By: Keith Kefgen and Rosemary Mahoney - Nov, 1997
With fall upon us and winter just around the corner, migrating to the South with the birds for some favorable weather conditions may seem inviting. For those looking for favorable compensation conditions, however, the forecast calls for going East or West.
Below is a table of the average salaries and bonuses of four management positions at the property level. The compensation data is segmented by geographic location. As depicted in the charts, the managers in the Mountain/Pacific region of the United States are generally paid more handsomely than their peers in other parts of the country. In terms of total compensation (base salary plus bonus), general managers in the Mountain/Pacific region are paid an average total of $99,357.03, which is 25% greater than that of the South Atlantic region. The New Englanders are also paid rather well, with the director of sales and marketing and controllers averaging base salaries far above the rest, at $65,711.50 and $53,014.56 respectively. Although a region's cost of living plays a role in compensation, it is not the only factor in determining salaries, nor is it the most important influence in many cases. Our research indicates that the other important factors include market performance, property market value, and operational complexity. One way of examining these factors is through the HVI.
The HVI, Hospitality Valuation Index, developed by HVS International, is a hotel valuation benchmark based on occupancy, room rates, local operating performance, projections of supply and demand, and capitalization rates. The HVI reflects trends in market value over time. Hotel values change over time due to differing earnings expectations and capitalization rates. The HVI was designed to illustrate these changes and to quantify a hotel's value due to changes in both earnings and costs of dept and equity capital.
Examining the values of hotels across the country, 65%
of the top twenty hotel values included cities from the Eat and West, and
70% of the top 10 hotel values included hotels from the same two regions.
It makes sense that cities with the greatest increase of hotel values from
1990 to 1996 were in the Mountain/Pacific and New England/Mid-Atlantic
regions, the same regions where the highest salaries were earned.
| Average Bonus |
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| General Manager | $15,630.48 | $12,916.53 | $11,265.12 | $9,061.53 | $$9,938.78 | |||||
| Director of Sales & Marketing | $3,813.07 | $5,980.05 | $5,742.75 | $6,046.49 | $5,662.96 | |||||
| Director of Food & Beverage | $5,208.98 | $4,700.42 | $4,473.16 | $3,383.45 | $4,187.63 | |||||
| Controller | $5,850.59 | $4,058.75 | $4,708.14 | $4,172.95 | $3,801.30 | |||||
| Source: HVS Executive Search | ||||||||||
It is clear that compensation fluctuates dramatically, depending on a number of factors. When devising compensation packages for your organization, be aware that geography is only a small piece of the compensation puzzle. Be creative in looking for benchmarks that more clearly define how and what you should pay your management team.
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