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Revealed: The Hotelier Middle East 2015 salary survey

Confidence is generally down amongst hoteliers as 23.8% of participants feel less secure in their jobs than they did 12 months ago

Revealed: The Hotelier Middle East 2015 salary survey

Following last year’s soaring sentiment in the Middle East hotel job market, buoyed by burgeoning supply and a residual buzz from the Dubai Expo 2020 win, confidence levels in 2015 have plummeted.

The impact of the Russian visitor market decline, issues with the Euro, falling oil prices and political tensions in neighbouring countries have led 23.8 percent of participants to say they feel less secure than they did 12 months ago and the number of hoteliers that are anxious to keep their jobs is also on the rise

The Hotelier Middle East Salary Survey 2015 generated more responses than ever before, with 527 hoteliers completing it, compared to 489 last year.

In 2014, the region’s positive performance, and Dubai’s Expo 2020 win led hoteliers to question why the seeming success wasn’t being reflected in pay packets, and we concluded that a war for talent was set to begin as staff looked over the fence for better opportunities, while managers would have to up the stakes to keep their best staff.

In 2015, however, both employees and employers are feeling less secure in light of the current market uncertainty caused by a decline in Russian visitors since quarter four 2014, coupled with the instability of the euro impacting inbound visitor numbers to the dollar-driven GCC, and political unrest in neighbouring countries repelling visitors, who are opting for more peaceful locations.

“Hotels were performing very well in the first half of 2014, however the geopolitical issues in Eastern Europe and the falling euro has had an impact on performance levels. As a result, hoteliers are now looking at their expenses, while uncertainty remains on how long this will continue,” said Chris Hewett, associate director, TRI Consulting.

The pressure on occupancy and ADR may be felt in staff pay packets, and on the whole, confidence levels are down. Just 13.5 percent of survey respondents said they feel more secure than they did 12 months ago, compared to 20.7 percent of respondents who said this last year.

Similarly, 23.8 percent of participants this year said they feel less secure than they did 12 months ago compared to 18.8 percent last year, and the number of hoteliers that are anxious to keep their jobs has increased to 11.1 percent compared to last year’s 4.6 percent.

Saying that, in 2014 2.3 percent said they had already been told they would be made redundant compared to just 0.5 percent this year, indicating that employees are aware that their employers are also feeling unsteady in the face of falling ADRs and occupancy, and are thus looking to hold on to their best talent.

Even hotels that have been faring well over the past few years are taking a conservative approach in 2015. Atlantis, The Palm for example, recently laid off 27 employees as a result of changes to staffing structure and ‘market dynamics’, Gulf News reported last month. And while 27 sackings were confirmed, a source told us that the figure was actually more in the region of 200.

A spokesperson from Atlantis, The Palm said that none of the front desk staff or those in direct contact with the guests, like waiters, bellhops, bartenders and the rest of the front-office personnel, were affected.

“We have revised our staffing structure by approximately 27 positions to streamline our operations and create additional efficiencies in response to evolving market dynamics,” said the spokesperson.

Streamlining staff costs to cope with poor performance is a trend that has been picked up on by many of the survey respondents, one of whom commented: “If owners get greedy for more money and the market is not strong enough, cost reduction measures are forced onto hotels. This reduces training, demotivates staff and stops recruitment of talented people, who could potentially generate more revenue. There are a lot of potential revenue opportunities, however these are long term, not immediate. I believe owners require quick returns within the year.”

Indeed, the outlook seems bleak for the rest of the year in some Middle East markets in terms of hotel performance, with Dubai in particular taking a hit, according to Alison Grinnell, director — Hospitality and Leisure, PwC.

“In Dubai we’re forecasting negative growth in occupancy and ADRs — some of that is a knock-on effect of the Russian market and the euro depreciation and also with the amount of supply coming onto the market,” she said.

Of those surveyed, 21.5 percent said the decline of Russian visitors as a result of the falling rouble at the end of last year has impacted pay packets, particularly when it comes to service charge decreases.

The Dubai Annual Visitor Report, released in May revealed that Russian visitor numbers to Dubai fell by 23.5 percent in 2014 when compared to 2013. TRI Consulting’s Hewett said: “I think the only way it could have an impact is through lower service charge distribution.

“With the Russian market drying up, that has an impact. Direct salaries no, but indirect benefits, I think so.”

However, some respondents directly blamed pinched pay packets on falling profits caused by a declining Russian market.

One respondent said: “Less revenue means prices have been cut to attract other markets,” while another stated: “I don’t expect an increase due to decreased revenues”, and one more said: “The domino effect of market conditions has led to a change in strategy of the hotels dealing with the Russian market”.

Other participants said: “The market of CIS is down, the hotel was CIS reliant”; “It is too early to say whether a pay rise is affordable or not, given that stretched budgets have to be met”.

Another economic issue impacting hotel performance in the region according to PwC’s Grinnell has been the dramatic fall in the oil price last year and the impact this has had on tourism numbers, as well as the devaluation of the euro against the dollar, which has led to a drop from the Eurozone and has impacted GCC travel.

“Whereas before Saudi tourists came to Dubai for shopping, because things are so much cheaper in Europe, now a lot of the shopping tourists we would see from KSA are moving into Europe and the new visa process in the UK is making it easier for GCC visitors to go to the UK than before.Certainly we’ve seen more of that outflow with the weak euro so a lot of it will depend on when that starts to recover,” she said.

Samir Arora, general manager, Ramada Downtown Dubai commented: “The euro is playing a little havoc, and there are a lot of outbound visitors from UAE and Saudi Arabia, going towards Europe. The visa-free entry to 15 countries after the Schengen waiver for UAE nationals is going to make an impact as we used to get a lot of long weekends — but now people will travel to Europe. There is a little depression as supply and demand are not matching and things have gone haywire.”

Arora made reference to the continuation of the talent war, which really revved up last year as a huge amount of supply was announced for the Middle East. This year, hoteliers are still bracing themselves for the 654 new hotels totalling 150,762 rooms that are due to come onto the market over the next few years, and finding the talent to fill these pipelines will continue to pose a challenge, said Arora.

“They are poaching your staff, so rates are coming down and your margins are shrinking. In order for you to hold onto your quality talent, you have to make sure that you are on par with the market in terms of your salaries. And all these new five-star hotels poach your staff, offering 10-15 percent more,” he said.

“Going forward, in a couple of years, salaries will continue to inflate and there will be a huge shortfall of quality talent. So in order to tackle that, we as a hotel have a programme called succession planning that shows a clear career path to our stars.”

SUCCESSION PLANNING

In light of the importance employers are now placing on talent retention, it is worrying to note that less hoteliers this year (18.6 percent) are claiming to be completely happy in their current jobs compared to last year (21.7 percent).

Respondents reported feeling underpaid and underpromoted, as well as overworked, with 64.8 percent clocking up more than 50 hours a week, which is slightly more than last year (63.2 percent). In order to hold onto staff it will be crucial for employers to really get to grips with what motivates them to move elsewhere — and what makes them stay.

When it comes to accepting a new job, the number one deal-breaker this year, as with last year, was financial incentives, with 37.03 percent of respondents saying this was the most important factor — however the percentage was lower than last year (40.46 percent).

Similarly, the next most important deal-breaker last year — the reputation of the company, which garnered 22.7 percent of votes in 2014 — was selected by 21.62 percent of respondents this year, and likewise, a more prestigious position was less important this year (19.46 percent) than last year (22.37 percent).

One major driver, however, which was much less prominent last year, was location. In our 2015 survey, 14.1 percent of hoteliers have said they would leave their current job to move to a different location, while last year this percentage was much lower at 8.2 percent.

One respondent, voicing concerns about the job market in Bahrain, said: “Our HR manager resigned, our marketing manager resigned, our housekeeping manager retired, and we have 5 percent of total staff from Bahrain and the others are all from India — 90 percent. “Nobody wants to work for 10 hours a day when you give them BD 250 (US $663) as a salary.

You have to get at least BD 500 ($1326.26) monthly to cover your expenses in Bahrain if you are single; if you are married, you will need more than that.

“So in total we are disappointed with the current situation and hopefully my voice will represent any Bahraini who works in a hotel and has a 0 percent salary rise, no health insurance, no bonus, no incentives and nothing at all. There’s no transport allowance, no social allowance, no telephone allowance — we are in Middle Ages here!”

A UAE-based respondent commented: “Hotels exploit their employees. They pay low salaries relative to the market and offer close to nothing in benefits. Furthermore, they force their employees to do more than the required hours per week by the Ministry of Labour, and no one is held accountable.

“We have people working at our hotel since its opening in 2013, and they don’t have their Emirates IDs yet! You can’t even complain, because the company isn’t registered with the Ministry of Labour — it’s a joke! How can you call this ‘one of the most prestigious hospitality companies in the world?’ I’m out of here the minute I land something better.”

HANGING ON TO THE BEST STAFF

A positive result from this year’s survey is that more staff seem to have been with their employers for longer this year than last year. In 2015 only 13.2 percent have been with their employer for less than a year, while last year the figure was higher, at 21.6 percent.

The majority of this year’s respondents (40.5 percent) said that they have been with their employer between one and three years, while 18.1 percent have been in the same company for three to five years and an impressive 17.4 percent have been with their current employer for more than five years, an increase of 2 percent on last year’s results, when 15.1 percent participants said this.

Commenting on Rosewood Jeddah’s staff retention figures, managing director Hans-Peter Leitzke, said: “We’re in our eighth year of existence and we have about 250-plus employees, out of which, close to 100 will complete their fifth year of service with us this year, so that’s a very high ratio of stability.” He added that key to retention is hiring for the future in the first place.

“I’m hiring now for the long-term, so three, four, five years. I need time to get to know people, to analyse them and put together a development plan so that there’s a strategic approach to creating a career path, but that is only possible if you have from the other side this commitment.

“By providing development opportunities we have also become as a hotel, one that exports talent. If you’re able to do this, it speaks for itself louder than a thousand words.”

Southern Sun Abu Dhabi general manager Pierre Delfau agrees that training and development is at the core of staff retention.

“In terms of all the development and training we can do on the premises, it is focused on the employees and the associates. I always tell them: ‘I spend 10 percent of my time with a customer, you spend 90 percent of your time with a customer’. So who is more important? They are,” he says.

Le Méridien Al Aqah GM Patrick Antaki added: “Some places reduce their training when the hotel is not too busy, but we don’t. The hotel is a business and it’s important to have sharp people, and our staff need to see that we are committed to their development and improvement, whatever the case.”

Another comment supporting this view came from Shangri-La Hotel Doha general manager Coen Masslink, who said: “At the end it’s not always about the basic pay, we spend a lot of money on developing our people, training, giving them opportunities to grow. That is, for many young people nowadays, very important also.”

However, the survey respondents told us that staff development is less important this year with just 16.49 percent citing this as a deal-breaker, compared to last year’s 20.07 percent. Interestingly, more important for respondents in this year’s survey was employer loyalty (18.11 percent) whereas last year, only 15.13 percent of respondents marked this as a deal-breaker.

Antaki commented: “I strongly believe that people are here for money and they need to earn, and they need to support their families back home. However, people work for people — if people have a good boss, if people are looked after, and they feel looked after, they will only move when they absolutely have to. Some people move for AED 100 (US $27.22) and on a salary of AED1200 ($326.70), you’re talking nearly a 10 percent increase.

“If they are happy, comfortable, and well looked after, they will not move for 10 percent — it will have to be a lot more substantial than that. We say we are family, and a lot of places say they are family, but what do you do to make it real family?”

Masslink explained that to create a family atmosphere: “We do a lot of social activities; a lot of these people are away for the first time from their families. You have to work very hard as a GM to get close to the staff. Lower the barriers, work as one team, the chain is as strong as the weakest link”.

Madinat Jumeirah area general manager Margaret Paul, who currently looks after around 2800 employees says: “I’m very positive. We really spend a lot of time and resources on ensuring our colleagues are happy at work. We have a lot of programmes to help them develop and grow their skills and we recruit with a vision for the future, so when we recruit someone we can say that we see them going somewhere in the culture of Jumeirah and grow within the family. It keeps people motivated.”

This year, the level of loyalty from employees to company was rated as a one (the lowest level) by around the same number of respondents as last year (2015 — 6.37 percent / 2014 — 6 percent). The company’s loyalty to the employee was rated as a one by 12.19 percent this year compared to 16.67 percent last year, however.

Loyalty to the company was rated as a five (the highest level) by 41.27 percent of respondents this year compared to 44.67 percent last year. Company’s loyalty to the employee was rated as a five by 16.9 percent of respondents this year compared to 15.33 percent last year.

So generally, while employees are feeling slightly less loyal to their companies, the sentiment among hoteliers, is that employers are a bit more loyal towards them than last year — perhaps signalling that employers are more anxious now to retain staff than before.

Robert Richter, compensation survey manager, Aon Hewitt Middle East commented: “The employees in the GCC, especially the UAE are largely expats, who typically don't have a big identification with the employer and would often change employer even for a slightly better salary package.

On the other hand, the sector forms a big part of the economy in most of the GCC countries and there are new hotels opening up and established ones need to be able to stay competitive, so the need for talent leads to more attractive salary packages, which leads to more movement within the workforce.

THE CHANCES OF PROMOTION?

Despite employers claiming that development is their main tool for retaining staff, a majority of respondents claimed they have never been promoted (30.1 percent), while 19.9 percent said they were promoted, but more than three years ago.

Just 9.4 percent were promoted within the last six months, whereas last year’s survey showed that 19.6 percent were promoted in the prior six months.

This perhaps indicates that following the Dubai Expo 2020 win, coupled with positive performance throughout the region, employers were offering promotions, while this year, in the face of falling RevPAR in some markets and political and economic unrest, employers are being more cautious.

This year, a negative response was also revealed when hoteliers were asked when they expect to be next promoted. 26.7 percent said they don’t expect to be promoted in the future.

The next most common response was ‘Between one year and two years’, with 25.3 percent selecting this option. Last year the outlook was more positive however, with 34.1 percent choosing this.

In 2015, just 9.6 percent of respondents expect a pay rise within the next six months while last year that percentage was 16.9 percent. “I think there is a common theme that the reduction in performance levels due to wider market dynamics are having an impact on hotelier sentiment in the market” said Hewett.

HOW ABOUT A PAY RISE?

This year, expectations with regards to pay rises followed a similar trend to promotions, with less respondents expecting dramatic increases.

Just 28.3 percent said they expected a pay rise of more than 10 percent within the next year, compared to 33.7 percent of respondents who said this in 2014. This year, more people have said they do not expect any pay rise within the next year (25.8 percent compared to 20.3 percent in 2014). In 2015 more respondents also said that their company has announced a pay freeze (4.2 percent of respondents compared to 2 percent last year).

One participant commented: “Where is Dubai going? The cost of living is getting ridiculous; there’s a salary freeze — what about all those hotels and new restaurants after 2020? Forget about getting a pay rise; Dubai is becoming single-package paradise! Allowances for schooling are putting families in trouble all the time as companies support less and less these costs. I am afraid the future is not that bright.”

Other participants said that they only received their annual increment based on government policy, which generally is too low. Some put their lack of a pay rise down to oversupply: “I do not expect any changes will happen with my salary increase or other benefits because of the competition in the market and the company’s budget targets are very difficult to achieve — it’s not like 10 years ago,” said one response.

On the flip side, Richter believes that oncoming supply is more likely to have a positive impact on pay packets. “It’s a very competitive industry with a lot of new hotel openings, which does not pay overly well on a fixed basis, and the vast majority of the workforce are expats.

These factors will lead employees to be attracted to the best ‘deal’ they can get. In addition, across the GCC, theme parks opening up would typically recruit their employees from hotels, so more than ever hotels need to stay abreast of compensation trends in order to attract and retain talent.”

More than a third of participants (33.5 percent) have asked for a pay rise this year, and of those that didn’t, their reasoning was “I should not ask, my supervisor should understand” and “It feels like begging”.

Of those that answered the question, 45.3 percent said their employer refused them a pay rise, while 33.1 percent said they were given a pay rise but not as much as requested, and 21.6 percent received what they wanted. Overall, the majority (54.7 percent) was granted a pay rise upon request, however.

For those whose salaries did change, the majority (41.6 percent) said this was due to a standard annual pay increase across the whole company, while 15.5 percent said it was the result of a promotion within the same company, and 14.6 percent said it was because of a new job at a new company. However, the vast majority (72.01 percent) said their salary did not increase in line with the cost of living.

The disparity between cost of living and pay packets is not something unique to the hotel industry according to the experts. Hewett commented: “The sharp rise in housing costs has had a knock-on effect throughout the supply chain, increasing overall cost of consumer goods. The lag in salaries behind the rise in living costs is being experienced across all industries.”

Richter added: “Rents have risen at a two-digit percentage increase, as have school fees and transportation costs, while organisations have not increased allowances and salaries in the same manner.”

One participant said that their salary was increased due to the removal of service charges, while many complained that they had worked two, three, five and six years without a pay increase, and the only way to encourage employers to offer pay rises is to look for another job.

“I have been working more than three years, but there is no salary increment. Due to this reason I have to look for another job. Then the company would increase the salary,” one respondent said.

This negative sentiment is apparent too when hoteliers consider their wages compared to other parts of the region, and the world. Similarly to last year, the majority believe that their salary is average (49.7 percent), while those who think they earn less than average came in close, with 45.4 percent claiming this.

Only 4.9 percent said they thought their salary was above average for the region, while last year this percentage was higher (7.5 percent). In 2014, 10 percent believed their salary was above average on a global scale, while this year that figure was 7.9 percent.

DO YOU GET PAID ENOUGH?

In 2015 the percentage of respondents who said that wages for line staff in the Middle East are not adequate was slightly higher than last year, with 81.8 percent saying hoteliers don’t get paid enough, compared to 79 percent saying this in the 2014 survey.

However, what changed more was the percentage of respondents this year claiming that it’s time wages were adequate (35.6 percent compared to 30.4 percent last year).

A smaller percentage of respondents in the 2015 survey (46.2 percent) claimed that inadequate salaries is an issue that won’t change — 48.6 percent of participants said this last year. This year, a smaller percentage of respondents claimed that wages are adequate (18.2 percent) compared to 2014’s 21 percent.

Leitzke commented: “The upward push is there, but it will be, I think, to the detriment of the profitability of enterprises, because you cannot pass on the expenses to the consumer. So profitability of enterprises will go down while the demand for salaries goes up, and as an operator you have to find a healthy balance, because the owner side obviously doesn’t want to hear about less profits. You have to become innovative and creative about how you control expenses.”

This year, 68.5 percent of respondents said that wages for management positions are not adequate, which is just a slight increase on last year’s 67.4 percent. The main difference is that this year, 38.2 percent said it’s time they were increased, compared to 41.1 percent last year. In 2015, 30.3 percent said they don’t think this will change, while last year this figure was slightly lower at 26.3 percent.

So it seems that while more people this year think that line staff wages must be increased, less respondents are calling for management wages to go up. Likewise, there is more optimism about the possibility of line staff wages increasing, while fewer people believe that management wages will change compared to last year.

IS IT REALLY A BONUS?

While salaries were reportedly not increasing fast enough, a higher percentage of remuneration was reported to come from bonuses, allowances and commissions this year with 13.4 percent of respondents claiming these things made up more than 40 percent of their remuneration compared to just 9.3 percent of respondents last year.

“The rise in allowances can be attributed to the overall increase in payroll costs outside of the basic salary. With housing costs rising in Dubai over the past 18 months, hotels have been trying to keep up with these costs by increasing allowances,” said Hewett.

One respondent to the survey commented: “While my salary was not increased, my housing allowance went up 5 percent.” The majority of respondents (23.6 percent) said that bonuses, allowances and commissions made up 0 percent of their remuneration however, and 19.2 percent said these elements made up 1 – 5 percent of their wages, while a further 20.3 percent said they made up 6 – 20 percent of their remuneration.

Shangri-La Doha’s Masslink commented: “One thing we need to bear in mind, when your are looking at cost of living in this part of the world, particularly in Doha, is that it is very much influenced by housing.

“So if you only look at that, it’s distortive because we offer housing for our staff; you would need to look at expenses. Generally we try to follow true inflation, but you need to eliminate the housing part, which brings inflation up.

We are very strongly focused on taking care of our staff. We have brand new villas, furniture, Wi-Fi in the rooms. In terms of social activities ... all these people are away from their families. They live together, work together, that’s a different dimension.”

Anantara Qasr Al Sarab GM Patrick Both added: “Salary is obviously one thing. The other advantage is that for rank and file staff, we have very good staff accommodation — it’s more like a four-star hotel than anything else. We have a gym, a pool, basketball court and these are the kinds of things that are important for the staff as well.”

Jumeirah Zabeel Saray GM Fernando Gibaja asserts that pay is of course important, but Jumeirah Group, which was voted as offering the best pay packets in the region, also puts a strong emphasis on staff development to supplement the financial benefits.

“Jumeirah is a company that has a genuine care of our colleagues and yes I agree people in general are suffering more on the health of their accommodation and their benefits than their salaries,” he said.

The Dubai-based company is also currently working with a third-party firm to improve staff packages. “They have been working with us for the last year, monitoring how other hotels and companies are treating colleagues, to see the overall packages. They are doing it in stages and I know that it’s going to impact in a positive way,” said Gibaja.

On another positive note, this year more people said they work for the employer they consider to be the best (42.1 percent), than those that said they don’t (41.5 percent), representing a shift in sentiment from last year, when the majority of respondents said they didn’t work for the employer they considered to be the best (46.1 percent), and only 38.6 percent said they did.

Taking into consideration salary, development, reputation and career development, Four Seasons Hotels & Resorts was this year voted as being the best hotel company to work for, with a marginal increase in the percentage of votes it received this year over last year by 0.5 percent. In 2015, 25.9 percent of respondents said Four Seasons was the best company to work for, while last year Marriott International took the lead with 26.6 percent of the votes.

This year however, Marriott dropped down to third place in the rankings with 23.1 percent of participants saying it was the best company to work for, while Jumeirah Group moved up this year, taking 23.6 percent of the votes compared to 22.9 percent last year.

LOOKING AHEAD

The good news is that the forecast in terms of regional hotel performance for 2016 is more positive than it has been for 2015, meaning that the pressure may be taken off of staff pay packets by the start of next year.

PwC’s Grinndell commented: “In 2016 that story becomes much more positive and we’re seeing significant RevPAR growth across Abu Dhabi, Doha, Dubai, Jeddah, Riyadh and Muscat.

“By the time we come to 2016 we’ll see some green shoots with the Russian market returning but I think for Russia, the New Year is going to be more of an indicator of whether that is really back to the levels predicted.”

She advises hoteliers that positive performance going forward “is going to have to be about diversification”.

“It’s understanding which demographics are coming and how to adapt. Obviously your visitors coming in from China are going to have different needs and consumer spend to those coming from the CIS. So it’s adapting to changing demographics that are coming in, understanding from where the supply is coming onboard and working out a difficult balance between occupancy and ADR.”

Wael El Behi, general manager, Hawthorn Suites by Wyndham, Dubai asserts: “Everything is proportionate and there will be adjustments, and the owners will understand.

“We are complaining because of the cost of living, cost of transportation, education, but as the volume [of hotels] is increasing, there will be adjustments and the end user is going to benefit.

“We will have lots of options in hotels and in restaurants and as it becomes more competitive, it will adjust so I see it from a positive perspective. Good and professional people will always find their way in this market, because this region recognises talent.”

 

Click here to read more from our Hospitality Report 2015

 

 

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