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:

1. New York City General Managers lead the group with a median pay significantly higher than in the other cities;
2. San Francisco, Los Angeles, Boston, and Washington DC fall into the second grouping;
3. Miami, with median total pay significantly lower than the other five cities, is last.

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.

While I agree that these also play a role in deciding General Manager compensation, the HVS data has a strong enough mix of these factors not to cause any irregularities in the trends we have shown above. New York City and San Francisco consistently rank in the top three cities from a cost of living perspective. It therefore isn’t a big surprise that compensation in these cities is higher than in others. And equally significantly, one cannot ignore the heightened level of intricacy that comes with a luxury GM’s job in major markets. In addition to ensuring top-notch customer service they have to strategically beat out their competition via smart sales and marketing tactics, draw high-profile guests, win the bidding war to play host to marquee events, handle unions and government issues. It’s no wonder then that the price for successful leadership in a city as complex as New York City is nearly $335,000 (median cash compensation). There will always be a need for a General Manager to be both a business driver and hotel ambassador and our analysis concludes that geography is really the number one driver in deciding the compensation of this position.
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About the Author:
Andrew Hazelton is Vice President at HVS Executive Search New York. Andrew has spent several years in the executive search industry, including six years with Korn/Ferry International where he was responsible for completing a number of C-suite searches. He has worked on assignments for several industries including Healthcare, Technology, Finance, Hospitality and Real Estate. Andrew is a key member of HVS’s North America team and focuses exclusively on assignments for the hotel industry.