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. |