among many hoteliers.
This raises a question about why it carries such a stigma and what disadvantages are associated with outsourcing.
One of the challenges what we face in the hotel industry is that we do not separate operational tasks from strategic ones i.e the GM, Sales Manager and Revenue Managers at the same time are responsible for and get confronted with operational challenges, when they need to work on pricing and positioning for the hotel.
This ancient culture prevents management in many hotels from focusing and dedicating the adequate attention to work “on” the hotel and finally the management end up utilising the entire time in working “In” the hotel.
This longstanding culture hampers effective management in many hotels as it prevents the adequate focus and attention required in each area. As a result of this stretched and multitasking environment, hotels tend to hire or promote individuals with mixed skills, rather than recruiting specialists or experts in specific fields.
As per my decade of exposure to the industry, I feel, to enhance performances, the hotel industry should prioritise the recruitment and collaboration of specialists in each domain. For example, revenue management would not benefit as from people with operational hotel experiences as from people with the background of business analysis, mathematics, statistics or economics. After all 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 but then are there any qualified personnels within our hotel capable of evaluating the required skills? alternatively, could there be hesitation in hiring someone possessing different skills from our own? Is there a fear that individuals with superior skills in specific areas may pose a threat to our current position?
So, if you strategically improve the financial results of your hotel but are not able to find or afford qualified revenue manager or operation manager or sales manager, Outsourcing is indeed a good option. There are several significance advantages to outsourcing that merit consideration. Here are the primary benefit of outsourcing which one shall keep in mind.
- Improve Quality– Attain a significant improvement in quality by outsourcing the services and establishing a new service level agreement.
- Knowledge– Gain access to valuable intellectual property, broader experiences and a wealth of knowledge.
- Operational Expertise: Benefit from operational best practices that may be challenging or time consuming to develop internally.
- Talent Acquisition: Gain access to broader talent pool and a consistent supply of skills, especially in the field of science and engineering.
- Strengthen Innovation Capacity: Hotels are increasingly leveraging external knowledge service providers to augment their limited in-house capacity for product innovation.
- Accelerate Time To Market: Reduce the time required to develop and promote your sales strategies and promotions by leveraging additional capabilities brought by the supplier.
- Cost Efficiency- Achieve cost savings by reducing the overall expenses associated with the service. Hiring experts directly can be expensive but through outsourcing, businesses can share the overhead costs and potentially lowers the overall expenditure.
Considering the above benefits of outsourcing, it is evident that there is a considerable upside to it. Overcoming the negative connotations associated with outsourcing is crucial. In reality, almost all hotels outsource certain functions, for instance they engage specialised firns for accounting, auditing, legal services and other areas of expertise.
Outsourcing doesn’t necessarily mean giving away complete control. There are varying levels of cooperation often referred to as Co-Sourcing.
Co-sourcing involves a collaborative approach where services are performed jointly by internal staff and an external service provider. It can be structured to align with the hotel’s internal structure and operations, particularly in areas like reservations, sales and marketing. The scope of work can be tailored to focus on specific elements of revenue management or yielf function, based on hotel’s need and preferences.
Now is the time for hotels to opt new perspective…. Go Light to Grow High!
If a hotel has undergone staff downsizing, it provides an opportune moment to conder restructuring and adopting new approaches. This is a crucial time to contemplate how to make a stronger comeback compared to competitors, Leveraging external knowledge, talent and operational expertise can save valuable time and efforts in achieving this goal. Specialists in the field can offer unique methodologies and strategies that enables a hotel to rebound faster in the market , surpassing other hotels in the vicinity.
By Piyush Bhatnagar II Director-Strategic Alliance II 3Q Progressive Alliance