Depending on a hotel’s business objectives, outsourcing laundry or operating an on-premise laundry (OPL) can provide a wide range of competitive advantages. Outsourcing avoids the capital investment in laundry equipment and paying for labor. It is an ideal option when a reputable commercial laundry supplier exists in the neighborhood. OPL, on the other hand, allows the hotel to control quality and inventory and can be an additional revenue stream for a hotel (laundry services for guests and outside customers). The key is understanding which options can drive greater value to the hotel.
Based on my experience in managing a service provider’s laundry operations and advising hotels with their OPL, here are my thoughts about outsourcing vs. in-house laundry.
Before outsourcing became a trend, the only way for most hotels to do laundry is to invest in huge institutional laundry machines, flatwork ironers and other equipment to wash and dry their linen, including hotel staff uniforms.
Linen, itself a huge investment, must be taken care of by a large group of personnel – from the housekeeping staff down to the laundry team. A well-known hotel in central Makati, for instance, has around 70 staff working on laundry alone. In addition, laundry consumes a lot of electricity (heat) and water, and environmental considerations such as water treatment must be factored into the equation.
Investing in equipment and paying salaries and high utility cost may not sound attractive for OPL, but in-house laundry has its unique advantages:
- Revenue source (OPL is a laundry and valet shop service combined; laundry and dry cleaning services for guests and outside customers)
- Faster turnaround time (hotels need to have higher pars in inventory of linen and uniform to avoid shortage due to delays in delivery or bad coordination)
- Property protection (risk of service providers misplacing your linen assets)
- Low replacement cost of linen (bad wash lead to faster deterioration of linen)
- Low risk of contamination (commercial laundry companies also have other customers, like hospitals)
For many luxury hotels, having an OPL is often a default choice. Hotels not only need to provide a full suite of services (including guest laundry), but they also need to maintain the highest standard in linen quality, which can be a risk in outsourcing. Even in cases when the service provider is at fault, the blame for bad service (such as rooms lacking linen due to low pars) will always fall on the hotel.
Over the last decade, more hotels have opted to choose service providers over OPL. While this is now the trend among lower-tiered hotels where cost is tightly controlled, we have also seen big hotels close down their laundry shops. Here are the major advantages:
- No need for capital investment
- Less utility, labor and overhead cost (although these costs would still be incurred the service provider and pass on to its customers)
- Space for laundry can be used for revenue-generating activities (additional hotel rooms, gym, spa, office leasing)
Here are some areas in outsourcing that both the service provider and the hotel must watch out for:
- Losses, pilferage and miscounts
- Mix up (including mixing linen with other hotel customers)
- Fabric degredation
- On-time delivery and pick up
- Linen life
The value-add of service providers is that they absorb the cost of purchasing equipment and paying for utilities, salaries and other overheads to do laundry albeit some of these costs are eventually passed on to its institutional customers. A good service provider will minimize the risks of bad wash, misplaced linen, contamination and delivery delays.
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(Featured photo c/o http://www.brightwatergroup.com)