Hotel Management  Salaries on the Rise
Low Unemployment Drives Management Salary Increases 
at Rates Above Inflation
Results by Region
Results by Class 
Results by Type
Results by Size of Hotel
Results by Location
Health Benefits Generally Offered by Hotels, but Type of Coverage Varies
By: Keith Kefgen and Rosemary Mahoney-Browning  - November, 1998

Executives at the larger, more complex hotels continue to bring home the largest paychecks. Consequently, large convention and resort hotels pay more than their smaller all-suite and extended-stay  counterparts. That is one of the many findings in this year's 1998 HCE Hospitality Compensation Exchange survey. The survey is conducted by HVS International and includes data from nearly 2,400 North American hotels, encompassing 27 managerial positions. The survey is the largest of its kind and is updated every two years. The results include representation of all industry segments, with the exception of bed & breakfasts and casino/hotels. Casinos are surveyed separately due to their unique environment and geographic focus. Below is an excerpt from the HCE survey that examines the compensation trends of seven executive committee positions. The trend analysis compares the compensation levels between 1995 and 1998. 

When compared to 1995 levels, almost every management position had salary increases that beat the rate of inflation. With the inflation rate at about 3% per year, six out of the seven positions had compounded salary increases greater than inflation. For example, a general manager in 1995 earned an average base salary of $66,464.41 and in 1998 earned $77,950.05. With the exception of director of sales & marketing, the average compounded increase for the six positions was 3.9% per year. It is apparent that low unemployment, coupled with a thriving financial market has driven up compensation in the lodging industry. However, there continues to be a wide disparity of compensation levels for executives depending on the type, class, size and geographical location of their hotel property. 

The type of hotel refers to the physical characteristics and the operation complexity of a property. As illustrated in Results by Type Table, compensation increases from the least complex extended-stay property to the most complex convention property. For example, a convention hotel general manager gets paid $93,030.40 more in total compensation that his/her counterpart at an extended stay property. Resort properties were also categorized as highly complex, and had the highest average salaries for director of MIS, human resources and sales & marketing. Besides the general manager positions, convention hotels also lead in controller, food & beverage and rooms compensation., 

GM Salary Hike

When compared to 1995 levels, those with the biggest increased in salary were at conference centers and convention centers. Increases in resort compensation levels dragged in fourth place. For example, a resort general manager in 1995 earned an average salary of $91,323.18 and in 1998 his/her salary increased $8,787.42 to $100,110.60. Whereas the average general manager at a convention center hotel increased $21,570.58 over the 1995 level. 

We continue to see clear distinctions in compensation levels based on property class. The class describes the quality and service level of a hotel. Once again, it is evident that hotels with greater complexities, such as luxury and first class hotels, pay their employees the most. The general manager at a luxury property for example earns $50,000.00 more in salary that the average GM and $95,000.00 more than a GM at a budget property. 

High End Gains Most

When comparing the 1998 class results, the largest increases in salary are also at the high end of the market. Luxury and first class general managers had increased of $13,491.18 and $13,538.96 , respectively. General Managers at micro - budget properties gained the least in average base compensation following by economy and mid-rate. 

The size of a hotel does matter greatly when comparing compensation. Likewise, as a hotel increased in size so does compensation. When we applied a regression analysis to the data, we confirmed that size was the best predictor of compensation levels. The only exception to that rule was compensation as small luxury resorts and boutique properties located in city centers. 

Further comparison of the data shoed that the highest increases of salary were at hotels with 150-349 rooms. In this category, general managers earned $34,794.17 more than they did in 1995. General managers at hotels with 350-549 rooms followed, earning &17,535.94 more than they did three years ago. Director of MIS also saw significant increase to compensation. We attribute the rise to the increased importance of technology and the demand for more timely financial reporting. 

One of the other factors that can substantially affect compensation is geographical location. East Coast and Mountain Pacific region pay more than their counterparts in the North and South Central. Higher costs of living and larger concentration of hotels in urban markets increased compensation dramatically. Compared to the 1995 data, the largest increases in salary were actually in the Southern United States (South Atlantic and South central Regions). These regions saw much more new build construction and greater competition for employees. 

Compensation can also be correlated to the characteristics of a location. For example, managers at hotels located in center city and resort areas earn substantially more than their counterparts at hotels located along highways or in the suburbs. A general manager at a center city hotel earns an average of 154% more than a general manager at a highway hotel. Such discrepancies are attributed to operation complexity and high costs of living. However, with an increase of only $1,944.23, managers at center city hotels had the smallest increase of average base salary from 1995 to 1998. Those with the largest increases were resort and airport hotels with gains of $9,778.52 and $8,716.73. 

Most hotels offer some form of health coverage to their employees. Some 98% of the industry offers employees health coverage; 53% of companies offered both a major medical plan and an HMO, whereas only 3% offered neither. Over 40% of companies that offer a major medical plan paid in full, and 9% paid the full bill for an HMO, while the rest implemented cost-sharing plans with their employees. With over 70% of companies offering 401Ks, it is evident that this plan is the most popular form of retirement benefit. The perquisites of housing and autos continue to decrease in the lodging industry. 

As the industry remains financially healthy, we predict a continued increase in compensation levels for most hotel property employees. We suspect that compensation increases will outpace the rate of inflation for the foreseeable future. The irony is that although hotel occupancies and room rates continue to increase, the public markets have battered hotel stocks. If hotel stocks continue to languish, employees that have incentives tied to stock price will likely see their overall compensation packages remain flat or decrease. This phenomenon may also put upward pressure on base salaries and bonuses. For the industry's sake we hope that the international financial markets begin to improve so that the bulls will outlast the bears. 
 


 
Results by Region
all numbers in $
Mountain Pacific New England / Mid Atlantic North Central South Atlantic South Central
Position Average Salary Average Bonus Average Salary Average Bonus Average Salary Average Bonus Average Salary Average Bonus Average Salary Average Bonus
Controller 58,619 6,591 59,369 4,204 52,253 4,708 53,257 4,483 49,243 5,304
Director of HR 49,892 4,907 55,876 3,937 48,647 4,569 52,972 4,534 43,099 4,530
Director of MIS 50,207 554 48,974 1,005 43,916 117 44,149 1,513 40,114 0.00
Director  Marketing 63,375 4,732 69,445 5,714 57,507 5,196 62,282 6,039 53,664 5,270
Director of F&B 70,907 5,489 61,492 3,323 56,835 4,907 54,689 4,103 53,525 4,693
Director of Rooms 57,878 2,411 60,680 2,449 55,825 3,066 50,325 1,358 49,003 2,354
General Manager 95,098 21,659 88,770 15,168 63,543 13,278 75,997 13,733 75,772 16,474

 
Results by Class
all numbers in $
 
Micro - Budget
Economy
Luxury - Budget
Mid - Rate
First - Class
Luxury
Position Average Salary Average Bonus Average Salary Average Bonus Average Salary Average Bonus Average Salary Average Bonus Average Salary Average Bonus Average Salary Average Bonus
Controller n/a n/a 39,055 198 40,296 2,149 48,185 3,950 56,559 3,822 70,516 11,177
Director of HR n/a n/a n/a n/a n/a n/a 45,345 2,899 47,399 3,341 65,924 7,907
Director of MIS n/a n/a n/a n/a n/a 1,502 45,955 365 45,625 704 50,132 1,021
Director of Marketing n/a n/a 36,046 6,128 41,830 3,049 52,285 1,876 66,430 4,618 86,383 13,801
Director of F&B n/a n/a n/a n/a 44,525 2,768 56,884 4,296 62,476 3,263 69,946 7,168
Director of Rooms n/a n/a n/a n/a 47,290 0.00 53,739 1,159 56,266 2,563 55,031 2,038
General Manager 35,109 871 40,839 3,742 48,242 5,547 66,486 12,192 106,605 20,402 129,356 31,848

 
Results by Type
all numbers in $
Commercial Convention Resort All - Suite Extended - Stay Conference Center
Position
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Controller 56,177 5,295 68,407 7,485 65,458 6,385 32,044 2,844 31,717 834 54,118 3,217
Director of HR 50,748 4,087 58,804 5,240 58,293 5,446 33,067 3,973 n/a n/a 47,944 3,747
Director of MIS 46,692 527 47,478 187 55,943 1,236 n/a n/a n/a n/a 42,807 1,950
Director of Marketing 64,398 4,968 74,018 7,342 74,840 8,988 48,061 2,577 39,764 3,497 65,452 4,963
Director of F&B 61,427 4,606 70,665 2,665 68,300 5,101 43,425 5,467 n/a n/a 56,644 3,055
Director of Rooms 56,000 2,261 60,821 2,613 55,484 2,102 n/a n/a n/a n/a 53,803 920
General Manager 73,305 15,212 120,569 20,005 100,111 19,484 70,214 13,213 42,996 4,548 98,909 13,468

 
By Size of Hotel
all numbers in $
 
Under 150 Rooms
150-349 Rooms
350-549 Rooms
550-799 Rooms
Over 800 Rooms
Position
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Controller 40,100 3,030 61,821 4,549 50,286 6,255 76,313 8,865 82,118 5,618
Director
of HR
40,442 3,071 53,728 4,185 43,705 4,430 66,369 5,900 68,147 3,560
Director 
of MIS
n/a n/a 40,132 572 47,110 983 49,970 1,254 56,252 141
Director of Marketing 39,499 1,023 74,155 4,489 58,235 8,599 84,808 10,233 101,133 6,769
Director of F&B 51,350 3,009 65,406 4,336 55,458 5,116 78,278 6,039 87,291 3,134
Director of Rooms 38,897 111 53,202 2,148 50,516 2,116 60,754 2,918 68,895 1,743
General Manager 41,261 5,482 114,500 17,223 89,695 27,850 135,526 30,444 149,826 36,065

 
 
By Location
all numbers in $
 
Airport
Highway
Center City
Suburban
Resort
Position
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Average Salary
Average Bonus
Controller 50,280 4,160 41,991 4,713 62,468 5,746 49,667 4,809 60,960 5,523
Director 
of HR
42,123 2,932 37,310 4,281 56,582 4,347 45,510 4,294 55,034 5,075
Director of MIS 43,900 0.00 n/a n/a 48,886 644 40,371 693 50,702 1,071
Director of Marketing 56,130 4,846 48,562 1,654 69,597 6,840 58,761 4,482 73,007 6,683
Director of F&B 57,159 4,811 54,490 4,177 65,245 4,420 59,755 4,445 64,341 4,416
Director of Rooms 50,877 3,214 n/a n/a 58,802 2,264 50,736 1,487 55,693 2,090
General Manager 77,170 13,401 41,519 5,399 105,862 20,707 68,228 14,184 96,890 17,910

 
Health Benefits Generally Offered by Hotels, 
but Type of Coverage Varies
Hotels that Offer a Major Medical Plan
Hotels that Offer an HMO
Hotels that Offer a Pension Plan
Paid in Full 40.4% 9.4% 43.0%
Paid Partially 58.7% 90.6% 48.0%
Not Paid .9% - 9.0%

 
Type of Retirement / Investment Plan Offered
401K 69%
Pension Plan 2%
Neither 21%
Both 6%
No Response 1%

Keith Kefgen and Rosemary Mahoney - Browning are President and Assistant Vice President, respectively, of HVS Executive Search, the Mineola, NY - based human resources consulting firm which produces the Hospitality Compensation Exchange Annual Report.

 # # #
HVS Executive Search
372 Willis Avenue
Mineola, NY 11501
Phone: 516-248-8828 Fax: 516-742-1905
or Email Mr. Kefgen at kxk@hvs-intl.com
Back to HVS Executive Search Index
Also see: Key Property Level Positions Post Salary Increases Over 3% Inflation Rate/ HVS / Kefgen / Oct 1998


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