The Effectiveness of Outsourcing in Hotel Industry

The report provides an in-depth analysis of outsourcing in the hotel industry, examining its impact on cost reduction and service delivery efficiency. It concludes that outsourcing is a effective method used by hotels to reduce their operational costs and achieve efficiency in service delivery. The study highlights the importance of primary research in collecting accurate information and achieving effective results.

Supplementary assessment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Advantages and disadvantages of outsourcing activities in relation to Sydney Novatel......1
Outsourcing the cleaning activities was correct decision. ....................................................2
Annotated Bibliography.........................................................................................................2
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Outsourcing of business activities is practice in which the organisation makes contracts
with another company and hires them to accomplish the tasks, handle operations or provide
services which are either usually executed or has previously been done by the organisation's own
employees (Outsourcing, 2017). Present report is based on analysis Sydney Novatel which is
five star Hotels decided to outsource its activities of Housekeeping. In this, advantages and
disadvantages of outsourcing activities are analysed along with the analysis that whether the
company decision was correct or not. Further, Annotated bibliography has been made by taking
6 peer reviewed journals in to consideration.
Advantages and disadvantages of outsourcing activities in relation to Sydney Novatel.
Outsourcing is the considered as common practices of contracting out business functions
and processes to the third party providers. In this context, there are some important advantages
and disadvantages of the outsourcing of the clean activities of rooms by Sydney Novatel is
discussed above:
Advantages: Improved focus on the core activities: It is analysed that outsourcing of business
activities will the make the business free to focus on its strengths and allows their staff to
focus on their other important activities and future strategy (Schniederjans, Schniederjans
and Schniederjans, 2015). In this context, Sydney Novatel will get benefited from Hiring
others for cleaning the hotel rooms because they will be able to focus on their strengths
and improvement of Guest services. Increased efficiency: Selection of an outsourcing cleaning organisation or individuals
who has specialization in that process or service, management wants them to carry for
Hotel can help them to achieve the more effective, productive, efficient service and often
the great quality. Through this, management will also be able to reduce its labour
expenses in business and achieve high quality services. Controlled costs: Saving of resources and costs achieved by Sydney hotel through
outsourcing of accommodation cleaning activities will help the company, to release the
capital for investment ion other areas of their business.
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 Increased reach: It will also provide access towards the capabilities and facilities
otherwise it cannot be accessible or affordable.
 Greater competitive advantage: Outsourcing the activities will support the Hotel to
leverage knowledge as well as skills along with their complete supply chain.
Disadvantages:
Moreover, when outsourcing the cleaning activities, Sydney Novatel will experience
some problems such as: Service delivery: Through outsourcing, Quality of five star service delivery of Sydney
Novatel may tends to fall below the expectation of customers. Confidentiality and security: Major issue of theft and security will be there in
outsourcing of Rooms cleaning service (Espino-Rodríguez and Lai, 2014). Lack of effective flexibility: Contract can also prove to be rigid to accommodate change. Problems in management: By outsourcing, sometimes management will have to face
some issues like No proper cleaning, in effective staff of third party and improper
communication of third party.
 Instability: Sometimes Outsourcing of activities also leads to losses and damages in
business and sales as Third party tries to enter in to business.
Outsourcing the cleaning activities was correct decision.
From the above analysis, it is summarized the decision which is taken by the
management for outsourcing of room cleaning facilities after suggestion of Accountants is
correct because it will tend to reduce of hiring cleaning staff at workplace (Kruesi Kim and
Hemmington, 2017). It also aids the staff of Hotel to perform other important task and focus on
customers service. It tends to raise the efficiency of delivery of house keeping services to guest
in Sydney Novatel. Moreover, there are some problems will also arise like confidentiality and
security of resources or capital in outsourcing but through proper monitoring and handling by
third party and management these problems can also be removed.
Annotated Bibliography
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Topic: The Pros and cons of outsourcing
The aim of this research is identify the pros and cons of outsourcing business practices.
After the research is conducted, a professional overview and concept will follow whether it is
best in the interest for the hospitality industry in order to utilize their business practice (Smith,
2012). The participants who has participated in the above research are students. The researcher
has utilized the secondary research in order to carry out the effective study.
Research has provided an indication with respect to benefits of outsourcing the business
activities of Hotel has direct relationship with business performance and revenue. There are
various reasons behind outsourcing of activities. On the other hand, it can be with motive such as
reducing cost, getting quality, reducing time duration, gathering knowledge etc. The main
purpose for which the outsourcing has been done will help in defining the whether it is beneficial
and can leads to damage or losses. Research has support in analysing the merits and demerits of
outsourcing business activities.
Moreover, different measures are used by investigator to effectively analyse the aim and
objectives being framed. The overall findings of research has stated that, disadvantages or
outsourcing are very less than compared benefits. However, some problems in the research have
been analysed when the outsourcing researches to problematic level. The key limitation attached
to research is that the researcher has only used secondary analysis to gather information and
perception of managers in organisation was no taken to collect adequate and relevant
information.
Topic “Outsourcing: A study on Benefits to Housekeeping Department in Hotels”
The main aims of the study is to understand the influence of outsourcing of house
keeping activities in Hotels. Researcher has identified that major hotels and companies are
relying more and more on outsourced professional housekeeping service providers to cater their
requirements. Study concentrates on the reasons behind outsourced service in the housekeeping
department and its effects on house keeping operations (Tyagi and Zagade, 2015). In these
efforts to do so, a survey in the form of questionnaire was conducted from the sample which was
compromising employees of 27 star category hotels of Mumbai and Pune. The respondents were
employees from the executive house keepers to the associated categories of the house keeping
department. Moreover, Limitation in the research was that the sample has not covered the overall
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strata of population, However the selected sample was combination of various categories of
Hotel. It is only based on information provided by the employees of house keeping department.
Topic : “Factors Influencing Hotel Outsourcing Decisions in Thailand”
The main aim of the research was to understand the factors which has provided influence on the
outsourcing decisions of hotel in Thailand. It has specially seeks to the test and evaluation of
theoretical framework which is combination transaction costs of economic factors with the
additional factors affecting the level of outsourcing which has been emerged from the
preliminary study (Promsivapallop, Jones and Roper, 2015). In this study, researcher has drawn
sample of 391 hotels each of which was offering three activities for analysis, results provides
little support for the TCE. Study has shown that availability of suppliers, Hotel experience and
size of hotel are considered as strongest predicator of the outsourcing. Limitation of research was
that it fails to provide a clear analysis of hotel outsourcing practices.
Topic: “An examination of factors motivating the hotel outsourcing.”
The aims of research were to make an examination of the important factors which are
motivating the hotels towards outsourcing of business practices. High hotel demand volatility is
apparent over the course of an economic cycle, during a year, over the course of a week and also
within a single day (Lamminmaki, 2011). This paper has reported the findings of the study
concerned with the identification the range of factors which are motivating the hotels to apply
outsourcing in the particular activities and to gauge the relative. Further, insights of the
concerning the particular factors motivating a hotel to outsource activities were considered via
the conduct of 15 interviews by the researcher with the hotel managers. The researcher has
analysed the all the hotel are using the service of third party in their hotel. This outsourcing has
raised the efficiency level of providing house keeping services. Limitation of the research was
found that the sample was not taken from managers in the hotels. Different categories of hotels
are taken in to consideration nu researcher.
Topic: “EVALUATING THE IMPACT OF OUTSOURCING OF NON-CORE FUNCTIONS
IN THE HOTEL INDUSTRY: A CASE STUDY OF ANITA, NODA AND GOLDEN GATE
HOTELS”
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`This research is conducted with an aim to evaluate the impact of outsourcing non-core
functions within the hotel industry (Agyemang-Duah and et.al., 2014). The study is responsibly
to explore the factors that results in motivation of Hotel towards outsourcing. Researcher has
been able to draw attention regarding contributing the organisation in relation hotel industry.
Survey was conducted by researcher by using questionnaire method. There are various reasons
behind outsourcing of business practice in hotel industry which are also identified researcher.
Sample size of 50 employees was taken in to consideration for conducting research. The main
limitation of the research was that the data was gathered with the help of self reporting method.
Hence, the research methodology used is the study is found ineffective and its also difficult for
researcher to generalize the research.
Topic “Outsourcing decisions: the effect of scale economies and market structure”
The main aim of the study is to analyse the effect of outsourcing decisions on scale of
economies and market structure. Study is responsible for find out the problems which are faced
scale of economies and market structure through outsourcing (Hecker and Kretschmer, 2010).
Researcher has analysed that decisions of delegation of business practices to third party is
typically based on potential to realize the cost savings through the economies of scale and the
specialization by the outsourcing. Both primary and secondary analysis was used by researcher
for collection. Survey conducted by using questionnaire to collect the data from the managers of
hotels. Researcher has come to know that most the hotels in country is utilizing the method of
outsourcing to reduce the cost of operations but through this market structure has influenced.
Study conducted has some limitations it has used the secondary research analysis more where
new researcher was conducted by researcher. Primary research needs to used more to collect
information and effective results.
CONCLUSION
In this report, it has been concluded that outsourcing is most effective method which are
used by various organisation in hotel industry to reduce their cost of operations and achievement
of efficiency in service delivery.
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REFERENCES
Books and Journals
Agyemang-Duah, P., Aikins, I., Asibey, O. and Broni, A.O., 2014. Evaluating the impact of
outsourcing of non-core functions in the hotel industry: A case study of Anita, Noda and
Golden Gate hotels. European Journal of Business and Innovation Research, 2(3), pp.25-
45.
Espino-Rodríguez, T.F. and Lai, P.C., 2014. Activity outsourcing and competitive strategy in the
hotel industry. The moderator role of asset specificity. International Journal of Hospitality
Management, 42, pp.9-19.
Hecker, A. and Kretschmer, T., 2010. Outsourcing decisions: the effect of scale economies and
market structure. Strategic Organization, 8(2), pp.155-175.
Kruesi, M., Kim, P.B. and Hemmington, N., 2017. Evaluating foreign market entry mode
theories from a hotel industry perspective. International Journal of Hospitality
Management, 62, pp.88-100.
Lamminmaki, D., 2011. An examination of factors motivating hotel outsourcing. International
Journal of Hospitality Management, 30(4), pp.963-973.
Promsivapallop, P., Jones, P. and Roper, A., 2015. Factors influencing hotel outsourcing
decisions in Thailand: modifications to the transaction cost economics approach. Journal of
Hospitality & Tourism Research, 39(1), pp.32-56.
Schniederjans, M.J., Schniederjans, A.M. and Schniederjans, D.G., 2015. Outsourcing and
insourcing in an international context. Routledge.
Smith, A., 2012. The Pros and Cons of Outsourcing.
Tyagi, H. and Zagade, S., 2015. Outsourcing: A study on Benefits to Housekeeping Department
in Hotels.
Online
Outsourcing, 2017. [Online]. Available
through:<https://www.nibusinessinfo.co.uk/content/advantages-and-disadvantages-
outsourcing>
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