Insights on Hospitality Executive Recruitment - in the context of the Covid-19 crisis
As an Executive Search firm, specializing in the Hospitality industry, Tovalea team members have been in close contact with a number of clients and candidates during the Covid-19 crisis.
The idea is to share some current insights about recruitment in the International luxury hospitality industry.
These insights are very personal, so do not hesitate to comment with your own experience.
Note that we recruit only Executives for Hospitality groups and hotels; therefore, we are addressing what we observe in our niche market.
Let’s start on a positive note!
Despite the current situation and the fact that our industry is one of the hardest hit (if not the worst), we’re pleased to see that our clients are still recruiting talent, and continuing to contact search firms to help them identify the best candidates.
We have to say, we have been impressed by the resilience of our candidates and clients during the crisis.
1- What are hotel groups currently looking for?
Let’s make it clear, the situation has changed. This is a fact. Hotel groups are restructuring their teams, at a Corporate level and on properties, they intend to work differently, and there are already noticeable changes.
· At a Corporate level
Positions are drastically reduced, especially in large hotel groups. To name a few, Hilton is to cut nearly a quarter of its Corporate workforce; Marriott to lay off 17 % of its Corporate staff, and Hyatt: 1.300 corporate employees. Sebastien Bazin, the CEO of AccorHotels, stated that a more direct management would be more efficient, the Group put in place a new structure to reduce the levels between the CEO and the GMs on property – (formerly the number was 7).
Not all Luxury Hotel Groups officially communicate on staff reduction, but for sure, headquarters will be significantly affected.
All areas are currently affected: Sales, Marketing, Human Resources, Finances and Operations.
Corporate Executives of luxury hotel groups are contacting us, looking for a new start after losing their jobs; on the other hand, however, we are receiving fewer assignments from clients for Corporate positions.
· On property
On property, the Executive position most affected is the Hotel Manager or EAM (Executive Assistant Manager).
By cutting the “Number 2 position” , General Managers (GM) achieve two goals: reducing the payroll (obviously these are among the highest salaries in the hotel) and showing goodwill to their management and owners, they demonstrate they are hands-on, more involved in operations.
General Managers are still needed (!) Most of the assignments we currently receive are for GM positions. So far, there is no shortage on the demand.
And due to the situation, the “offer” (= the number of GMs looking for a job) is significant on the market. The bias would be to assume that these positions should be easy to fill - Some Directors of Human Resources told me it will be tough to convince their management to keep working with an Executive Search firm because they believe it should be easier to recruit in the current situation.
· “Quality over quantity” - first, selecting the right Executive candidate from a large quantity of CVs can be daunting. Executive Search firms have their own network of candidates.
· Second, only available candidates usually apply, whereas, Executive Search firms work on direct approach, and contact potential candidates who are still employed.
· Candidates may apply to the job offer for wrong reasons, in the absence of better alternative. Executive Search firms know the professional project of their candidates.
As a result, for a company, executive recruiting in this context could, not only be time consuming, but also imply a risk to select the wrong candidate.
What about hotels openings?
We receive assignments for replacements in operating hotels, and for property openings as well. We note that openings might be slightly delayed but usually maintained. That is encouraging.
2- Factors impacting hotels’ situation, and therefore employment and recruitment
· Hotel locations
When we interview GMs or ExCom members, the location of their hotel is the key factor to understanding their situation.
Are borders on the hotel destination open?
If the boarders are closed, is the domestic travel strong enough to cope with the absence of international travellers?
The STR map below is helpful to understand the situation by country. As of June, only China’s domestic business returns, whereas domestic leisure returns in most developed countries.
In China, domestic tourism rebounded to more than 50% of last year’s level during the Dragon Boat Festival, the average hotel occupancy was 7 % in February and increased to 58 % in July, according to STR. Those occupancy rates have improved through the summer. Hotels in China have restarted their activity, relying on the domestic market. According to the Shanghai Administration of Culture and Tourism, mid-August, the five-star hotels in Shanghai reached 67 % occupancy!
Unfortunately, this is not the case everywhere, as a lot of countries have kept their borders closed, and can’t count on their domestic market.
In order to boost the domestic market, luxury hotels are demonstrating their creativity to find new sources of business and generate cash flow.
We can quote few examples:
§ “Staycation” offers – such as the offer “Your ultimate staycation” from the Plaza Athénée
§ Quarantine business: especially in the Middle East (Qatar, UAE), some hotels are meeting demand, and taking the opportunity to increase their occupancy rate with Residents who stay in a hotel for the quarantine
§ “Workation” offers start to rise. The concept being to work remotely and enjoy a weekend in the hotel (ex: Hyatt Regency Chantilly)
· Client Segmentation
The client segmentation mix of the hotel deeply impacts its situation, depending on the typology of clientele: Leisure / Business / Meeting Incentive Convention and Events (MICE).
In destinations where domestic leisure is well developed, the luxury hotels have done well during the summer.
On the other hand, properties located in destinations where domestic leisure is not strong enough and / or Corporate business represent a considerable market share, occupancy is still catastrophic.
Let’s take 2 examples in France:
- Paris has suffered from the absence of International tourists; moreover, Corporate business represents a low market share during summertime.
According to a study from MKG Consulting, in June 2020, only 39% of the Parisians hotels were open and their occupancy rate was only 8.3%.
- However, hotels and resorts on the coasts have been booming thanks to domestic travellers and European too.
According to MKG, the hotels occupancy rate in the South of France (PACA region: Provence-Alps-French Riviera) reached 87,8%, from 1st to 16th of August 2020, with a slight increase vs last year (+0.5 point).
MICE hotels, offering conferences and events, are likely be the last to rebound.
The STR map shows that as of June none of the destinations reached the recovery driver level of “Groups return”.
As a result, people working on Events are more open to work opportunities.
Atout France follows daily the mobility allowed towards France on an online interactive map.
As you can see below, on the latest update, it is not yet promising…
· Level of range
Our whole sector is impacted; however the luxury segment is suffering more; due to the absence of the key international markets (US, Middle-East, Russia, Asia, Latin America – especially Brazil).
As per a McKinsey study “In early May, occupancy was less than 15% for luxury hotels and around 40% for economy”, and the RevPar of luxury hotels would be the slowest to return, shown below.
The luxury hospitality segment relies on high-end leisure, and part of it is coming from International luxury travel agencies.
With the borders closed in some destinations, the mobility restricted and the long-term impact on airline companies, we cannot expect the luxury segment to bounce back for a while, especially in destinations where domestic travellers cannot compensate for the loss for international tourists. However, the below study from STR shows that, in the crisis of 2008, the Global Luxury Room demand had bounced back in two years, and then hit new highs.
We all know the current crisis might have longer-term impacts.
The impacts are not only financial this time, as behaviours might also be affected. Who can predict how luxury hospitality consumption will be revived?
A different demand may confirm its growth though, luxury hotels offering closer-to-the-nature experience.
3- What are candidates currently looking for?
During this crisis, employees have had different experiences in the way they have been treated by their companies. There are two main behaviours we notice: they want to leave it - while they still have the choice - or they want to get through the crisis with the company.
· The will to work for a hospitality groups with strong shared values
A lot of candidates tell us they want to work for a meaningful company, a group with strong values.
The search for authenticity and experience is a trend we know well, client-wise. We tend to note that, with the crisis, candidates have the same aspiration.
There is an appeal to work for groups they can be proud of, they want to believe in their work, to trust their approach, or even their philosophy: hospitality groups caring for their employees and for the local population and the environment.
Candidates mention hotel group brands they’d like to work for: groups with a strong positioning on the Lifestyle segment, developing “Experiential luxury”, focusing on authenticity, sustainability, caring (values, social commitment, ethical consumption), orienting their strategy towards wellness and guest experiences.
Credit: The Brando
· Reluctance & Gratefulness
We observe that employees who have kept their jobs seem less open to new opportunities than before the crisis.
We could assume they are scared to lose the security of their job and therefore reluctant to take the risk by changing jobs in this context. That is certainly one of the reasons.
That could explain why some candidates ask us not to have a probation period, which is a request we receive daily.
However, I feel that there is another reason: employees are loyal to their companies, they feel grateful not to have been made redundant, and they would not jump ship before the crisis is over; they would feel bad, even guilty to do so in this tough context.
Employees have powerful values too!
· An appeal to work in countries with strong government support schemes:
We note an appeal to work in countries with strong governmental job retention schemes, to face to crisis. Lots of expatriates are ready to come home:
- One the one hand, to be close to their family
- but on the other hand, some of them realize that their expat package comes with a price in some countries; they could be made redundant overnight, whereas in some other countries, governments may support furloughed workers
No need to say that France, and some European countries, are well known with this regards.
To give a precise example, we can refer to the French support scheme, called “activité partielle”.
To avoid redundancy, the French Government supports companies who need it: employees who cannot work due to the situation but are still employed are entitled to 84% of their net salary. The scheme offers a certain form of flexibility as the companies define how many days per week their employees work.
That makes a real difference compared with countries not offering this kind of support to companies; employees can be laid off.
· “I want to keep working”
We hear a lot of people who just want to “keep working”. Unemployed, furloughed, or even, people working only few days a week share their concern: they want to feel useful in their job.
It’s not rare to meet Executives who have accepted a lower position at a lower salary to sign a work contract.
Our industry employs of passionate people, and most of us would prefer a wage cut rather than stop working.
Let’s have a quick word about salaries.
Some Hotel Groups have asked Executives to take a pay cut. Even when there is no drop in wages, bonuses can be at risk for a couple of years.
Benefits for expat packages - usually including: housing and schooling allowances, one return ticket for the family, medical insurance, transportation / car – can be impacted in some cases; for example: a reduction of the housing allowance.
The expatriate packages, as we knew them in the past, tend to be rare now. An easy way for companies to reduce their costs is to offer expat contracts with a single status, or a kind of “local-expat contract”: an expat salary, sometimes with flight tickets - but with no other perks, such as housing and schooling allowances. It’s not new that hospitality groups are trying to reduce the numbers of expatriates, and instead are eager to promote locals whenever possible, which is a good thing. This trend could also be accelerated by the current crisis.
We will need more time and data to analyse the long-term impact of the crisis on wages and packages, but so far, all assignments we’ve received are in line with the salary grid Tovalea publishes yearly.
· “I want to work differently”
To sum up the current trend, let us quote our candidates, we hear from them daily that they want to work “differently”.
The crisis seems to have an impact on all generations with this regards.