News for the Hospitality Executive
The Cost of Luxury Leadership:
By Andrew R. Hazelton
May 2, 2012
What are the factors that decide how much a General Manager should be paid? HVS looks at compensation trends in North America’s top 6 cities to answer this question.
In almost every single search I worked on this past decade, I can count this amongst the first three questions I am asked, both by clients as well as candidates: “What is the job paying?”
My recent search for a luxury hotel General Manager in North America was no different. It seems luxury comes with a price tag depending on where in North America you are looking. During the course of the search I found significant disparity in pay amongst the candidate base. To gain some clarity surrounding this trend I spoke with Paige Brewer, the head of HVS’s Compensation Consulting practice. She reviewed the top 6 cities of New York City, San Francisco, Washington D.C., Boston, Los Angeles and Miami. According to aggregate data that she provided, we see that geography plays a significant role in General Manager compensation.
Our findings indicate that New York City luxury General Manager’s receive the highest median base salary of $265,309 followed by San Francisco, Los Angeles, Boston, and Washington DC. Miami comes in last on this list of North America’s top 6 cities with a median luxury General Manager salary of $174,267, a whopping 52% lower than the highest median salary in the group.
A review of the annual cash bonus displays a similar trend.
New York City luxury General Managers receive the largest median
payouts of $81,047 and Miami comes in last again with $24,657. The
differential percentage differences from city to city were quite large.
For example, Miami luxury General Managers receive a median annual cash
bonus of 39% less than San Francisco while Los Angeles incumbents
receive 45% less than their New York City brethren.
In reviewing total cash compensation (base salary plus annual cash bonus) it appears that there are three notable breaks in pay:
Note: Data analysis for each city is presented in standard percentile format. A percentile is a measure of location in a distribution of numbers that defines the value below which a given percentage of the data fall. Eg: 25th percentile is the point below which 25% of the data falls. If actual pay is compared to this point, it indicates whether pay is higher or lower than 25% of the incumbents whose data has been matched to that position. HVS prefers the percentile format, as it is a better reflection of real compensation levels, protects the original data, and is less susceptible to statistical outliers. The Median Salary Difference (above) is the dollar difference from the GM’s pay in NYC at the 50th Percentile. All the data provided is current as of January 2010.
Some would argue that geography isn’t the only reason for such
gaping differences in luxury General Manager pay. Opinions will suggest
that there is more to the trend than pure location-based differences;
aspects such as size (number of rooms) and complexity (independent vs.
chain affiliated) should also be factored in.
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