How Should I Compensate My Sales Manager?
October 4, 2017 2:26pm
By Leora H Lanz and Eydie Shapiro
This is a very common question, and yet one which typically has a complicated answer. But should it?
It’s unfortunate that many hotels boast about how much money was spent on artwork decorating their lobbies and yet compensation increases for the sales managers who book business to their rooms are embarrassingly low. Sadly, the cost of living, the price of gas, and other expenses have increased, while, generally, the rate of pay increase has either stayed stagnant or has not kept up.
Recently, we’ve been approached by a handful of different hotel owners asking for guidance on how to compensate the sales manager or team. The truth is, there never really has been an exact science or “specific percentage” to be calculated when deciding sales compensation packages. Traditionally, it is part of the overall marketing budget for a hotel, which usually falls in the range of 9% -12% of the total projected revenue.
Our hotels have become more complex businesses to operate. The demands of owners continue to rise and we face ever-increasing competition. Today, our guests and the travel agents/meeting planners who book business to our hotels are also better informed when conducting business with us. Compensation for good sales managers needs to stay attractive so that we can hire educated people who can successfully sell to our educated customers. Too often lately, we have seen good sales people departing to other industries that pay better and are less demanding than our industry.
Commonly, hotel directors and owners would take a look at various factors when determining base salary:
In 2004, HVS Executive Search released its Lodging Property Report (to be updated in 2006) that analyzed salaries and bonus structures for various positions, including sales managers, throughout the United States. Salaries were studied based on the following criteria:
A review of this data shows that sales managers’ salaries are highest in the resort, convention and city center properties and in particular located in the New England/Mid-Atlantic region of the United States. Luxury hotels often pay higher salaries as well. Bonus averages in 2004 were approximately 13% of salary and were increasing nearly 3% each year.
What doesn’t work?
What should we always keep in mind?
Here’s what we consider when developing compensation plans that need to satisfy various aspects of the operation:
Tags: leora lanz,
hotel sales managers,
Leora Halpern Lanz is principal of LHL Communications, a hospitality marketing communications, branding, and media relations advisory. In February 2017, she was named one of the Top 25 Extraordinary Minds in Hospitality Marketing by the Hospitality Sales & Marketing Association International (HSMAI). She is also a full-time marketing professor at Boston University’s School of Hospitality Administration. In May 2017, she was named Professor of the Year for the school. Previously, she served for fifteen years as Global Director of Marketing for HVS, ten years as Director of Public Relations for ITT Sheraton, and five years as Director of Public Relations for the Greater Boston CVB. firstname.lastname@example.org
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