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Thu 6 May 2010 12:24 PM

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Rotana staff 'given 3% of service charges'

Majority of revenue taken by firm 'to cover accommodation, transport and training'.

Rotana staff 'given 3% of service charges'
BIG CHAIN: The Rotana group currently operates 24 hotels in the UAE and has plans to have 30 by the end of the year. (ITP Images)

As little as three percent of the service charges paid by guests at Rotana hotels in the UAE goes directly into staff pay packets, Arabian Business has learnt.

The rest is put into a fund to cover costs such as accommodation, transport and training, the head of the hotelier’s operations told Arabian Business in an interview on Wednesday.

“About three to four percent [of the service charges] is distributed directly and the balance is through accommodation, transportation [and] benefits,” said Omer Kaddouri, senior vice president of UAE operations at Rotana.

The remainder of the service charges revenue is put in a fund and is “used for any future projects that are payroll and training related” and “staff outings, staff training and initiatives relating to staff,” he said.

Rotana hotels in the UAE state that in dining and entertainment facilities, “all prices are inclusive of 10% municipality fees and 10% service charge”. The municipality fee is mandatory for all licensed premises and goes to Dubai Government, while the service charge is traditionally considered a gratuity to reward staff for providing good service.

“The service [charge] is distributed amongst variables, according to a policy of law dictated by, for example in Abu Dhabi the Abu Dhabi Tourism Authority,” Kaddouri continued.

“A certain amount of service charge has to go to the staff, whether it is in their pockets, whether it is through any means related to an employee or the benefits of an employee. That money is utilised for the employee.”

The Rotana group currently operates 24 hotels in the UAE – including the Rose Rayhaan, the world’s tallest hotel – and Kaddouri said the group has plans to have 30 by the end of the year, and 37 by the start of 2012.

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John Thomas 9 years ago

"while the service charge is traditionally considered a gratuity to reward staff for providing good service." So why are the staff technically "covering" their own transportation and accomodation? when that is really the responsibility of the hotel?? This is why I detest the service charge because we know the staff does not get it eventhough it is theirs!- it is a reward for "their" service not a way to cover the hotel staffing exppenses - shamefull. If i ever have the option to remove it, i will and give the tip to the staff itself, unreal - they [the staff] "maybe" get 3% out of the 10% we must pay... I do detest hoteliers in the Middle East, they basically steal the staff tips and then pay them AED500 a month - YOU SHOULD BE ASHAMED!!

Original Joe 9 years ago

It must be a slow news day if this is a lead story... Everyone in the Hospitality Industry knows the Service Charge goes to the "Company" and very little ever goes to the employees. This is as it has always been with non licensed restaurants in shopping malls and with licensed restaurants in hotels (now only licensed restaurants are allowed to add a Service Charge). The surprise in the story is the staff actually receive 3% whereas many hotels out there probably give less, some as little as 1%. To say there is a "fund" where the rest of the money goes is probably not accurate. There is a P&L of expenses for every business starting with sales at the top of the P&L down to net profit at the bottom. Employee costs such as accommodation, transportation, airline tickets, uniforms, medicals, indemnity accruals, etc. must be paid for by every company in the UAE and most do not have the benefit of creating a "fund" for these expenses from a Service Charge. The money from the Service Charge hotels add to bills goes to the Company, minus what these hotels are kind enough to give to their employees, end of. The rest of the money can really be considered as "profit". Some hotel managers/companies may not agree with my logic, but every company has employee related expenses, correct? And I don't remember paying a Service Charge the last time I paid for my dry cleaning, had my car serviced, had photos developed, ate at McDonalds, etc. Rotana should actually be congratulated for giving as much as they do to their employees.....I wonder how much Jumeirah gives to their employees???? Hmmmm???

Lady Muck 9 years ago

This is the reason I refuse to eat in restaurants in the UAE - I can't bear the thought of leaving behind a tip which goes to the fat cat management. Service staff in this region really are marginlised and yet we expect them to smile, be gracious and deal with our petty requests. Now, if a restaurant could guarantee that their staff were getting at least 7-8%, I would choose to dine out more often.

MAX 9 years ago

service charge is basic right of serving staff. Hotel customers are tipping staff for thier good service not for hotels to pocket it. Shame on you Rotana.

The Pundit 9 years ago

"...while the service charge is traditionally considered a gratuity to reward staff for providing good service." Omer, the gratuity is for the STAFF not for the hotel to make money. Additionally you hire the staff and agree to pay them a wage that includes accommodation, transport, training, etc. You don't get to take their TIPS to pay for this. That is not only shameful but abhorrent.

Mark 9 years ago

The reality is that all hotel management companies follow the same model. This model of only distributing 3% to staff and allowing the remaining 7% to drop to the bottom line was rumbled about 8 years ago. The result was the Hoteliers rather than lose the pure profit convinced the ‘powers that be’ to allow them to declare that the 7% cash could be off set against necessary staff overheads/on-costs – training/housing/utilities/maintenance etc. . The net result therefore never changed - the staff still continued to only receive 3% and the bottom line remained 7% healthier through a simple accounting exercise . It was not fair then and still remains unfair today. The only fair way is drop the 10% totally and let people reward staff directly for good service. The argument from the Hoteliers will be that this does not benefit all the BOH staff who work diligently behind the scenes in supporting the front line staff. Poor argument as the hotel should, as part of good management/business practice allocate monies from genuine revenues for motivation and reward of all staff.

Disgusted 9 years ago

Since the "fund" is for "accommodation, transportation [and] benefits(?)", why not take a pay cut and make the ACTUAL people who make you the money, a little happier. What surprises me more than the distribution of the service charge, is the absolutely nonchalant way Rotana admits to this travesty! I say, boycott Rotana, in our own little way, it can go a long way. As a regular to Rotana Hotels, I for one definitely am not going back in the near future. Shame on you.

Dutch 9 years ago

It's incorrect to state that Service Charge should go to staff. One has to make a clear distinction between Service Charge and Tip. Service Charge is to cover staff costs, tip is given as a appreciation for good service. So people crying shame on Rotana have little knowledge of how hospitality works in this region. I have worked in hospitality in the GCC, and I can assure you the difference between tip and service charge. The fact that Rotana spends a part of that service charge is a very positive thing and shows that training, outings etc. are important and that they work to improve our experience when dining or staying at the Rotana Hotels. There are hotels that take TIP from their staff to cover costs, and that is wrong. But that is a totally different story. In most hotels tip is actually evenly divided over all team members plus the supporting departments such as stewarding who clean and does dishes in the respective outlet. This to ensure all team members get an even share, as its extra money for everyone. Please, before commenting, get your knowledge straight.

james 9 years ago

I am probably being thick here. But the article is not clear as how much these guys actually recieve. Assuming the SC is Dhs100, do the staff receieve 3% of that (i.e.3dhs) or 30% of that (i.e.30Dhs)?

Jhon 9 years ago

The article already panic the hotels owners and operators in UAE, Service charge it’s 16% from the total of any bill..6 % as tourism fee and 8% back to the hotel as revenue and 1% goes to staff as cash 1% goes to what they call it benefit of the staff like monthly birthday party, covering accommodation expenses and so on which is suppose to be covered from hotel income not from the staff money End of the month staff getting only 1 % from the 16% of service charge, and that what make me noticed that every time I am entering restaurant or bar I saw most of the staff working with no motivation or lovely spirit because they feel that some one taking what is right for them, it's shame