An examination of factors motivating hotel outsourcing

The broad range of activities undertaken in a hotel, combined with its high labour intensity and volatile demand, signify a predisposition particularly suited to outsourcing. In this paper, transaction cost economics (TCE) theory, agency theory and the broader outsourcing literature are drawn upon to inform the distillation of 20 outsourcing/insourcing motives. The relative significance of these motives is examined using interview and survey data. While broad support is provided for the TCE model, it is apparent that the model does not constitute a robust framework with the capacity to comprehensively account for outsourcing behaviour.

► The range of factors motivating a hotel to outsource are examined. ► Twenty motives are drawn from TCE, agency theory and the outsourcing literature. ► Top 3 insourcing motives: timing & coordination, reputation, core activities. ► Top 3 outsourcing motives: flexibility, savings, capital outlay avoidance. ► A negative pre-disposition towards outsourcing was held by the sample. ► No solitary theory provides a complete understanding of outsourcing motives.