Hotel Online  Special Report

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Compensation Trends in Trying Times
By: Keith Kefgen, May 20, 2003

HVS Executive Search completed its fifth national survey of compensation and benefits in the hospitality industry.  Since the previous survey in 2000, a great deal has changed in the hotel industry, the dot-com implosion, September 11th, and the Enron scandal. Even with all that upheaval in the economy, the search for talent has continued unabated. It still takes talent, maybe even more, to remain profitable in a down market. Below is an excerpt from our recently published 2002 HCE Lodging Property Annual Report, profiling seven of the twenty-nine positions in the complete survey. 

Our nationwide results for 2002 revealed small increases in average base salaries.  However, the base salary increases were quite meager with respect to Cost Of Living increases.  For example, a Director of Human Resources earns on average, 6.97% more than s/he did two years ago.  Increases ranged from 2% for a Director of F&B to nearly 9% for a Director of MIS and General Manager. 

With regards to bonuses, the last two years have not been kind to hotel executives.  For example, all positions, with the exception of Director of Human Resources and Director of MIS had smaller bonuses than in 2000.  Bonus decreases ranged from 8% for General Managers to 2% for Controllers and Director of Sales & Marketing.
 

Nationwide Salaries & Bonuses

Position Min Salary Avg
Salary
Max
Salary
Avg Bonus
Controller $18,760.00 $63,840.00 $150,081.00 $6,355.00
Director of 
Human Resources
$18,000.00 $58,677.00 $139,256.00 $5,684.00
Director of 
Mgmt. Info Systems
$18,793.00 $55,227.00 $106,090.00 $1,180.00
Director of
Sales & Marketing
$15,000.00 $69,763.00 $256,225.00 $6,155.00
Director of 
Food & Beverage
$20,324.00 $67,364.00 $140,000.00 $5,645.00
Director 
of Rooms
$19,306.00 $60,850.00 $116,699.00 $4,815.00
General Manager $22,000.00 $88,060.00 $437,737.00 $15,210.00

Our report breaks down the positions further in terms of size, class, location, type and geography. It is interesting to note that size and location are still the biggest factors that influence compensation even in a depressed market.

As in previous studies, salaries tended to increase as the size of the hotel got bigger. The average GM salary ranged from $50,000 at small hotels to $172,000 at large properties. Controllers saw a range of $50,000 to $98,000 while DOS&Ms ranged from $47,000 to $119,000.

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Salary & Bonus Results by Number of Rooms
Position UNDER 150   150-349   350-549   550-799   OVER 800  
  Avg. Salary Avg. Bonus Avg. 
Salary
Avg. Bonus Avg. 
Salary
Avg. Bonus Avg. 
Salary
Avg. Bonus Avg. 
Salary
Avg. Bonus
Controller $50,308.00 $3,707.00 $57,634.00 $5,823.00 $71,853.00 $7,675.00 $82,067.00 $7,580.00 $98,476.00 $11,258.00
Director of Human Resources N/A N/A $52,677.00 $5,498.00 $62,733.00 $6,203.00 $73,632.00 $6,145.00 $83,426.00 $6,952.00
Director
of Mgmt. Info Systems
N/A N/A $55,795.00 $1,316.00 $50,149.00 $1,429.00 $59,481.00 $1,495.00 $59,558.00 $486.00
Director of Sales & Marketing $47,487.00 $2,103.00 $64,593.00 $5,774.00 $84,319.00 $9,322.00 $97,058.00 $7,313.00 $119,452.00 $14,688.00
Director of Food & Beverage N/A N/A $61,493.00 $5,350.00 $73,126.00 $7,249.00 $85,672.00 $5,699.00 $94,275.00 $7,301.00
Director 
of Rooms
N/A N/A $58,483.00 $5,300.00 $62,054.00 $4,862.00 $67,652.00 $4,831.00 $69,910.00 $5,373.00
General Manager $50,053.00 $6,068.00 $101,586.00 $16,694.00 $132,022.00 $28,369.00 $145,852.00 $29,586.00 $172,872.00 $44,616.00

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Results based on Location were very similar to our past two annual reports, 2000 and 1998.  Center City and Resort properties continue to pay more than their industry counterparts.  A General Manager at a Center City hotel earned an average of 142% more than a GM at a highway hotel.  This higher compensation may be attributed to a combination of cost-of-living, competition, property quality and operation complexity.  However, the increases in average salaries were not very significant from the 2000 survey.  For example, a GM of a Center City and a Resort only earned 2.77% & 9.00% more than in 2000. 

Once again we see that salaries are generally higher for hotels located in the Mountain/ Pacific and New England/Mid-Atlantic regions.  We attribute these differences to many of the same reasons, higher cost-of-living, competition, and greater concentration.  When compared to the 2000 data, the largest increases in salary were also seen in these two regions. There was also an unusually high average increase in the South Central region for GMs. We attribute this to a larger response from many of the larger resorts in the region. 

Hotel type refers to the physical layout, amenities and services available to guests.  For all seven positions, the highest paid were those at the most complex operations, the convention hotels and the resorts.  Properties of a less complex nature paid less to their executives.

Class describes the quality of the property and the level of service provided by the staff.  As in years past, the 2002 data demonstrates that compensation increases when there are more guest services and increased operational complexities.  For example, a Controller at a Luxury property receives $47,772 more than his/her counterparts at an Economy hotel. In comparison to 2000 data, a GM at a luxury property earns 8.5% more in 2002 than he did two years ago, however the GM at a Micro-Budget earns only 8.8% less than he did in 2000. It appears that in many of the various data breakdowns, the compensation gap between the highest and lowest levels is growing. 

It is evident that if you want to progress in your career in terms of compensation, head for the large, complex, and upscale operations.  Furthermore, working for a chain appears to offer more job security in an unsettled market. It also may be a time to start thinking about entrepreneurship by starting your own company or buying a hotel. That might be the best job security you can find. 

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Keith Kefgen  is President of HVS Executive Search, the leading executive search firm specializing in the lodging, gaming, and restaurant industries.

Keith is a frequent lecturer on industry-related issues and has written more than 90 articles on the topics of executive selection, pay-for-performance, corporate governance, and executive leadership. He is the founder of two e-commerce initiatives, hospitalitycareernet.com, a web-based recruiting site and 2020skills.com, an online assessment profile. He serves on the board of the Association of Executive Search Consultants (AESC) and is co-president of the International Association of Corporate and Professional Recruitment�s NYC Chapter.


 
 
Contact:

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Keith Kefgen
HVS Executive Search
372 Willis Avenue
Mineola, NY  11501
516-248-8828 Ext. 220
516-742-1905
[email protected]
http://www.hvsinternational.com/exec.htm
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Also See Sales Executives in Lodging Enjoy Significant Increases in Compensation / Compensation Trends - HVS Executive Search / Nov 2000
Compensation in the Gaming Industry; Top Level Salaries Continue to Rise in Las Vegas and Atlantic City / HVS / Kefgen / Aug 2000


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