What is the element that occupies an important position in every hotel management?

Yes, that's them: The costs!

The first thought of every entrepreneur, a relevant factor for every strategic choice.

The hotel cost structure and outsourcing

Let's briefly study the costs of our business.

Hospitality facilities, as in most entrepreneurial activities, are characterized by: fixed costs e variable costs.

In the first case, fixed costs represent a large part of the structure's expenses, such as: labor costs, ordinary maintenance costs, depreciation of furnishings, insurance costs, marketing costs and so on.

While, variable costs depend on the company's turnover, such as: intermediation costs, extra costs for seasonal workers, for lighting and water, and so on and so forth.

It can be deduced that the hotel sector is predominantly managed rigid, linked to the seasonality dependent on the location, the perishability of the services and the impossibility of modifying (in the short term) the structure, both quantitatively and qualitatively.

It is important to carry out an analysis on costs – volume – result which evaluates the variability of the economic result as the sales volume changes.

Similarly to the increase in fixed costs, it is normal for the company's management risk to also increase, in fact it tends to vary depending on:

• increase in the variability of expenses;
• grow as Fixed Costs increase;
• increase in the unit contribution margin (i.e. the difference between the selling price and the variable cost per unit);

How to cope with management costs?

One solution is to use theoutsourcing, that is, outsource, transfer functions or activities to a supplier external to the company.

But this "rely on an external operator” does it bring competitive advantages? Let's see together which ones:

• cost reduction, for example I don't need staff in the laundry department;
• improvement of management flexibility and reduction of investments, for example I do not have to purchase machinery for washing clothes;
• possibility of focusing the strategy in another sector, concentrating on the "core" of the service offered, obtaining greater technical-professional skills;

Normally a hospitality facility resorts to outsourcing for reduce costs in the catering department, accounting, maintenance and management of wages and contributions.

And how does your structure deal with daily and annual costs? Do you resort to outsourcing? I'm curiously awaiting your advice!