Hotel Employee Rewards Benchmarking Survey. Hotels & Leisure PRECISE. PROVEN. PERFORMANCE.

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1 Hotel Employee Rewards Benchmarking Survey Hotels & Leisure PRECISE. PROVEN. PERFORMANCE.

2 Table of contents Foreword Foreword 3 Respondent details 5 Key findings 6 Salaries 6 Overtime 9 Gratuities 10 Employee benefits 11 Holiday entitlement 12 Notice period 13 About us 15 Vincent Wood Head of Hotels & Leisure T: +44 (0) E: vincent.wood@moorestephens.com In January 2018, the Moore Stephens Annual Hotels event delegates identified staffing issues as the strongest headwind facing the UK hotels industry. Brexit, the national minimum wage, the apprenticeship levy, mandatory pension provision and even the weak pound were all contributory factors in making it difficult to find the right people at the right price. So it is no surprise that labour costs in UK hotels are now nudging up towards 30% of total hotel operating costs, representing the biggest single annual cost, with distribution and food costs also significant and rising. That said, UK hotels are generally felt to be in a good place, although there is recognition that hospitality is a cyclical business, so the upward trends of recent years cannot last forever. So although now may be a good time to borrow and develop brands, there is no room for complacency. Costs must be kept under control as they increase faster than revenue streams, leading to a compression of profit margins (GOPPAR). At the same time, the industry is intent on improving the attractiveness of hospitality as a rewarding career choice at all levels, requiring imaginative thinking and careful planning as well as investment. In that context, we present this survey of employee salary and bonus costs. This is based on a relatively small sample of hotels in the South East, with a view to extending this to a nationwide survey if it is found to be useful. It also includes information on current trends in the provision of benefits, treatment of gratuities, holiday entitlements, overtime and notice periods. We are now seeking comments on what further information could be added or taken away to maximise the value of this survey to hoteliers and whether and how the pilot should be extended to make it relevant to a wider user group. Survey details To gather the data for this report, we conducted an online survey of hotels between 25 October 2017 and 2 January We analysed 12 hotel groups identified to us by the British Hospitality Association (now part of UKHospitality). Respondents were senior members of the team within their hotels primarily general managers, managing directors or other high-level directors. We also conducted in-depth interviews with the hoteliers to learn more about employee rewards within their hotels and the implications of their business. 2 3

3 Respondent details We conducted this pilot online survey of hotels between October 2017 and January 2018 with the assistance of The Buell Group and the British Hospitality Association (now part of UKHospitality). We are extremely grateful to those who responded. We asked respondents to provide information on their hotel type, location, number of hotels rooms, number of staff, star rating and TripAdvisor rating to help us analyse their data. Number of rooms: Range from 17 to 152 rooms. Average number of rooms 88. Number of staff: Range from 40 to 350 staff. Average number of staff 203. Star rating: 3* to 5* hotels Trip Advisor rating: 3 17% 5 25% 4 58% % 4.2 8% % % Type of location: Style of hotel: 67% 33% 58% 42% Rural Town Country house Full service other The hotels were located across the following counties: Berkshire, Surrey, West Sussex, Buckinghamshire, Kent, Oxfordshire, East Sussex and Dorset 4 5

4 Key findings Table of salaries We outsourced elements of housekeeping a couple of years ago but after detailed analysis, and a review of our pay structure, have brought these roles back in house. General Manager Dansefield House Our survey covered a number of areas concerning hotel employee rewards, including employee salaries, overtime policies, gratuities policies, employee benefits, holiday entitlement and notice periods. Salaries We asked respondents to provide details of the minimum and maximum annual base salaries for a variety of employee roles. We also asked them to provide a note of any bonus that staff may receive in addition. The roles covered the following areas: general management, banqueting & events, food & beverage, kitchen, rooms, engineering & gardening, sports & fitness, human resources & finance, and sales & marketing. Entry level grades are paid well above national minimum wage Across all hotels (town and rural), all staff in the 10 lowest-grade roles except one receive salaries that are 10-20% above the minimum wage. For most roles, salaries are highly comparable Excluding the three key roles of general manager, deputy manager and head chef, the salaries paid to staff at most grades are highly comparable differing by no more than 5,000. This applies regardless of whether the hotel is based in a town or rural location. General managers in town hotels receive the highest bonuses As expected, general managers earn the highest salaries and bonuses. Generally bonuses are only paid to individuals in key management roles. Where offered, these bonuses typically range from 7% to 15% of salary except general managers who can receive bonuses up to 57% of salary. Bonuses paid by town hotels tend to be twice those paid by rural hotels; general managers in towns can be paid bonuses of around 50% of salary, whereas general managers in rural locations are typically paid bonuses of up to 25%. Head chefs receive the second highest salaries and rural chefs do best On average, head chefs (or executive chefs) earn the second highest salaries. Head chefs in rural hotels tend to earn more than chefs in town hotels: rural hotels pay their chefs 24% more on average than town hotels. Rural hotels typically pay lower wages for most grades With the exception of the three highest paid roles (general manager, deputy manager and head chef), rural and country hotels typically pay their staff 8% more on average than town and non country hotels.. Job title *Bonuses are in addition to salary amounts displayed above. All respondents Minimum Maximum Average Average Bonus General Manager 68,200 83,417 75,808 26,778 Deputy General Manager / Executive Assistant Manager 39,167 50,500 44,833 6,260 Duty Manager/Assistant Manager 21,500 25,357 23,429 1,863 Food & Beverage Manager 29,719 33,500 31,609 2,792 Conference & Events Manager 23,635 28,286 25,960 2,100 Conference & Events Coordinator/Administrator 18,500 21,714 20,107 1,500 Restaurant Manager 27,861 31,000 29,431 3,532 Restaurant Assistant Manager 21,038 23,813 22,425 - Head Waiter 19,480 21,000 20,240 - Chef de Rang 17,448 18,643 18,045 - Commis Waiter 16,119 17,430 16,775 - Waiter/Waitress 15,175 15,963 15,569 - General F&B Assistant 15,167 16,333 15,750 - Bar Manager 24,143 28,000 26,071 2,800 Bar Supervisor 18,033 19,250 18,641 - Bar Person 15,857 16,770 16,314 - Head Chef/Executive Chef 46,750 56,727 51,739 6,938 Senior Sous Chef 29,800 33,200 31,500 - Sous Chef 28,300 31,444 29,872 3,000 Junior Sous Chef 24,286 26,167 25,226 - Chef de Partie 20,376 22,333 21,355 - Commis Chef 16,852 18,167 17,509 - Pastry Chef 27,778 28,750 28,264 - Head Kitchen Steward/Kitchen Porter 18,615 18,615 18,615 - Kitchen Steward/Kitchen Porter 16,062 17,027 16,544 - House Manager 24,583 30,000 27,292 2,050 Night Manager 23,600 25,167 24,383 - Night Porter 17,210 19,285 18,247 - Head Receptionist 20,150 22,028 21,089 3,000 Receptionist/Reservationist 16,700 18,075 17,387 - Head Housekeeper/Executive Housekeeper 27,354 30,960 29,157 2,800 Floor Housekeeper 18,520 21,800 20,160 - Room Attendant 13,421 16,825 15,123 - General Cleaner 14,800 15,800 15,300 - Laundry Assistant 14,800 26,000 20,400 - Chief Engineer 26,000 28,000 27,000 - Engineer 22,000 22,800 22,400 2,800 Maintenance Manager 25,988 28,238 27,113 2,500 Head Gardener 34,863 40,500 37,681 4,550 Gardener 19,705 23,250 21,478 - Senior Therapist 17,857 20,613 19,235 - Beauty Therapist 13,555 15,411 14,483 - Fitness Supervisor 20,200 20,600 20,400 - Human Resources Manager 30,354 37,000 33,677 3,300 Training Manager 35,500 31,000 33,250 4,000 Financial Controller 33,222 36,222 34,722 4,425 Accounts Clerk 19,188 24,083 21,635 - Payroll Clerk 22,000 30,000 26,000 2,800 Sales/Sales & Marketing Manager 37,500 49,375 43,438 5,950 Marketing Assistant 23,000 26,000 24,500 - Sales Executive 21,250 23,000 22,125 - Revenue Manager 38,400 39,000 38,700 4,

5 Overtime The hoteliers that participated were asked to provide details of their overtime policies. Overtime is a key element of the remuneration package within the hotel industry, especially if paid to employees rather than given as time off in lieu. This can often result in employees significantly increasing their earnings through working overtime. According to our survey, reward for overtime is often restricted to certain classes of employee. There was no general rule but individual examples included: only for F&B staff working more than 48 hours per week; salaried staff benefit only if overtime includes a full day; not applicable to heads of department. For eligible employees however, our survey again indicates some will recognise overtime through additional pay, some through time of in lieu and some give a choice. Overtime policy 45% Paid Time off in lieu Paid or time off in lieu 10% 45% Worked bank holidays were generally compensated through time off in lieu with 18% paying premium rates instead or as well. However, a similar percentage offered no compensation for worked bank holidays at all. Overtime included in calculation of holiday entitlement: No 83% of the hotels promoted flexible working. Yes 75% 25% 8 9

6 Gratuities Employee benefits Respondents were asked to describe their gratuities policy, detailing how gratuities and service charges are distributed amongst employees, as well as the percentages of the split. We asked respondents to indicate if employees were offered a number of selected benefits, as well as providing details on any additional benefits. 50% of hotels levy an F&B service charge. Of them, 80% distributed 100% and 20% distributed 95% of the amounts collected after a deduction for administration costs. 83% of hotels allowed staff to keep all the cash tips. Only one hotel did not permit cash tips stating that gratuities are restricted to the F&B service charge only. 75% of the hotels that permit credit card tips distributed 100% to employees. 8% did not share any credit card tips with employees. 17% of hotels run a tronc system to distribute cash gratuities to generate national insurance savings. Where gratuities are paid to employees by a troncmaster, and gratuities do not make up employees' contracted salary, and the owner has no involvement with their distribution, no NICs are due on the gratuities paid to employees. A number of respondents said they were considering implementing a tronc system. An interesting finding was the sheer variety of methods for allocating gratuities between staff including; equally amongst all staff, dependent upon position (extra weighting for food & beverage team or order takers ), personal (e.g. food & beverage team or spa therapist keep their personal tips), points system (according to ability to drive revenue), or based on hours worked. As regards distribution, gratuities were paid periodically (usually monthly) and often through payroll other than where tronc systems was being used. 83% of hotels provide accommodation to varying numbers and levels of staff. Care is required where the accommodation off-set allowance is applied to employee earnings in relation to National Minimum Wage/National Living Wage legislation. 100% of hotels provide staff access to an auto-enrolment pension scheme, as expected. Where salary sacrifice arrangements are used, this can lead to employer National Insurance Contribution savings. Hotels should budget for the increases in auto-enrolment mandatory rates effective from 6 April % of hotels provide health insurance, although, only to senior management. 73% of hotels provide childcare vouchers to all staff. Hotels should consider the amounts that can be subject to tax relief for basic rate and higher rate taxpayers. 25% of hotels also provide staff with discounted shopping and High Street vouchers. 25% of hotels provide flexible holiday entitlement (buying or selling of entitlement). 50% of hotels provide staff with use of the hotel's gym facilities. 17% of hotels provide staff with a discounted rate for gym membership. Hotels must consider the marginal cost for determining the value of the taxable benefit in kind, if the facilities are on-site. 50% of hotels provide all meals to staff whilst on duty. 25% of hotels provide a discounted rate on F&B. 8% of hotels provide a limited number of meals per shift. Additional benefits provided to employees include: complimentary stay at the hotel on staff member s birthday, staff Christmas party, interest free loans to a maximum amount, company cars, cycle to work schemes and sponsorship of external training. One hotel allows employees to select their own benefits, up to a certain value, through Perkbox

7 Holiday entitlement Notice period Respondents provided details of holiday entitlement, split between management and non-management. We asked respondents to provide details of notice periods, split between management and nonmanagement. Management Non-management Management Non-management We have a number of longstanding members of staff some have been with us over 25 years. Over 20% of our staff stay for 5 or more years. 25% 17% Managing Director The Vineyard 67% 8% 83% 58% 8% 17% 17% 91% 9% 28 days 30 days 31 days 33 days 28 days 30 days 1 month 2 months 3 months 4 weeks 1 week Holiday entitlement here is inclusive of bank holidays We then asked whether holiday entitlement increased based on length of service. For those that responded three months for management, 38% of those cases differentiated between the levels of management and commented that this varied on position, with a three month notice period only being applicable to general managers. No 30% Yes 70% During our interviews, it was also noted that there were a few long standing members of staff with some hotels commenting that they had staff who had been with them for 15+, 20+, 25+ and 29 years in one instance. Some respondents also commented that staff retention was a significant issue, with others also commenting that Brexit would be expected to have a negative impact on staff retention and their ability to recruit in the future. In both results for management and non-management, in the majority of cases staff are entitled to 28 days holiday per annum. For those that indicated that holiday entitlement increased based on length of service, 50% of these cases were after five years, with a maximum of five additional days given

8 About us We would like to thank all those who have contributed to this hotel employee rewards benchmarking survey report. As a Top 10 accounting and consulting network, Moore Stephens provides their hospitality clients and others to a range of core and specialist services including audit and tax compliance, business and personal tax, trust and estate planning, wealth management, IT consultancy, governance and risk, business support and outsourcing, corporate finance, restructuring & insolvency and forensic accounting. As your circumstances changes, we ll give you the support and guidance you need to deal with new risks and opportunities. If your business and personal interactions need to expand, we ll make it happen coordinating advice from a network of offices throughout the UK and in more than 100 countries. We support a broad range of individuals and entrepreneurs, large organisations and complex international businesses. We ensure easy access to the right people, so decisions can be made quickly and confidently. About The British Hospitality Association/The ALMR The British Hospitality Association (now part of UKHospitality) is the private sector forum for the UK s sixth largest contributor to export earnings and fourth largest employer. 4.5 million people work in the hospitality and tourism industry, equivalent to almost one in seven of the entire UK workforce. We are the leading authority on hospitality and tourism in the United Kingdom and directly serve our 46,500 member businesses, including hotels, serviced apartments, the private rented sector, the sharing economy, restaurants, private members clubs, food service management companies, stadia, attractions and leisure outlets. About The Buell Group The Buell Group is an advisory and services conglomerate focused exclusively on the Hospitality & Leisure Sectors with a key focus on hotels. The Group provides practically based professional advice and support to a broad spectrum of businesses and clients ranging from small start-ups to well established hotel companies. With exceptional resources and networks, Buell is able to provide bespoke services to meet the precise requirements of individual clients. Buell is made up of an elite group of industry leading Associates and Partners, who together can respond to the requirements of any owner, operator, developer or investor. Our particular focus is on helping owners in the sector maximise the value of their assets

9 We believe the information contained herein to be correct at the time of going to press, but we cannot accept any responsibility for any loss occasioned to any person as a result of action or refraining from action as a result of any item herein. Printed and published by Moore Stephens LLP, a member firm of Moore Stephens International Limited, a worldwide network of independent firms. Moore Stephens LLP is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Authorised and regulated by the Financial Conduct Authority for investment business. DPS39496 April