OUTSOURCING AS AN OPTION

Contemporary economics opines that the following factors must be considered in locating your business. Nearness to market, raw materials, source of power, political stability and availability of labour. In the early 80s, this used to be a recurring question in O'level economics examination. There were about ten or so factors then but for the purpose of this piece, we will contend with five.

These used to be core industrial factors but not any longer. With the advent of technology and emergence of creative information, organizations are beginning to ask the right questions, critique the old orders and venture into realm beyond the traditional approach. For time and space, we will limit our foray into the hospitality industry. I have inspected hotels that looked as if they were deliberately tucked away for security reasons. I mean real hidden. And I have heard the owners of such hotel complain of low sales in spite of heavy spending on sales and concerted efforts at marketing. The question is why hide hotel only to start advertising it. The location of some hotel will elude all scrutiny. Which of the above factors was taken into consideration before the choice of location was made?

There is this hotel on the Island that appeared to have the benefit of good location by its nearness to main road. The island is a representation of good market and political stability as political demonstration hardly ever crosses the third mainland bridge. Apart from the regular heating of the polity by politicians, the political landscape has been fairly stable   Labour is cheap from the neighbouring camps that encircle the island like water. The diesel gulping machines ensure power is relatively sourced, yet the hotel seems not to enjoy the privileges of patronage. Even with all the factors taking into consideration. Owners of hotel must submit to the fact that starting and running hotels have gone beyond Adam Smith. And to make a success of this venture, they may have to start embracing the new trends in hotel business.

Rather than manage your property yourself, it’s more profitable and result oriented having a consultant run it for you. The advantage of this option far outweighs the prospects of handling it by yourself. You can imagine a Dangote or an Otedola micro managing all their legion of businesses. They source for fund, throw it into a well thought out business idea, commit it into the hand of expert in that area of influence, sit back and watch their business grow. They retain corporate control, secede management control to the managers and the banks come smiling to them. Take it or leave it, business has moved from the basics to the complex where all competition are done on-line. But what is now vital is the ability to review business plan and methods, strategize on how best to move your business forward.

Outsourcing is the process of conceding some area of the business that you lack sufficient competence to someone who is versed in that area. This is perhaps a safe landing for hotel owners who for reasons beyond sentiments will not want to totally hand over their property to a consultant. Its very difficult to incubate a business, birth it and then hand it over to another person for nurturing. But isn't that what we do with our kids after giving birth to them. We hand them over to educational institutions to help us in areas where we relatively lack competence for them assist us. Same is expected in business and it should not be difficult doing this if we care enough for the business.

Back to outsourcing, some particular departments of the hotel are more vulnerable than others. The ancillary departments like housekeeping, security and food and beverage are some of the departments within the hotel that are susceptible to outsourcing.  With the obvious exception of the food and beverage, other aforementioned departments are not revenue generating rather they are service units that needs constant funding. They are meant to complement the revenue generating units of the hotel. By out sourcing these departments, hotel owners or hospitality consultants are left to concentrate on the core areas that make the hotel.

Lastly, outsourcing is a rather delicate concept that is not entirely new, but must be approached with some level of exposure in the industry as well as a technical savvy laced with corporate instinct. Just before you consider this option, make sure you speak to a consultant.