Outsourcing for Hotels 101

By Michael Doyle Managing Director and Executive VP, CHMWarnick | May 14, 2017

Hotels have historically outsource services to restaurant operators, parking and audio visual professionals, with resorts often outsourcing recreational services and landscaping as well. Today's options for outsourcing are much broader, as new firms have developed business models to provide expertise with greater efficiency at lower costs. Have you considered outsourcing your entire housekeeping operation? How about stewarding, overnight cleaning, or laundry operations? Other options could be banquet services, night cleaning, HVAC Services or Accounting Services.

As we develop this series of articles and focus on the evolving outsourcing opportunities, it is important to ask the question -- Why do Hotels outsource? Or, stated a little differently, Why should I challenge the traditional operations model and introduce uncertainties into my operation? Hotels outsource to meet the changing demands of the labor market, cope with high and increasing costs of benefits, better meet the needs of their guests, bring added expertise to the team and accomplish this at low cost with high margin benefits. In short, we outsource to maximize profitability.

Outsourcing does not necessarily mean a loss of quality or of control. The best firms bring expertise and talent to your team. Success is achieved when these third parties are fully integrated into the operation and not treated as outsiders. The successful operations have their third party partners participating in meetings both internal and external (yes – with clients), providing cost and revenue enhancement opportunities and being held accountable to the service delivery standards set by the Hotel Manager or Brand. Managers will also benefit from the additional resources from off-property leadership of these firms to fully leverage their expertise to drive performance.

Established third party firms have developed over the last several years and are dedicated in their area of expertise. They bring knowledge, experience and resources to meet the changes in demand posed by Hotel operations. These firms are the subject matter experts in their disciplines, often bringing capital resources in equipment and can be an excellent resource to Hotel managers in meeting changing needs, including the ability to flex with the business demands of the operation. Hotels have adapted and crafted over the years processes and practices to integrate these third parties into the operation and service culture. The benefit of this focus should result in a seamless experience for the client, complementing the efforts of the Hotel.

Integrating a third party into your operation takes careful planning and commitment. No matter the scale of initiative, it is critical to think through and identify the scope of their responsibilities.
Doing the homework up front will avoid unnecessary issues in not only the execution of the contract but more importantly the service to your guests – even if the outsourced service is not forward facing to your guests. Here are some steps to consider taking in the development of the scope of work:

  • Development of a detailed responsibility task list for each of the positions
    that will be outsourced

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The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.