Author: Ling, Kwok Lung
Title: The shared services centre model for hotel finance functions in China and Hong Kong
Degree: DHTM
Year: 2018
Subject: Hong Kong Polytechnic University -- Dissertations
Hotel management -- China -- Hong Kong
Hotel management -- China
Hotels -- Finance
Department: School of Hotel and Tourism Management
Pages: 2, 195 pages : color illustrations
Language: English
Abstract: The shared services centre (SSC) has been widely adopted in Europe as a popular business model in the hotel industry to provide high-quality service at low cost. However, the experience of the author and industrial practitioners indicates that SSC is unpopular in China and Hong Kong. Bergeron (2002, p.3) defines 'shared services' as 'a collaborative strategy in which a subset of existing business functions are concentrated into a new, semi-autonomous business unit that has a management structure designed to promote efficiency, value generation, cost savings, and improved service for the internal customers of the parent corporation, like a business competing in the open market'. This research seeks to identify the advantages, disadvantages, prerequisites and challenges in the deployment of the Hotel Finance SSC (HFSSC) model in China and Hong Kong, contrast the critical success factors or challenges associated with HFSSC implementation in Europe and recommend a framework for the most appropriate execution of the HFSSC model in China and Hong Kong. In this work, the literature review covers economic, organisational and competitive advantage theories. The methodology adopted by this study entails a qualitative approach comprising interviews and focus group discussions. NVivo Pro 11 version is used for data analysis and for facilitating the discovery of theories and the development of the framework. The findings identify the advantages (including Payroll Cost, Capital and Maintenance Cost, Compliance Cost, Treasury Management, Role and Responsibility of Finance, Performance Benchmarking, Timeliness and Accuracy of Report to Stakeholders, Expansion Platform and Industry Value) and disadvantages (namely, Management Control and Flexibility and Culture and Mindset Change) of the HFSSC model. In addition, establishing the HFSSC involves several prerequisites (ERP System, E-Support System, Network Connectivity, Planning and Steering, Operation Cost and Qualified Staff) and common obstacles (Local Environment, Talent Pool, Critical Mass, Motivation and Incentive, Training, Outsourcing Opportunity and Performance Measurement). The differences in Business Environment (including Hotel Facilities, Labour Market, Legal Compliance, Market Maturity and Cultural Difference) and Owner Expectation (including Data Confidentiality and Operational Control and Involvement) are the major factors explaining why Hong Kong and China are behind Europe in adopting the HFSSC model. Finally, the data findings are summarised in an HFSSC process chart, and a framework is recommended for implementing the HFSSC model in China and Hong Kong.
In conclusion, compared to its implementation in China, the deployment of the HFSSC model in Hong Kong is generally believed to have a higher likelihood of success in the near future because of owner sophistication, higher payroll cost, better quality of employees and superior business environment in the latter. However, in the long run, the PRC possesses greater potential for growth and rapid development with the HFSSC model in light of its surging economic improvement, escalating payroll cost and an expansion platform targeted by most international hotel chains. Special attention should be directed towards the key difference between Europe versus Hong Kong and China from the Business Environment and Owner Expectation perspectives. A thorough due diligence process, an evaluation process and a feasibility study from an outside consultant are also recommended with the participation of the Corporate Finance, IT, Operation and possibly Human Resources departments from the very beginning. A planning and steering committee is also suggested as an industrial best practice for monitoring the implementation process. A detailed planning and testing plan should be in place to overcome the obstacles and challenges of this transition. Further research may consider examining the applicability of the HFSSC model in other regions and other hotel support services like Procurement, IT and Human Resources. Outsourcing to a third-party independent service provider can be explored as well, depending on the availability of capable vendors in the market and whether the organisation is mature enough to address concerns related to loss of knowledge retention, vendor opportunism and data privacy issues for the owner.
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