Hotel Online  Special Report

   
Outsourcing: A Prime Example of “The Sum
of the Parts is Greater than the Whole”

 
by Brenda Fields, December, 2006

Outsourcing over the past several years, has taken on a negative perception in the market place. It has recently been associated with the idea that big businesses outsource some of their support services and functions in foreign countries in order to reduce expenses, and that this is invariably at the expense of customer satisfaction as well as local jobs. An example of outsourcing gone bad is technical support services moved to foreign countries where the technicians who are not fluent in the customer’s native language, try to communicate complicated technical information and provide solutions to problem.  And, to make matters worse, the service is also priced at a high rate per minute; so inefficient problem solving is very, very costly to the customer. But, in the case of small independent hotels, outsourcing can provide major benefits which would allow these properties to provide specific services and expertise that they would not be able to offer because of the costs associated. As selling rooms is the primary goal, these enhancements only create an opportunity to increase demand for your property.

Small, upscale independent hotels are faced with the challenge of competing with the chain hotels which have much greater marketing resources and marketing funds as well as the advantage of the economy of scale. Outsourcing various functions allows a property to get a “big bang for the buck” when used effectively and wisely.  By tapping into outside resources which make their living by specializing in specific areas, a hotel manager or owner can potentially add value to their property and benefit from greater expertise, more cost effectively than providing on their own. Therefore, when putting it all together, the sum of the parts is truly greater than the whole. 

Sales:
A dedicated sales position on your property is ideal as there is no conflict of interest and  no chance of a sales call being made for another client at your expense. But, the  downside is that if the sales process is not expertly devised and implemented, then the  cost of sales can surpass what is actually realized. There are companies which specialize  in providing outside sales solicitation services on behalf of your property. These  companies typically handle multiple clients. Therefore, if this function warrants  outsourcing, it is important to ensure that systems and procedures are set up with an  outside sales company to ensure that quality sales calls are made on your behalf  and that the annual revenues generated are approximately ten times the cost of hiring the  company. Additionally, it is important to have consistent reviews with the company to  ensure that they are selling your property properly and that they have up-to-date  information on the property, promotions, demand periods, and the competitive set.

Lead Generating/Prospecting:
Identifying the right business for your property along with all the contact details of the  decision maker is one of the most costly elements of direct sales. Independent hotels do  not have the luxury of a national sales team surfacing leads on your behalf from clients  all over the world and do not have marketing resources to develop a strong brand that will  generate leads. It entails identifying the right business for your property; determining the  key contact(s) with their  addresses, phone numbers, and email addresses; and qualifying  the accounts business potential for your property. So, it might be more cost effective to  hire an outside company which is dedicated to surfacing leads on your behalf and having  your sales staff close on the business. Again, there can be pit falls in selecting the wrong  company. Many marketing representation firms provide this service for a flat fee. But it is  important to ensure that the staff understands your need periods and well as capacities,  rates, and type of business to which you market yourself. A few companies specialize in  offering customized services for your property. They will call as a representative of your  property and will forward you the well-qualified leads. More often than not, the fee is  much lower than a high profile marketing representation company and the results are  much greater.

Marketing:
A small independent property is challenged with maximizing exposure in the local,  domestic and international marketplaces. A well optimized web site is a great equalizer  and can cost effectively help an independent property gain equal exposure online against  its chain-affiliated competition. But, outside of the web site, the costs to accomplish  this goal far exceeds the industry standard of marketing expenses, which is typically six  percent of revenues. Therefore, a marketing representation companies can insure that  your property is represented in trade shows, mailings, advertising, and advertising. Costs  vary significantly based on which services are provided and how well established the  representation company is. So, it is important to  evaluate your needs in the long term as  well as the short term, and evaluate the ROI of the company considered.

Reservations:
Typically, reservations are handled by the front desk staff in small, independent hotels.  But in a busy property, reservations usually take a back seat to the person standing  across from the front desk staff. In addition, if there is an on-property reservationist, the  hours are usually limited to eight hours per day, five days per week. So if it is determined  that revenues are lost as a result, this area could be outsourced to a marketing  representation company. One advantage of outsourcing is that the exposure and ease  of booking are greater than what could be accomplished in a cost effective way in a small  property. Voice reservations can be provided 24/7 to ensure that every time zone is free  to book your property at their convenience, increasing the likelihood that your property  will be booked. 

Employee Recruitment:
Most small, independent hotels do not find it cost effective to hire a staff member or to  create a department dedicated to the recruitment of personnel, even though the  identification and recruitment of qualified candidates is crucial to the overall performance  of the property. That function, more often than not, falls on the shoulders of the general  manager. Therefore, it may be beneficial to consider the services of an employment  recruitment agency which has an up-to-date database of qualified candidates in all  positions and provides quality reference checks and background checks. Depending on  the size of the property and the number of employees, this service, if warranted, can be  contracted on an annual retainer basis, which specifies the number of positions per  month as well as the terms for any replacements. Outsourcing this area may allow a  manager or an owner to improve the efficiency of hiring well qualified and well  referenced employees, and freeing up their time to attend to planning, sales, and  operations. 

Restaurant/Bar:
Given the margins in food and beverage, it requires great planning and expertise to  ensure profitability. Many times, in a small property, it is not profitable to provide a  restaurant and/or bar. Therefore, it may make sense to outsource this to established  restaurateurs who have all the elements in place to provide this service. They have the  responsibility to run the business, based on your needs and objectives, and you have  provided an additional service to your guests at no expense to you. 

Health Club:
As with a restaurant/bar, health clubs, if done correctly, are costly to develop and  maintain due to cost of equipment, staff and insurance. Therefore, if a health club could  add value to your product, consider outsourcing this by finding a well established health  club business to provide this service either in your property or in one of their nearby  clubs. 
Lastly, as with any company or service, there are varying levels of professionalism and expertise. So before choosing what is best for your needs and your property, a careful evaluation is necessary to ensure that you are getting the best match to accomplish your goals. By understanding what resources are available and how to effectively use them, an owner or manager is in a great position to determine the best course of action for his/her property. 

This article is reprinted with the permission of its author and HotelExecutive.com, and cannot be reprinted without the author’s permission.



About Fields and Company:

Fields and Company, founded by Brenda Fields, provides in-depth analyses and cost effective sales and marketing solutions to help owners and managers achieve their revenue goals. Systems and procedures are devised and implemented to monitor results and to ensure staff accountability, resulting in success during downturns. We work on individual projects or provide on-going involvement and expertise on a retained basis.


 
Contact:
.
Fields and Company
1011 Smithfield Road
Millerton, NY 12546
Phone: 518 789 0117
Fax: 518 789 0118
brenda@fieldsandcompany.net
www.fieldsandcompany.net

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Also See: What Women (Really) Want; Identifying the Unique Needs of the Woman Business Traveler / Brenda Fields / August 2006
Sales Incentive Plans: Hotel Owner's Friend or Foe? / Brenda Fields / May 2006 
Creating Results: Strategy vs. Knee-Jerk Reactions / Brenda Fields / January 2006
Advertising: How to Create Award Winning Ads (Yes, Even on a Budget) / Brenda Fields / September 2005
A Primer’s Guide to Understanding and Maximizing Your Hotel Web Site / Brenda Fields and Michael Parkes / January 2005
David and Goliath: How Independent Hotels Can Successfully Compete with the Large Chains / Brenda Fields / October 2004
Catering Sales in Boutique Hotels: How to Maximize Revenues and Optimize Sales Productivity / Brenda Fields / July 2004
The New Market Segmentation and Pricing Model for Independent Hotels / Brenda Fields / May 2004
Boutique Hotels: Rethinking the Fundamentals in a New Business Environment / Brenda Fields / February 2004
Room Configuration - Are Your Rooms Configured for the Best and Highest Use? / Brenda Fields / January 2004
Direct Sales - What to Expect from Your Hotel Sales People and How to Get Results / Brenda Fields / August 2003
Boutique Hotels: How to Survive in a Down Market - Getting Back to Basics / Brenda Fields / May 2003
Industry Marketing Pro Brenda Fields Opens Consultancy Focusing on Independent Properties / January 2003


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