Risk Management and Priority Alignment with Outsourced Service Providers

Part I of our look at outsourcing in the hotel industry explored some potential pitfalls that could reduce a property’s overall strength. This second segment focuses on communicating your hotel’s priorities to service providers while reducing the likelihood of errors. When considering the option of outsourcing, it’s essential to select suppliers that understand and support your business goals. Specifying these objectives within their contracts may help a property avoid potential conflicts.

Following are some aspects to consider when evaluating the suitability of outsourced service providers, along with some practical ideas for minimizing risk:

A. Does your outsourced provider juggle many clients? How much time can they devote to your property? One idea: insist upon regularly scheduled check-in meetings.

B. Will your service provider’s bigger clients be more important than you, leading to your loss of control and quick reaction time to problems? One idea: set monetary incentives for promptly and sufficiently resolved problems as well as penalties for slower responses.

C. Are confidentiality agreements enough? Could your outsourced supplier leak proprietary information? One idea: password protection and strict monitoring of the access of sensitive data and documents.

D. Can your outsourcers adequately evaluate the levels of risk that are acceptable for your hotel? One idea: include in the contract a comprehensive database of potential scenarios and your hotel’s desired outcomes.

E. Is there consistency with the proficiency of those employed by your outsourced provider? Surging demand for less expensive skilled labor could lead to hiring insufficiently trained staff, which decreases quality and speed levels while defeating the cost savings intended by outsourcing; i.e. a booking engine maintained in an emerging technological region such as Bangalore. One idea: verify the employment and education credentials of your outsourcer’s team leaders.

G. Are the outsourced provider’s corporate ethics aligned with yours? Do they have unfair labor practices or irresponsible environmental/waste policies? It’s not just the matter of being unprincipled; could their actions harm your brand’s reputation? One idea: stipulate as a qualifying factor for awarding the contract your first-hand observation of the company’s actual work environments/factories, not just the corporate headquarters.

Successful outsourcing is all about due diligence to make sure your hotel is put into good hands without giving away your knowledge base. In the process you may decide it is not the most fruitful path to strengthen your brand. Part III explores this scenario with some ideas of how insourcing can make better use of your current staff resources.

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