Risks and Benefits of Outsourcing Hotel Operations: A Comparison between Scotland and Taiwan

Abstract

This paper examines the use of outsourcing in the activities comprising hotel operations in Scotland and Taiwan. Outsourcing is a key process integrated into the design of the supply chain management. The research also focuses on empirically identifying the role of the outsourcing strategy in hotels. To this end, the authors propose two hypotheses to study the relationship between the benefits and risks of outsourcing and the tendency to use third-party organizations. These hypotheses are analysed and tested in the two regions. The study was conducted on a representative sample of 118 hotels in Scotland and Taiwan. A questionnaire was used to obtain the findings. The results indicate that the principal candidates for outsourcing are the activities requiring technical skills and those services not involving direct contact with guests. No significant differences were found between the current levels of outsourcing in Scottish and Taiwanese hotels. The findings indicate that a stronger perception of the risks and benefits of outsourcing has a greater influence on outsourcing strategy. Furthermore, in the case of Scottish hotels, it is the benefits that determine the level of outsourcing, while it is the risks that do so in Taiwanese hotels. This work contributes to the literature on outsourcing from a services perspective.

Activity outsourcing and competitive strategy in the hotel industry. The moderator role of asset specificity

“…The hotels that would like to outsource more are those that follow a cost leadership strategy, as they try to reduce costs even more in order to take advantage of suppliers' economies of scale. However, when actual outsourcing is analyzed, the hotels that follow a cost leadership strategy do not present greater activity outsourcing, which indicates that the main reason for using the outsourcing strategy is not cost reduction, as there are other more strategic motives for outsourcing (Espino-Rodríguez et al, 2012). It is possible that many hotels have reached their optimal level of activity outsourcing, and the main reason they outsource is not the cost: in contrast, higher levels of desired outsourcing would be determined by the hotel's emphasis on a cost leadership strategy.…”

Outsourcing Performance in Hotels: Evaluating Partnership Quality

“…This cost saving is greater because, through partnership quality, control, and negotiation, costs are reduced, producing a positive effect on the financial performance of outsourcing. Moreover, the outsourcing suppliers offer better prices thanks to the economies of scale obtained by offering their services to various clients, which lowers the hotel's costs [59]. However, this benefit will probably only be obtained within the framework of partnership quality because otherwise suppliers may not share these benefits with the hotel, due to opportunistic behavior [60].…”

“…All aspects related to the competitive advantage are considered in the study, except cost reduction. To elaborate this construct, a theoretical and empirical literature review was carried out on the main strategic advantages outsourcing can provide [59,68,72,73]. For this purpose, a scale was created containing eight items that incorporate information related to the strategic benefits of outsourcing.…”

La intensidad de la externalización hotelera y sus beneficios y riesgos percibidos

“…Estas actividades básicas, en las que el hotel es más eficiente, deben ser el centro de atención de los directivos, ya que su desarrollo interno supone una mayor flexibilidad y rapidez del hotel para adaptarse a los cambios del mercado (Quinn, 1999). Centrarse en este conjunto de operaciones basadas en el conocimiento y habilidades críticas permiten mejorar la calidad y diferenciar su servicio (Espino-Rodríguez et al, 2012). Además la externalización de las actividades no básicas permite incrementar la atención en las actividades estratégicas, lo que puede repercutir en una mayor flexibilidad en las operaciones y la posibilidad de disponer de recursos para otros propósitos (Espino-Rodríguez y Padrón-Robaina, 2004).…”

“…Esta estrategia ha sido reconocida como una estrategia positiva que conlleva a una reducción de costes ; Kroes y Ghosh, 2010), lo que supone también una mayor eficiencia (Özdoğan, 2006). Al mismo tiempo aporta al hotel una capacidad de adaptación a sus necesidades según la demanda, convirtiendo los costes fijos en variables (Espino-Rodríguez et al, 2012). Como señalan Delmotte y Sels (2008), la externalización es también una alternativa para reducir el volumen de personal en un sector caracterizado por un uso de mano de obra intensiva.…”