The tendency to outsource hotel operations: Strategic reasons and relationship to activity performance and size

Abstract

The purpose of this study is to find out the tendency to outsource hotel operations, explain the reasons, both strategic, related mainly to quality, improvement of service, concentration on core operations, and tactical or cost reasons. The relationship between the tendency to outsource and performance is also analyzed with regard to quality and cost of hotel services. In addition, the relationship between the size of the hotel and the tendency to outsource is analyzed. The tendency to outsource is defined as the predisposition of the company to leave certain hotel functions or services in the hands of third parties, keeping in mind both degree of present and desired outsourcing by the hotel under the hypotheses that there are suppliers who offer better quality than could be obtained by the hotel if it kept it in-house. The results of the study make it possible to establish significant differences between present and desired outsourcing indicating that an increase in outsourcing is decided by the possibility that this strategy can improve quality and service and increase flexibility in operations, and not because of a cost reduction as traditionally believed. This study also establishes three groups of hotel activities according to the tendency to outsource (i.e., low, medium and high tendency). It is also observed that the larger the size of the hotel, the more present outsourcing there is. Finally, current demands of businesses with regard to suppliers able to satisfy their needs and the limits that impede a larger number of activities from having been outsourced up to now have been found. Finally, a series of practical and academic conclusions and implications are presented. © 2004, Emerald Group Publishing Limited