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How Outsourcing Changed the Hospitality Industry

When speaking of sectors that highly regard the role played by people, hospitality is at the top of the tree. In fact, according to Hospitality Global Market Report 2021: COVID-19 Impact and Recovery to 2030, the global hospitality market is expected to accelerate to almost $5,300 billion by 2025 as businesses emerge from the COVID-19 pandemic impacts of lockdowns, border restrictions and social distancing. As that demand has increased, so has the battle to find and sustain staff. Attracting qualified applicants and motivating them to remain once trained is critical for success, as their onboarding and training consume enormous resources. From the customer-facing frontline employees to the back-office operators who play an equally imperative role, seeking the right staff for the right function at the right price is salient. 

Likewise, with the advanced technological requirements of the sector ignited by digital transformation, it is a vast and unbearable investment for most companies, especially small and medium enterprises, where they need more money and know-how. 

Fortunately, business process outsourcing (BPO) provides hospitality businesses access to custom-fit staffing solutions and top-of-the-line software. As a result, it can help lower their overhead expenses and boost their efficiencies while continuing to render highly exceptional services for guests, tourists and clients. 

That’s why in this blog post, we will discuss how outsourcing from a BPO service provider changed the landscape of the hospitality industry. But before delving into that part, we will also briefly tackle everything you need to know about the hospitality industry in general.

Keep on reading! 

What is the definition of the hospitality industry? 

There might be various definitions of hospitality, but to boil down the point, it only means making someone feel welcome, typically through comfort and entertainment. 

Now, what really is the hospitality industry? It is a sector with a broad category of fields or falls under this large umbrella within the service industry. For example, it involves lodging, travel, tourism, theme parks, resorts, food and drink service, and event planning, such as concerts. Likewise, it also includes travel agencies, airlines, hotel corporations, motels, restaurants, bars, and much more. 

Now, if there are times that you are unsure whether or not a business is considered a chunk of the hospitality industry, you can ask yourself these questions:

  • Is customer experience a top priority? 
  • Does this establishment serve food or drink? 
  • Does this business involve booking flights, concert tickets or lodging reservations?
  • Does the company earn monetary funds through services more than goods? 

If “yes” is your answer to one or more of the following questions, there’s a strong chance that the organisation you’re into is involved in hospitality to some degree. 

Furthermore, another way to better understand hospitality is by looking at what is considered the big four according to hospitality.net: namely, lodging, travel and tourism, food and beverage and recreation. 

The 4 Segments of the Hospitality Industry 

  1. Lodging: This can be anything from hotels to Airbnb.
  2. Travel and tourism: This category covers travel agencies and airlines.
  3. Food and beverage: This includes lounges, bars and restaurants.
  4. Recreation: This usually means having activities such as playing in theme parks, fishing, swimming, golfing, tennis and watching concerts. 

As you can see, all these segments connect by their drive to render enjoyable and memorable experiences for those who wish to participate and engage. The atmosphere is warm and welcoming, the establishments sometimes provide additional convenient amenities such as complimentary valet parking and showers, and their revenue usually depends on whether or not people enjoy being there.

What is the primary goal of the hospitality industry?

Simply put, the hospitality industry’s ultimate goal is to deliver clients a good and enjoyable experience and memories they will never forget. Whether that amusement and satisfaction come from getting a good night’s sleep away from home, relaxing in a luxurious spa, eating a good meal, or travelling across different countries, ensuring each guest is adequately taken care of is highly paramount. 

What is Hospitality Outsourcing? 

Hospitality outsourcing is the process of contracting out the management, operation, and delivery of services related to a particular sector of an economy to a third-party provider instead of conducting these services in-house. The services that you can outsource include hotel management, food and beverage services, transportation, event planning and coordination, marketing and public relations, and more. This has become increasingly popular in recent years as businesses grapple with increased costs associated with traditional staffing models.

Why is hospitality outsourcing a good idea?

Undeniably, one of the most exciting facets of the hospitality sector is the need to be excellent at many things, especially in the service industry. That means there are tons of moving pieces, and as the world evolves, the number and complexity of those aspects are rising. This is precisely where outsourcing to BPO companies thrives. It is a one-way ticket to better hospitality services. 

  • Outsourcing renders you access to existing expertise in specific ways at a minimised cost, enabling companies to concentrate on their core business. From reservations, administrations, customer care, data analysing, IT, accounting, and loyalty program management, the roles you can offshore are a long list.
  • You can perform most of the actual work via the cloud. You can also access the systems in any location through any terminal with appropriate security measures. That makes it simple for hospitality outsourcing specialists to enter and do the work.
  • You don’t need to work on many of these roles and functions in real-time, and some of them, such as reservations, actually require a round-the-clock concentration. Outsourcing to a BPO provider can allow 24/7 operations to handle these queries.

The Main Types of Outsourcing Services in Hospitality and Local Accommodation

Operations

It is typical to see outsourcing services such as room service, housekeeping, kitchen, laundry, maintenance, and security. In these operational areas, some establishments decide to subcontract because of space in urban centres per m2’s high values, which may make it impractical to have non-productive areas (laundries, etc.) or high fixed expenditures for purchasing specialised staff (maintenance). 

Transportation

Transport rental or generating covenants with particular suppliers is a constant in this kind of business. Several types of corporations already make formal or informal agreements with transfers, uber, taxi companies, and many more so that they direct clients to those companies. These practices are frequent in hotels, local accommodation spaces or restaurants.

Revenue Management

For most countries, it is common to outsource revenue management in exchange for a percentage of sales. Being a development area in telework due to its characteristics, they frequently contract this area. It can produce outstanding results when synchronised with marketing, sales and IT.

Marketing and Sales

In the aspect of marketing and sales, because of the lack of technical skills with the rising business digitalisation, hotel corporations feel many challenges to follow the technological evolution opting for a BPO vendor of software and marketing.

Administrative Services

The area of administrative services is one of the oldest in outsourcing, for instance, human resources, reservations, finance, accounting services, salary processing, etc.

Information Technology (IT)

Due to the growing technological need and the latest legal changes in consumer privacy, this is one of the most commonly outsourced areas nowadays, even in the hospitality industry. 

Parking, Facilities Rental, Tax Residence, or Virtual Offices

These points conform to one of the most current market needs. With the boom of local accommodation spaces and the increasing costs per m2, many corporations choose not to have their physical offices installed. 

As such, they prefer to turn spaces into productive areas where they can make an additional profit rather than creating room for administrative services. To digress, the space constraint of local accommodation requires obtaining virtual offices in places other than the places of the dwellings themselves, for instance, in private houses or other unconventional solutions. With the coming of new solutions, business owners find themselves professionalising their services, changing their tax residence to coworking organisations or virtual offices.

Here’s a list of the frequent hospitality and tourism roles that you can outsource:
  • Travel Advisor / Agent
  • Travel Coordinator
  • Reservations Agent
  • Online Receptionist/Concierge 
  • Sales & Reservations Consultant
  • Guest Services Supervisor 
  • Guest Relations Manager 
  • Hotel Manager
  • Lodging Manager 
  • Restaurant Shift Supervisor
  • Food and Beverage Manager 
  • Catering Manager 
  • Spa Manager 
  • Recreational Activities and Leisure Coordinator 
  • Event Coordinator/Planner 
  • Sales and Marketing Manager 
  • PR Manager 
  • IT Manager 
  • Project Manager 
  • Finance Manager 
  • Data Analyst
  • Translator
  • Back-office Assistant 
  • Customer Service Representative 
  • Customer Care
  • Health and Wellness Specialist
  • Hospitality Specialist
  • Maintenance Supervisor 
  • Human Resources Management
  • Housekeeping Associate

How Outsourcing Changed the Hospitality Industry

1. Minimising and controlling operating costs with the renewal of fixed costs into variables.

2. Boosted efficiency on time-consuming and repetitive tasks.

3. Freed human resources for the company’s main activities.

4. Reduction of additional in-house employees and the expenses inherent to it.

5. Gain access to highly specialised professionals, which is challenging to find if hired directly.

6. Acquisition of new skills, know-how and technological capability of systems

7. Elevated the company’s focus and operational competitiveness.

8. Performed activities that were hard to manage or control.

9. Empowered services and added value to the organisation.

Green Hotels

As the world is rapidly becoming more environmentally conscious, to the point where it impacts travellers’ choice about where they stay, hotels are reacting by adopting motion sensors, using solar power, reducing plastic, and adding meat alternatives to menus. Most guests now expect this, so hotels must join the sustainable movement.

Smart Rooms

Rooms like this will allow guests to be as relaxed and carefree as they can be on a getaway. With smart controls such as Amazon Alexa, the internet of things, soundproofing, wireless charging, and many more, it will be possible for them to do anything they wish in their hotel room. They won’t even need to move a muscle to make things work.  

Technology On Every Front

No trip or experience is without technology, as hotels rarely operate without it. They can now voice-operate search engines. They can use artificial intelligence to check in guests, offer online help, price rooms, and room service. And there’s literally a mobile app for everything. Technology, as a whole, makes it much easier to personalise the guest experience and take note of their preferences.

Multicultural Employment

Hospitality is extreme in this aspect, enabling many hotels to become global and adding another dimension to the guest’s stay. As such, staff from their own country can serve them, or they can learn about a culture they’ve never toured before while staying somewhere they haven’t gone to before either.

Hotel Designs and Business Strategy

Driven by the evolving preferences of guests, ‘cool’ luxury hotels are beginning to pop up in growing numbers, along with micro-rooms, ‘instagrammable’ brands, experimental social spaces and a focus on local design and flavour. 

Traveller Priorities

It’s never been more true that travellers are seeking experiences over materials. They constantly search for something unique or something that speaks to what they are passionate about, like travelling for their love for coffee alone or visiting themed hotels based on their specific interests. 

  • Social media    Specifically on Instagram, the predominance of social media in decision-making is growing. 
  • Mobile bookingOnline bookings via the mobile app are expanding exponentially.
  • Multi-channel distributionAs traveller markets become more diversified, so must your ability to match them.
  • Growth in Asia and Asia Pacific travelThese travellers have their preferences and ideals. 
  • Transport is becoming cheaper –  More people are finding themselves wanting to travel, where new markets are coming into play. So you must consider what you must offer them.
  • Technology is a driving force It’s now a disadvantage to not be tech-led in your business’s strategy. 
  • Money talks Travellers are now willing to invest more if it means they get a one-of-a-kind experience. So the value for money is the most salient thing.
  • People want travel to be enriching The experience of touring another place should be exciting and fulfilling. You need to ensure a stay at your hotel or lodging remains unforgettable. 
What are the critical points for a successful outsourcing hospitality services partnership?
  • Planning and strategic vision.
  • Clear mission and vision shared with the outsourcing provider.
  • Selection of the right partner according to the area of activity.
  • Attention to questions of teams and personnel.
  • Well-structured and clear contractual conditions between the parties.
  • Open communication with interested parties.
  • Relationship management.
  • Assignment of a contact person with the outsourcing partner to cover your absence.
  • Support and involvement of the executive team.
  • Mid-term financial evaluation.
Conclusion

In conclusion, outsourcing has had a profound impact on the hospitality industry. Not only has it allowed businesses to save money, but it has also allowed them to focus on more crucial aspects of their company. Outsourcing has made it possible for hotels, travel agencies and restaurants to provide better customer service, and it has also allowed them to upgrade their tools and facilities. Consequently, outsourcing is firmly entrenched in this industry and will significantly continue to impact how businesses operate.

Are you looking for a more cost-effective, efficient and quality service for your hotel, travel agency or restaurant? The Lead Enquiry can help you with that! Our service provider partners have the best talent along with world-class technology that can help increase your customer satisfaction and revenue! Contact us today. 

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