Friday, June 15, 2007

Global Hospitality Outsourcing - Winning in a Flat World!


In the last few years the hospitality space has seen a rapid transformation. Much has been said and written about how emerging markets such as India and China are becoming the new centre of gravity for the hospitality world.

The global hospitality playing field has been levelled and the resulting impact on growth and profitability continues to push leading hotel companies to explore more efficient business models and raises the following key questions for the industry:-


* Are the cost structures better than industry averages?
* Is there a clear view on core vs. non-core functions?
* Is there scope for converting a large portion of the business support cost to variable cost?

Focus & Stakeholder Alignment

* Are processes within each strategic business unit and within geographical regions structured appropriately?
* Have shared service centers given the expected returns?

Growth Alignment

* Is the company ‘acquisition ready’ operationally?
* Is the company operationally ready to expand into growing markets and geographies?


* Does the executive level have a consistent and standard view of information across businesses and geographies?

It will be safe to assume that in today’s world no corporate strategy is complete unless it addresses the impact of global off-shoring on the organization’s bottom line. Derivation of enhanced value through cost optimisation, efficiency and transformation of processes, functions, products and various businesses is imperative.

Traditionally organizations have aligned their back offices to a functional productivity model that is constituted around the existing structure within the company. While these models have worked for some, there are common themes of inefficiencies that run across captive back-office operations of organizations and these inefficiencies impede the ability to optimize business performance.

The initial business case for outsourcing emerges by way of significant opportunities in labor cost arbitrage. Organizations have realized this potential and are beginning to move their non-critical, people intensive segments to third party vendors or establishing captive units and shared service centres. Typical services that can be off-shored would include functions such as 24/7 global reservation centres, customer helpdesk, outbound sales support, frequent guest program management, RFP response centre and other similar services.

People, Processes and Technology Alignment

Through technology enablement and operational effectiveness of the service provider, a greater degree of integration can be achieved. Having analysed a prototype organisation we understand that often high end resources are involved in low value activities and processes are not aligned to the right stakeholders.

Operational Effectiveness and Productivity Improvements

Service providers are capable of providing customised real-time asset, brand and enterprise level information through automated reporting and statistical consolidation. Assessment of development and investment risk to validate entry strategy in key global markets through economic research and functions such as development and tracking of performance indicators, trend based forecasting, budget reviews, compliance audits and statutory reporting can be also be outsourced, thereby resulting in committed operational efficiencies, enhanced productivity and better knowledge management.

At HVS, global hospitality outsourcing was an opportunity we spotted early and have formed a global strategic alliance with Infosys BPO Ltd. The alliance seeks to combine the outsourcing capabilities of Infosys and the hospitality consulting expertise of HVS to design specific solutions for the hospitality industry. Our outsourcing solutions will be tailor made to enable your operations work more efficiently and, at the same time optimize costs.