The feasibility of subcontracting certain services in local hotels

Abstract

Purpose: The purpose of this research is to evaluate the trend, recently emerged, where local hotels are increasing their dependency on subcontracting various services required within their business. The study determines whether or not it is feasible for these hotels to subcontract some of their services to outside contractors. Design: The objectives of this research were achieved by conducting unstructured and in-depth interviews with hotel general managers or financial controllers. A pilot study was conducted with a general manager of a 4-star hotel. This interview was then reviewed and reconstructed taking into consideration the response and feedback obtained and then another nine interviews were conducted by the researcher. Findings: The study reveals that the majority of managers interviewed agreed that before opting to subcontract a service, the hotel must always conduct a feasibility study to conclude whether or not it is worthwhile outsourcing that service. Managers believe that before opting for subcontracting, they must consider how the following three important factors which are cost effectiveness, the quality of service and the hotel reputation will be affected after subcontracting a service in their hotel. Conclusions: From this research one can conclude that hotels subcontract some of their activities for three main reasons which are: coping with demand fluctuations, being flexible and being more cost-effective. Managers are keener to subcontract certain areas such as housekeeping, maintenance and spa facilities. However, on the other hand, there are some areas such as the F&B operation, which are widely viewed as too challenging to outsource. It has been concluded that it is of utmost importance that the control of the subcontracted activities should always remain in the hands of hotel management to ensure that a top-notch service is provided to the hotel guests.Value: Greater efforts should be directed towards subcontracting non-core activities in a hotel as these improve the overall hotel efficiency. In this way, management can focus more on core activities of a hotel such as the renting out of rooms which plays the major role in generating profits and hence improving the overall well-being of a hotel.