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Literature Review

Discuss about the Managing Rooms Division Operation for Journal Articles. 

The key research question on which this literature review is formulated is: “To conduct a literature review in order to understand whether it is possible to outsource completely, a hotel’s entire reservation system or not.

In order to do this, the literature review will throw light on various perspectives. These perspectives will range from understanding the concept of outsourcing to understanding the framework of reservation system outsourcing as per essential articles of research, journal articles, academic reviews etc (Buhalis and Law 2008). The review will be conducted comprehensively in order to reach the consensus of research. The literature review overall, will be of the notion that, yes, a hotel can outsource its entire department of reservation. The key lies in ensuring that hotel takes utmost care of its operations while operating.

The concept of outsourcing was initially introduced as a term in the middle years of 1980s. However, the similar concept has long existed from a very long period of time wherein individuals where hired to perform specific job roles and/or division of labour. According to Coase (1937), outsourcing is present globally within the context of business, either of simple or complex structure with firm size of either large, medium or small scale (Cunil and Forteza 2010). Prior to the times of 1900s, the primary focus of outsourcing was on the production tasks which were labour intensive along with activities of business outside the core competitive of the company including outsourcing of food preparation, janitorial work, print press, hiring of migrant seasonal workers of farm and more.

According to Commons (1931 and Wiliamson (1975), it is mentioned that outsourcing is considered as business tool that is widely accepted in achievement of organizational goals. The use of outsourcing is generally significant wherein the activities that takes place in house are more than purchasing of market goods or services. Conditions are states by Kliem and Quinn (1999) that the process of outsourcing not only provides with an advantage to the current employees in focusing on the core activities of the organization but as will concentrates on achievement of the key objectives (DiRomualdo and Gurbaxani 2008). These include reduction in cost or stabilization of the costs and finally obtaining competitive cost advantage, offering flexibility within market change and significantly lower the investment with respect to high technology.

According to Bruna (2010), subcontracting of Third Party Company provided service is considered as outsourcing.  The primary organization trusts and provides responsibility to either one or numerous organization to perform specific task to be successfully able to save resources, time and organizational funds.

What is Outsourcing?

As per Mariam (2001), the discussion of outsourcing within the domain of hospitality is difficult itself due to the dependability of the hotel product on certain factors which are not always controllable by the hoteliers (Espino-Rodriguez and Gil-Padilla 2010). At instances, hotels are unable in determining the workload which leads to the resort of subcontracting organizations specialized in delivering services of high standards. Brian (2004) also stated that a hotel possess fixed costs that are high. In order to maintain running the hotel, numerous expenses are faced as it does not concern whether guests are present or not at the hotel. It is required that staff is present on daily basis for which the salary is paid. If the premises of the hotel is not owned by the hotelier, then in such case rent becomes another fixed cost of the hotel along with providers, bills and more (Haag et al 2008). According to Burkhart (2009), the hoteliers turn towards contracting certain activities to another organization in order to convert the costs that is fixed into variable. Karen (2001) stated that this further leads to a dilemma of determining the services that will benefit when outsourced.

According to Brian (2009), on one side there are varied different experiences introducing within the domain of hospitality has enabled is to provide with more differentiated and improvised services that further require professionals with high qualifications. While on the other side, continual improvisation within the sector of technology has enabled automation of process to a higher extent within the industry of hospitality that further increased the trend of outsourcing related to IT (Lam and Han 2005). It is considered that an individual cannot be a specialist in everything. Hence, certain tasks deliver desirable goals when left with the individuals of speciality in domain. 

From this perspective, it becomes crucial to explore review of literature on advantages and disadvantages of outsourcing the reservation department of a hotel.

As mentioned by Klein (2005), contract services and outsourcing is being increasingly opted by the hotels in order to sustain operation reservation operation with cost efficiency and to further make sure that assets and resources of the hotel are utilized to realize the maximum. Large hotel chains and corporate organizations are dependant primality on outsourced professional reservation staff providers to meet with the needs of hotel. According to George (2008), fast changes in the environment of industry demands strategy implementation by the top management which focusses both on the present success and investment in certain activities that will enable hotel with competitive advantage for continuous success (Lamminmaki 2003). As discussed by Mike (2011), the process of outsourcing is viewed as the only resort of maintaining competitiveness of the hotel in this century by the managers of most hotels.

Benefits of Outsourcing to Hotels

According to Maria (2013), the systems of reservation within majority of hotel chains are developed by the department of IT as per the customized needs. Outsourcing in this segment is considered as an effective alternative due to the high amount of required investment (Mistilis et al 2004). Following are some of the primary considerations in decision making of reservation system:

As per Moss (2001), advanced system is the reservations system’s core factor as multiple requests of reservation may be displayed. A typical scenario of this will be request of a guest for two rooms wherein only one guest will occupy one room and two guests will occupy the second room. Certain reservation systems would read and deliver limited options like one room for triple occupancy and in worst cases, another search would be requested by the system due to reservation of individual room within single type of room in a reservation. Hence, two separate reservations will be made for the same period of stay.

According to Kim (2006), customization is present in a good system due to the individual distinctiveness of each hotel. For an instance, preference of room is considered. The preference of a room is currently exposes and details of breakdown are offered to the customer including desired pillow type, bed size and more (O’Connor and Frew 2004). It is viewed that not all system enables the hotel for input of associated data. A guest that is allergic to feathers will be satisfied upon realizing the availability of option at hotel to choose from pillow made from feathers or latex which will count as satisfaction generation by hotel.

As discussed and mentioned by Smith (2012), page is referred wherein the guest inputs the check in and check out dates of stay. It is viewed that certain systems offers search box including dates of check-in and check-out, count of guests and without use of any colour on the page. An hotelier is required to be ensure attractiveness of reservation page as the interest of the booker is to be maintained in checking of availability.  As per Jonah (2010) it is identified that numerous hotels implement outsourcing to address these issues as well.

As per Lukeman (2009), the reservation system is integrated for effective management of reservation while being friendly in the complete process including hotel data and information, for the hotel as well as the guest.

It is stated by Bob (2001) that system of reservation is also used by other departments along with the reservations, room division and sales as per the hotel (O’Connor and Frew 2002). There are many features present apart from the core functions, which add value through email distribution, web promotion, reporting tools for agent productivity and payment functionality.

Outsourcing Hotel Reservation System

Reduced fixed costs is one the primary advantage of outsourcing as per Miguel (2001), this is because it enables the hotel chains to be kept up with the expenses of guests usage. This implies that services from another organization can be taken as per the load of work.

Furthermore, it is stated by Jones (2009) that improves specialized products or services quality is another key advantage that is enabled by outsourcing. Professionals providing the hotel with services and products in best possible manner. For an instance, design marketing or campaigns of advertising. It has become highly often that management of hospitality and associated reservation goes together with technology (Olsen and Connolly 2000). Organizations that offer technological services for the domain of hospitality deliver specific software to the hotels for management of allotments, warehouse organizing and controlling other processes that are internal. As per Nick (2013), Failure in outsourcing of IT management can result in high costs to the hotel as specified professionals and software developers will be hired at fixed cost in Hotel. The costs will further increase to a large extent if the hotel develops the reservation system themselves.

Loss of control is considered to be an initial disadvantage by Hart (2014) as it is difficult for the hotel to trust the third party which might imply control loss of their own activities. This notion becomes stronger if the services are in concern. It is evident that the services delivered to guest are defined through simultaneity wherein they are consumed as soon as they are produced which makes quality control difficult. Hence, outsourced services needs to ensure avoidance of depersonalization in customer experience.

Misalignment is another disadvantage identified by Gregory (2015). There is presence of risk of misalignment of objectives and associated aspects of strategy (Paraskeves and Buhalis 2000). It is to be ensured by the Hotel that the vital internal communication takes place along with seamless communication with outsourced agents to ensure accurate transmittal of objectives.

Jeffery (2002) stated that scepticism is another disadvantage in regards to security. Reluctance is seen by the hoteliers to provide critical data to other organizations. Such data should remain secure as the availability, integrity and confidentiality are the essential computer security premise resulting in internal IT management.

As per the Express Hospitality, number of hotel facilities are under reviewing the concept of reservation system outsourcing. Technical aspects of this system including the maintenance, upgradation, constant security checks, implementation, continuous improvisation in outlook and content of the system are some of the tasks which require outsourcing (Sigala 2003). According to Henry (2005), there are various advantages of outsourcing in Hotel.

Considerations

As per Hoffman (2012), prior to implementation of outsourcing, it is essential to initially analyse the overall requirement of the hotel. Assess the requirements of the reservation department in terms of work load, regular schedule and associated charts if needed, calculation of associated manpower costs, equipment and more (Singh and Kasavana 2005). It is also to identify the outsourcing type that will match the suitability of hotel, complete or partial.

Partial outsourcing implies hiring external assistance for maintenance of certain hotel functionality as per Bullock (2010). This includes outsourcing of the certain parts of reservation system and functions of reservations department. Herein disadvantages will be risks of security, staff confusion, inconsistency in performance and staff loyalty and honesty.

According to Brian (2009), complete outsourcing implies outsourcing of the entire reservation system management and reservation staff both in certain cases which will benefit in time efficiency, reduced costs and high guidance on projects (Werthner and Ricci 2004). Some of the disadvantages can be high risk in security, questionable skill of worker, less quality control and reduced operations flexibility.

Conclusion

The decision of outsourcing or against is dependent on the hotel type and each hotelier’s attitude. There are varied services which can be outsourced. However, the most delicate to outsource are ones with guest involvement, such as reservation management, restaurant and more (Wethner 2002).

Hence, it is concluded that the decision making in any case will not be easy and the key behind effective outsourcing is to maintain balance between internal and external resources as some outsourced services will contribute to the productivity while others might not.

References

Buhalis, D. and Law, R., 2008. Progress in information technology and tourism management: 20 years on and 10 years after the Internet—The state of eTourism research. Tourism management, 29(4), pp.609-623.

Cunill, O.M. and Forteza, C.M., 2010. The franchise contract in hotel chains: a study of hotel chain growth and market concentrations. Tourism Economics,16(3), pp.493-515.

DiRomualdo, A. and Gurbaxani, V., 2008. Strategic intent for IT outsourcing.MIT Sloan Management Review, 39(4), p.67.

Espino-Rodriguez, T.F., and Gil-Padilla, A.M., 2010. Determinants of information systems outsourcing in hotels from the resource-based view: An empirical study. The International Journal of Tourism Research, 7(1), 35-47.

Haag, S., Cummings, M. and Dawkins, J., 2008. Management information systems. Multimedia systems, 279, pp.280-297.

Lam, T. and Han, M.X., 2005. A study of outsourcing strategy: a case involving the hotel industry in Shanghai, China. International Journal of Hospitality Management, 24(1), pp.41-56.

Lamminmaki, D., 2003. Outsourcing in the hotel industry: a management accounting perspective (Doctoral dissertation, Griffith University-Gold Coast).

Mistilis, N., Agnes, P. and Presbury, R., 2004. The strategic use of information and communication technology in marketing and distribution--A preliminary investigation of Sydney hotels. Journal of Hospitality and Tourism Management, 11(1), pp.42-56.

O’Connor, P. and Frew, A.J., 2004. An evaluation methodology for hotel electronic channels of distribution. International Journal of Hospitality Management, 23(2), pp.179-199.

O'Connor, P. and Frew, A.J., 2002. The future of hotel electronic distribution: Expert and industry perspectives. The Cornell hotel and restaurant administration quarterly, 43(3), pp.33-45.

Olsen, M.D. and Connolly, D.J., 2000. Experience-based travel. Cornell Hospitality Quarterly, 41(1), p.30.

Paraskevas, A. and Buhalis, D., 2002. Outsourcing IT for small hotels: The opportunities and challenges of using application service providers. Cornell Hospitality Quarterly, 43(2), p.27.

Sigala, M., 2003. The information and communication technologies productivity impact on the UK hotel sector. International Journal of Operations & Production Management, 23(10), pp.1224-1245.

Singh, A.J. and Kasavana, M.L., 2005. The impact of information technology on future management of lodging operations: A Delphi study to predict key technological events in 2007 and 2027. Tourism and Hospitality Research,6(1), pp.24-37.

Werthner, H. and Ricci, F., 2004. E-commerce and tourism. Communications of the ACM, 47(12), pp.101-105.

Werthner, H., 2002. Intelligent systems in travel and tourism. IJCAI 2003: 18th International Joint Conference on Artificial Intelligence.

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