Virtual Hotel

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¬¬Introduction
This paper analysis is about virtual hotel that is described in “The Economist” (2009) article. The terms of “virtual hotel” has a strong relationship with outsourcing, which means the hotel will let their system, name, and others to be used by other interested parties.
By doing outsourcing, the business will require less initial investment compares to the typical conventional hotel. Another effect is the quality hotel brand will increase indirectly through outsourcing. However, they must concerns about controls, security, and confidentiality. Since outsourcing is rather common in the hotel industry, therefore this essay will discuss some of the major advantages and disadvantages of it.

Main Advantages of Not Owning the Building
By outsourcing or not owning the building, it will be beneficial for both hotel chains and businesses. The first benefit will be less investment cost for starting a new hotel. This lead to decreasing of total cost and opportunity cost as the new hotel using the system and name from hotel chains. So, both businesses and hotel chains will get more economic profits.

The second benefit will be building a quality brand. As the hotel chains get more branches, the quality brand will increase by itself. This lead to decrease the cost of investment for building the quality brand. Therefore, return on investment (ROI) will increase.

The third benefit will be able to focus on running the hotel instead of managing the building. This lead to decrease the opportunity cost as the time and effort are allocated on increasing the services quality instead of maintaining the building. Therefore, the hotel chains will get more economic profits.

The fourth benefit will be the flexibility of location. It...

... middle of paper ...

...etitors. This information can be used by competitor to design an effective strategy against hotel chains that can lead the hotel chain to losses of customers. As a result, the hotel chains will be burdened with immense loss of economic profit.

Conclusion
In conclusion, outsourcing or having business without owning the building is attracting more businesses and hotels. This practices is easy to be implemented, lower risk and does not need large investment. The main benefit from outsourcing is making more profit as the flexibility of starting a new hotel at many location and less investment. However, it is difficult for hotel chains to maintain the quality as the businesses only focus on profit instead of quality.
Therefore, filtering the businesses candidate who interest in outsourcing services is needed. So the quality and reputation of the hotel chain will go up.

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