|Kirby D. Payne, CHA, is president of The American
Hospitality Management Company which provides consulting and management
assistance to hotels in the U.S.
Our company's Sales Incentive Plan is intended to motivate and encourage the sales staff by allowing them to share in the income the various hotels derive from the sales effort. This article details all the aspects of the Sales Incentive Plan we use in some of our hotels.
A portion of the collected revenues derived from group booking of 10 or more room nights, banquets or planned dining room group service, meeting room rental (in excess of $75) or room revenue derived from locally developed corporate programs, contract business and similar accounts will be placed in a pool to be divided among the sales staff.
The percentage of revenue which will be allocated to the Sales Incentive Pool are as follows:
5% new group rooms revenue (as noted above).
2% of food, beverage and repeat group rooms revenues (as noted above).
1% of corporate programs, contract business and similar accounts revenue (number of room nights generated times and ADR for that month)
On stress dates, a premium percentage may be offered by the General Manager subject to corporate approval. Stress dates must be previously identified and approved as part of the annual market plan. As a guideline, days with less than 40% occupancy during the previous year should be considered as stress dates for the following year. Special events, dates with major business already booked, city wide convention, etc. should be excluded.
The money in the Sales Incentive Pool is divided by the total number of points in the pool, which are arrived at as follows:
Points - Job Position
6 points - Director of Marketing
5 points - Director of Sales & some Directors of Catering Sales
4 points - Senior Account Executives & Assistant Director of Sales
3 points - Sales Representatives, Account Executives, Sales Managers and Program Coordinators or similar positions, regardless of titles assigned (eg. Sales Director actually functioning as a Sales Representative.)
2 points - Sales, Banquet, Catering Coordinators and Secretaries in hotels with no Coordinators for programs, if applicable.
1 point - Secretaries
The points allocated to each position are multiplied by the number of persons in that position. The results are added together and divided into the amount of money in the pool to arrive at that month's dollar value per point. The dollar value per point is then multiplied by the number of points assigned to each individual to arrive at the amount of money due each individual.
The Accounting department is responsible for maintaining the necessary records for this program. All the following standard features apply to the program in each hotel:
1. Money is not allocated to the Sales Incentive Pool until the entire function or group is fully paid.
2. The program will be calculated based on monthly results and payment will take place within 30 days after final statements are complete.
3. 20% of the Sales Incentive Pool will be withheld each month and be paid in December prior to Christmas and at one other time during the year, usually about six months later, but at any time of the company's choosing.
4. In the case of newly assigned staff members, they will be entitled to participate beginning with their second complete calendar month.
5. Sales staff who leave the company (hotel) (excluding transfers) for reasons imputable to themselves will not be entitled to the payment corresponding to the month they leave, nor the 20% previously withheld and not yet paid.
6. In cases where termination is not related to any action by the employee he/she will be entitled to the bonus earned through the prior month and all the previously withheld funds.
7. In cases where the sales staff member resigns voluntarily and gives adequate (2 weeks) notice and performs the turn over responsibilities in a professional manner, s/he is entitled to the bonus generated during the month in which s/he departs less the 20% withheld. The staff member who resigns will not be eligible to receive this accumulated withholding.
8. Any excess fund or funds not paid to an individual as stipulated in this plan, may be distributed, if at all, as directed by the president of the company.
9.Any anomaly or extraordinary event which might occur may affect this program in a positive or negative manner. In all cases the President of the company reserves the right to adjust the program or an individual's results so that the program is fair to both the company and the individuals involved. This discretionary authority will not be delegated.
Obviously, this plan won't work everywhere. We adapt it for certain situations particularly for larger hotels with higher average daily rates. In those cases cutting the percentages by as much as half seems to keep the program fair to the staff and the owner.
In limited service hotels we sometimes leave the program as is but use higher base salaries as the business is sometimes difficult to place into identifiable programs.
By manipulating the percentages and the points one should be able to adapt the program to many situations.
An important point, in our view, is that there is no maximum that can be earned. We don't want to put a ceiling on people's efforts. Additionally, if we're achieving the sales we can afford the program.
High incentive pay seems to be good for sales staff retention. If an individual is not pulling his weight we usually are aware of it through our booking reports, sales call reports and comments from our management team.
For additional information, contact:
Kirby D. Payne at the firm
American Hospitality Management Company
1500 South Highway 100, #375, Minneapolis, MN 55416
Phone: 763-591-7640 Fax: 763-591-1593
Back to: American Hospitality Management Company Article Index
Back to: Hotel Online Ideas and Trends