Exploring Outsourcing Strategies in Tourist Hotels in Korea

Exploring Outsourcing Strategies in Tourist Hotels in Korea

This study examines hotel outsourcing activities and the factors that influence outsourcing strategies in Korea. Specifically, it draws on transaction cost economics (TCE) theory to examine the relationship between hotel characteristics and the factors that influence outsourcing activities in the hotel industry. Telephone interviews were employed to gather data from 121 tourist hotels in Seoul, Korea. The findings indicate that the most frequently outsourced activities are the lowest strategic activities that require non-core competencies, such as housemaid duties, cleaning, and security, in that order. Although the main reasons for outsourcing are cost savings or the desire to focus on core competencies, some activities are outsourced for different reasons, such as quality improvement or access to external experts. This study also shows that the degree of outsourcing appears to depend on such characteristics as the hotel’s size, quality, and brand capital. However, the findings do not support TCE theory.