Key dimensions of outsourcing hotel food and beverage services

Abstract

Hotel restaurants are widely considered to be under‐performing assets and hotel companies have sought to improve their financial performance in a number of ways including outsourcing to specialist restaurant companies. This article reports the findings of a study that explores the key dimensions of outsourcing through a series of semi‐structured interviews and group discussions with 55 key informants. The findings reveal five key dimensions to the outsourcing relationship: core competencies, brand compatibility, organizational culture, operational tension, and systems of review, evaluation and control. It is concluded that, whilst there is evidence that the outsourcing of hotel restaurants can offer substantial benefits for both hotel and restaurant companies, it is important that the relationship is treated as more than merely the contracting‐out of support services. The provision of food and drink is an important and integral part of the hotel product and the complexities of the relationship between the partners, particularly in terms of issues such as brand association, organizational culture and operational tension, should not be underestimated. The impact on consumer perceptions of the hotel product and consumer satisfaction should also be considered carefully.

Hotel outsourcing under asset specificity: “The good, the bad and the ugly”

“…Yet, all the three cases confirm that even in the presence of high asset specificity, outsourcing transactions do take place. This is consistent with evidence from Espino-Rodríguez & Lai (2014), Lamminmaki (2005), and Hemmington and King (2000), which also highlights conditions conducive to hotels choosing to outsource under asset specificity. Most importantly, however, we also find that though -as suggested by TCE -market transactions under high specificity can generate devastating costs (as in the case of "The Bad"), our evidence also illustrates instances whereby outsourcing under high specificity can work, bringing hoped-for benefits without the costs of keeping the activity "in-house".…”

“…As Roodhooft and Warlop (1999) spell out: "Managers do take into account transaction costs, at least when they are explicitly specified. Quite rationally, they [are] Hemmington & King, 2000;Lamminmaki, 2005Lamminmaki, , 2007 asset specific investments are neglected also in studies examining hotel outsourcing. As a result, several grey areas remain in scholars' knowledge of hotel outsourcing under asset specificity, and how related TCE propositions fare.…”

Analysis of additional hotel services in the international luxury hotels – a case-study from Budapest

“…In the recent years, several hotel restaurants were not profitable, hotel restaurants have become support amenities to what has come to be seen as the core business of accommodation. Two significant trends have emerged (Hemmington and King, 2000). On the one hand, the independent restaurant sector has become highly competitive and has focused on meeting the needs of the market with creative and innovative branded restaurant concepts (Casper, 1995).…”

“…As a result, the poor economic performance led to an increased attention to the food and beverage bottom line. The outsourcing of the hotel restaurants is becoming increasingly common, particularly, as hoteliers become more comfortable with the presence of restaurant brands in their properties and as restaurateurs become more competitive in the terms they are prepared to agree (Hemmington and King, 2000).…”

Supplier Selection in Hospitality Industry Using ANP

“…Hotel customers usually consider food and beverage services as a component of the hospitality service of the hotel. They believe that food and beverage services support the hotel's image and significantly affect the customer's general hotel experience (Hemmington & King, 2000). Customer expectations in hotel services usually depend on the guest type, for instance business guests are often looking for healthy items because they travel and dine out often.…”