Outsourcing of vital hotel engineering functions could work well, given the operational expertise the facility management company brings with it, says Sapna Kulshrestha.
Hospitality businesses are increasingly outsourcing the whole, or part of, hotel engineering, to external service providers.
However, the debate still rages about the pros and cons of outsourcing vital engineering and infrastructure services; the distinction is important, as both in-house and outsourced facility management have value and cost implications that are unique to themselves.
Masih Siddiqui, chief engineer Le Royal Meridien, Mumbai, says: “We have outsourced HVAC to Blue Star, and sewage treatment plant (STP) to a related company, as they were the specialists who had also done the project.”
Environmental aspirations, reinforced by increasingly stringent regulations, are driving technological advancements in areas such as heating/cooling, water and power systems, fire and security systems, renewable energy sources, and telecommunications, thereby requiring specialised professionals.
Proactive maintenance gives advantages like long-term savings from fewer breakdowns, fewer unplanned repairs, as well as lower energy costs because of improved efficiency of equipment. The downside is that preventive or proactive maintenance of specialised installation involves major expenses and higher maintenance costs for a hotel.
Critics argue that outsourcing of engineering services is short-sighted. As outsourced services become noncritical for the organisation they tend to get neglected by the management, which leads to reduced ownership of processes and installations, and may also lessen a hotel’s flexibility to respond to unique tasks and surges in workloads.
Further, the hotel management is likely to lose control over the technical staff’s quality, which is decided by the outsourced provider. NC Malhotra, assistant vice president, projects and engineering services, The Lemon Tree Hotel Company, says: “This solution may look quite attractive in the beginning, but the contracting agency will always try to push low-cost staff to the hotel and that too, without adequate experience.”
Moreover, as the skills required of in-house staff are organisation-specific, it may require steep learning curves needing management focus.
This is one of the reasons many hotels in India continue to have in-house facility management which, though a costly option, gives the management qualitative and quantitative control of its facilities, or else they employ an integrated team where the technician staff is from a facility management company, while the supervisors and engineers are on the hotel payroll.
However, due to the restricted number of supervisory staff, it leads to the limited engineering strength handling too many activities at one time, impacting the overall quality of service.
Therefore, some hotels utilise the services of professional facilities management companies for part of the engineering works, which is comparatively more economical in the long run.
The major challenge though, remains the lack of organised players in India, specifically for hospitality businesses.
Tejus Jose, director of sales and marketing, Hyderabad International Convention Centre, and Novotel, Hyderabad, says: “Most facility management providers in India lack understanding of hospitality engineering needs, as the majority of their clients are commercial or retail businesses whose requirements differ from hotel businesses.”
Management of engineering services is mostly taken into account at the near-completion stage of a hotel, but significant cost-savings and efficiencies can be affected if its synergies are harnessed early enough, at the design stage.
Hence, it is essential that a hotel selects an outsourcing facility manager that shares similar brand values, as outsourcing part of engineering systems also addresses factors such as high capital costs on staff, equipment, and products, the constant need to reduce operating costs to provide better value to customers, and the high degree of turnover of skilled labour.
Zubin Songadwala, general manager, ITC Grand Central, Mumbai agrees: “We outsource most of the engineering services to the original equipment manufacturers as they are knowledgeable about the technicalities of the equipment and, more importantly, have access to the expertise and spares required to ensure seamless operations.
The biggest disadvantage is the increased dependence on contractors/service providers, but ensuring close monitoring, as well as stringent penalty clauses built into the contract, would help overcome these challenges.”
Yash Kapila, head of facilities management, Jones Lang LaSalle Meghraj, West Asia, says: “Outsourcing non-guest area engineering operations can help hotels improve specific activities like critical environment management, and energy optimisation, and also provide an educational opportunity for hotel staff to learn about advanced products and technology developments from top-notch experts.
By being an active partner in service implementation, their knowledge levels increase, thus allowing them to provide more valuable contributions to a hotel’s operations.”
Additionally some hoteliers recommend work place optimisation, or in-sourcing from within the organisation, which would not only significantly reduce the management’s time and effort in monitoring multiple contracts, but create more effective communication between engineering departments and management.
It would also help develop the company’s own skilled knowledge pool more attuned to organisation needs. As Malhotra says: “We firmly believe in in-house management of the engineering department, and go for annual maintenance contract (AMC) only for major/vital equipment such as DG sets, STP, and chillers, which cannot be tackled in-house.”
Certainly, values can be derived from outsourcing facility management in comparison to in-house management.
Low initial investment as also the operational expertise of the facility management company brings with it improved quality of services through high calibre professionals.
Outsourcing of ancillary functions brings about a competitive advantage, as organisation resources can be used for essential services like development projects. Says Siddiqui: “If engineering services are outsourced to a competent professional service provider with control maintained over the overall services, any disadvantages of outsourcing can be curbed.”
Another approach being practiced by some hotels in India is the creation of a dual technical services team combining a hotel’s in-house skills for core technical services, and external service provider’s capability for specialised installations, thereby utilising internal resources along with reducing operational cost.
The hotel is able to derive better brand compliance from the service provider due to presence of experienced hotel professionals that can monitor consistency of MEP service delivery combined with improved procedures practiced by the vendor.
Says Jose: “At Accor, we believe in investing in extensive training of technical staff as maintenance of engineering services is crucial for the hotel, at the same time, we do outsource specialised jobs such as boiler and STP that require special technical and infrastructural support.”
As hard engineering services are increasingly getting specialised, there is a growing trend in hospitality to seek tangible support systems for engineering installations to ensure that the hotel’s related support services remain unaffected.
Thus, for the majority of hotel chains, it will always be fiscally sound to outsource at some levels but, rather than giving away control, outsourcing can be an educational opportunity for staff to learn about advanced product and technology developments from top-notch experts.
Therefore, it is critical to select providers who keep abreast of the most current advances within their fields of expertise. Says Songadwala: “The concept of employing a turnkey facility management provider is definitely the way forward as it is the one-stop shop for all technical services related issues. As this trend picks up, this would certainly result in a better sharing of best practices among users and better vendor management.”
Successful outsourcing is all about due diligence to make sure the hotel is in good hands; although the need for outsourced expertise cannot be eliminated, the management of these processes can be more creatively delegated to bring cohesiveness within the team and the hotel’s brand identity.
