Economics: Outsourcing Hotel Buildings

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Outsourcing is a crucial factor in running a business. It is the process of delegating tasks to several out-house service providers to handle various operations in the business. In the hotels and tourism sector, it is very common to find that the building or the land is being outsourced or rented by an external supplier. Companies rely on outsourcing primarily to cope with the complex dynamic environment of the business world and to leverage the human resources specializing in individual sectors of operations. This has become highly relevant in both large scale and small businesses to enhance the service sector where external service providers are better trained and equipped to perform certain tasks (Jensia, 2008). Hence, this essay will highlight the benefits and problems faced by hoteliers in the short run and long run from an economic perspective. Businesses turn to outsourcing to reduce costs, improve the quality of service provided and enhance efficiency. By outsourcing firms to undertake non-core functions of the hotel, the efficiency and profitability of the business can increase substantially. Outsourcing firms provides hotel managers a short term cost advantage by saving time, human resources and training costs. The external service suppliers have their own staff with various different areas of expertise and equipment needed to carry out a given task. Once firms are outsourced, they are responsible for the quality and service they provide to their customers. Moreover, the out-house suppliers are required to develop, maintain and upgrade their systems in order to promote efficiency and productivity. Since these duties are taken up by the external service suppliers it fundamentally translates to less management worries for... ... middle of paper ... ...costs are staff training, recruitment of staff and hourly wages. Works Cited Jensia, I. (2008). Advantages and disadvantages of outsourcing. Retrieved from http://voices.yahoo.com/advantages-disadvantages-outsourcing-1921370.html Reiss, B. (2010). Outsourcing Turns Fixed Costs into Variable Costs. Retrieved from http://www.entrepreneur.com/article/217487 Hudson, K. (2010). Luxury Chain Cuts the Flowers, Sends Out Wash at Some Hotels. Retrieved from http://online.wsj.com/news/articles/SB10001424052748704366504575278450170941876. Sani, A., Dezdar, S. & Ainin, S. (2013). Outsourcing Patterns among Malaysian Hotels. International Journal of Business and Social Science, 4 (9), p. 134-142. Retrieved from http://ijbssnet.com/journals/Vol_4_No_9_August_2013/13.pdf. The Economist. (2009). Outsourcing as you sleep. Retrieved from: http://www.economist.com/node/13145889.

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