Salary Survey 2017: positive payoff

The last year seems to have tested the patience and skills of the Middle East’s hospitality sector. A recent report by TRI Consulting titled The Middle East Hotel Market Review revealed that hotel performance levels across the Middle East remained static or declined during 2016, largely driven by lower oil prices, reduced government and private sector spending and the ongoing political and civil problems in the Levant. Many hoteliers were forced to lower room rates to maintain market share, leading to a rate war along with a negative effect on profits and RevPAR.

However, the forecast for 2017 is positive on multiple fronts. TRI’s report shows that most markets will either bottom out or slowly start recovering as oil prices stabilise, key infrastructure projects come online and new tourism strategies take effect. This is also compounded by the fact that the hotel industry in the Middle East, and particularly in the GCC, is one of the fastest growing markets in the world.

Similarly, according to Alpen Capital’s GCC Hospitality Industry 2016 report, despite the slowdown in 2016, the market is likely to recover in the long-term, driven by the strong pipeline of hotels, with government efforts and events pushing tourist numbers up. Overall, the market is expected to grow at a 7.6% CAGR from an estimated US $25.4 billion in 2015 to US$ 36.7 billion in 2020.

The report revealed that during the forecast period, occupancy rates at hotels and serviced apartments are anticipated to grow by three percentage points to 70% and ADR is likely to average between $168-190, growing 1.4% annually. As a result, the aggregate RevPAR of hotels and serviced apartments in the GCC is projected to grow at a CAGR of 2.3% to $133 by 2020.

So what does this mean for hoteliers, and how does it impact recruitment, training, as well as salary? And does the potential improvement in the hospitality sector mean that hoteliers are keen to stay where they are, or look for new opportunities?

MOVING AHEAD?

Nearly 30% of our respondents have said that they are actively looking for new opportunities, while nearly 20% have categorically stated they are happy in their current roles. The remaining 50% have said they are not actively looking, split into 20% who wouldn’t mind moving for the right opportunity within the company, and 30% who would move outside their company if the right opportunity came along.

The percentage of people actively looking for new jobs wasn’t a big surprise for Samir Arora, who is the general manager of The Retreat Palm Dubai, MGallery by Sofitel. He told Hotelier Middle East: “This is always the case in buoyant situations where demand is more than supply. Qualified associates know that there are many new hotels opening and will have ample opportunities in this scenario. Furthermore many are here in this part of the world to better their salaries and careers. New hotels are offering incremental salaries to attract quality personnel from the same market in order to have an edge over the others to find their feet in the market.”

This is backed up by The First Group’s (TFG) recent whitepaper titled ‘The Impact of Staff Turnover on a Hotel’s Income Statement’, which revealed that approximately 28,000 new hotel rooms are expected to come online in Dubai by the end of 2018, reflecting an average growth rate of 12.5% per annum (John, 2015). On that note, 110,000 new jobs are anticipated to go live in the sector in the run-up to 2020 (Bouyamourn & Sahoo, 2014).

All well and good, but that means hoteliers have new opportunities to try, which makes retention a challenge. In the UAE, based on this report, employee turnover is approximately 25-30%. Additionally, the reasons revealed behind turnover included: career advancement in other hotels; better compensation offered elsewhere; lack of training; poor relationships with colleagues and/or managers; job security; lack of engagement; and, stronger brand values. So how do we retain staff?

TRAINING DAY

Lack of training and career advancement is one reason why employees leave, also backed up by the TFG report. This year just under 60% (56.52%) of our survey respondents said their company has offered training opportunities in the last 12 months, but a similar number (56.09%) said they were not given any direction as to their career development with the company.

Arora commented: “Offering training to better associates knowledge and skills doesn’t necessarily mean a guaranteed career growth. Trainings and coaching are conducted for three purposes, one to close a gap in their current performance, second to bring about consistency, and last to ensure that organisations are planning for their succession plan. We as hotel GMs need to ensure that we invest in star associates and have plans to retain them by a succession plan. Alternatively we need to constantly seek to have quality personnel lined up to fill this attrition. In coming years, Dubai as a destination will need hundreds and thousands of quality personnel. That is why DTCM has announced a hospitality school to address this need.”

What Arora is referring to is the Dubai College of Tourism (DCT), which is an institution dedicated to training the next generation of tourism professionals and providing school leavers with an alternative option for further education, that bridges the gap between in-house training and a full bachelor’s degree. The government-backed vocational college will be accepting its first batch of students in September 2017. In addition, the college will also serve as the base to develop and roll out training and industry on-boarding programmes that encourage young UAE nationals to be part of the city’s evolving tourism sector. The practical and flexible vocational courses are focused around five core faculties — tourism, events, hospitality, retail and culinary arts.

Focusing on youth and their interest in hospitality is something that Hilton president and CEO Christopher Nassetta also highlighted at the Arabian Hotel Investment Conference (AHIC) 2017, where he said that if the hospitality industry ignores youth issues including unemployment, it does so at its own peril.

In conversation with Bench Events chairman Jonathan Worsley, Nassetta said that one of the things the hospitality industry needed to do was market itself better to the new wave of job-seekers, and said that in many cases, the youth are “not thinking about our jobs, and in many cases they think it’s a bad job”. “If you look at the numbers WTTC has put out, for the next 20 years we are going to generate 75 million new jobs in travel and tourism,” he said, sharing the opportunities of the industry.

However, The First Group report has revealed that while there are many opportunities in the sector, there is a shortage of skilled workforce. The report revealed that Expo 2020 Dubai is likely to generate around 110,000 new jobs in the travel and tourism sector; however, it was imperative to get the right people for these jobs.

Assila Hotel, Jeddah general manager Harry Fernandes told Hotelier Middle East that investing in people from the beginning is very important for retention, along with continuous training.

He said: “We have a very strong training culture in the company. We have something called ‘Future Leaders’ which I am bringing in to Jeddah. It’s a module-based training programme for young managers to learn the things that you’re normally not taught when you start in hospitality. We are bringing this programme for our teams, both at management level and supervisory level.”

Fernandes added that training is very important, especially when opening a new hotel. Not just hospitality training, Fernandes has been keen on building team spirit as a method of generating loyalty by creating sports teams for basketball, football and cricket. He added: “Out on a sport field, people express themselves quite differently and that gels them together.”

GREEN MATTER

While salary is definitely not everything, a quarter of our respondents said they have never received a pay rise. In a market with rising cost of living, it’s imperative that team members are compensated for their work fairly, so that they can have a good quality standard of living.

At the advisory panel for the GM Gebate 2017, the issue of quality of living and salaries came up, and Laurent A. Voivenel, senior VP, operations & development Middle East, Swiss-Belhotel International said: “Our industry is a people business. We know that without the labour force, we are nothing. The problem is that when you look at the balance sheet, the payroll is on the liability, not on the asset.” He added: “How can we give better treatment, better retention, and drop the turnover that we have in our properties? Not every single operator has the same problem; you have some good operators with low turnover. But if you look at Dubai, 10 years ago turnover was 12%, today it’s 28%.”

Palazzo Versace GM Sandra Tikal added that new F&B outlets are the ones poaching “all the F&B staff for more money”. “It is actually restaurants and bars that are hurting our turnover,” she added.

Jumeirah Beach Hotel general manager Sven Wiedenhaupt commented that there are indications of a “salary bidding war” in the market, and Radisson Blu Hotels, Dubai Waterfront & Dubai Canal cluster general manager David Allan said that there seem to be a lot of people unhappy with what they have and are looking for something else. He shared an example: “We put a generic advert out for our hotel three months ago saying we’re going to be recruiting very soon. We got over 17,000 applications. We didn’t even put roles on the ad. 17,000 unsolicited applications, with over 80% from within Dubai.”

Hearteningly, 96% of our respondents said they had not received a pay cut.

Arora commented: “This is very much the case as hotels went through a minor downturn in last couple of years and GMs were pressured to sustain their GOPs compared to yester years. This has put in a lot of pressure to do away with many high costs and not increase any cost lines. As I mentioned before, we need to have a sustained succession plan for our star associates and ensure that we show them career growth. We can’t retain all associates in this scenario. We also need to have a constant supply of quality personnel from overseas as quality personnel within the city will not move for same salary or position.”

Thomas Fehlbier, general manager of Banana Island Resort Doha by Anantara and area general manager of Minor Hotels Qatar, told Hotelier: “Any kind of cost factor on the island is a challenge. As for labour cost, our salaries are in line with the market although when compared to the UAE, we suffer a little bit in terms of the absence of service charge that supports the salaries. But it’s a bit more profitable for the hotelier.”

CAREER ASPIRATIONS

Confidence in the Middle East hotel employment market is rising, which is interesting to see. Last year, nearly 40% said they felt less secure than they did 12 months ago. This year, nearly 35% expressed the same sentiment, and while only 12.17% said they feel more secure, nearly 40% said they look forward to the future in their company with complete confidence.

What is being looked on at with confidence is companies that people want to work for. For the first time, Marriott International has topped the list, with nearly 50% of our surveyed respondents wanting to work for the behemoth operator. Last year, the company completed the acquisition of Starwood making it the owner of 30 brands worldwide — obviously a lucrative and interesting opportunity for hoteliers everywhere.

When contacted by Hotelier Middle East about this accolade, Marriott International president & CEO Middle East & Africa Alex Kyriakidis said: “We are delighted that Marriott International has been recognised in Hotelier’s Salary Survey as the best hotelier to work for and we are proud to receive recognition. Our commitment to  ‘people’ is at the heart of everything we do and this result shows that our hotel teams continue to be true ambassadors to Marriott International.

“At Marriott International, our core values make us who we are, and as we integrate our teams, we will leverage our people-focused environment to our 65,000 associates across Middle East & Africa and remain focused on retaining and fostering talent.”

So it’s been all about talent, quality of life, training and retention — not vastly different to the issues we have faced before. The question is: what are hoteliers doing about it, to really address the issues that make hoteliers want to stay loyal?