HOTEL COMPENSATION SURVEY2011 INDIA

Natwar NagarManaging Director - Executive Search

Anupama JaiswalSenior Associate

www.hvs.com HVS India Office th 6 Floor, Building 8-C, DLF Cyber City, Phase - II, Gurgaon 122 002 INDIA

2011 INDIA HOTEL VALUATION INDEX – COMPENSATION SURVEY | PAGE 10

The hospitality industry, traditionally more focused on the physical product, has woken up to a customer who is demanding consistent delivery of the brand promise. As the economic recovery accelerates, the most successful hotel brands will be those that are able to most efficiently engage with their customers and clearly differentiate their offering from that of their competitors.

There is no question that in today's competitive landscape the most successful differentiator a brand can rely on is its human capital. Success is based on the ability to attract, retain, and motivate superior talent. The most tangible way to accomplish this is by linking pay and performance.

The 2011 Hospitality Compensation Exchange (HCE) India Hotel ©Salary Survey report has been created to provide hotel owners and

operators with current and credible information concerning salary trends. This valuable data will assist in managing businesses better, allowing companies to attract and retain talent through equitable compensation practices.

Now as part of the third edition of the annual survey, the 2011 HCE ©India Hotel Salary Survey includes data from 200 hotels in the

country reporting on 40 key positions from the executive committee to line managers. The data for this report has been provided by the

individual hotels directly. To ensure accuracy and confidentiality, data is presented for positions based on the job responsibility (and not just the job title), and only for those positions and criteria for which at least five participating hotels provided data.

For the purpose of the survey, the Total Annual Employment Cost or Cost To Company consists of the following components:

• Annual Salary• Annual Benefits• Leave Travel Allowance• Retirement Benefits• Medical Premium• Other Entitlements

The post recession landscape, across all segments of the hospitality sector, has witnessed an interesting trend in compensation benchmarking activities. The findings of the 2010 HCE India Hotel Salary Survey© conducted in the first quarter of 2010 largely represented compensation data that was adopted by hotel companies as part of salary correction strategy across all levels in the hotel hierarchy. Hence, the median salary range for the year 2009/10 has not been included in comparing salary benchmarks over the last three years as it may be skewed owing to a year that was in a post recessionary phase. Most hotel companies initiated their compensation benchmarking activities for salary rationalization in the third quarter of the year 2010.

Tables 2 and 4 provide a graphical snapshot of this comparison for key positions in various hotel segments in India.

Table 1 shows the percentage of growth in median salary in 2010/11 over the buoyant year 2007/08 in First Class and Luxury segments in India.

As the global economy recovers and companies return to pre-recessionary hiring levels, the 2011 HCE India Hotel Salary

©Survey shows that inspite of witnessing difficult times, compensation levels in the year 2010/11 are comparable to those in the buoyant year 2007/08 when disproportionate salary increases were observed throughout the industry.

©2011 HCE India Hotel Salary Survey

Position

General Manager 13%

Financial Controller 6%

Director Human Resources 18%

Director Rooms Division 11%

Executive Housekeeper 20%

Director Food & Beverage 43%

Executive Chef 9%

Director Sales & Marketing 23%

Chief Engineer 25%

Percentage of Growth in

median salary in 2010/11

over 2007/8

Table 1 – Percentage of growth in median salaries in 2010/11 over 2007/08 across hotels in First Class and Luxury segments in India

Table 2 – Graphical representation of median salaries for key positions across hotels in First Class and Luxury hotel segment in India for the years 2007/08 and 2010/11

0%

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10%

15%

20%

25%

30%

35%

40%

45%

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2007/08 2010/11 Percentage of Growth in median salary in 2010/11 over 2007/8

Note for Tables 2 & 4: Median salary range for 2009/10 has not been included as findings of the 2010 HCE India Hotel Salary Survey© indicate that the data in this post-recessionary phase may be skewed due to salary points being a reflection of the corrections taken to tide over the global downturn.

2011 INDIA HOTEL VALUATION INDEX – COMPENSATION SURVEY | PAGE 11

The position of Director Food & Beverage has seen the maximum increase in median salary reflecting that Food & Beverage as a function continues to be critical to increasing bottom line profitability. This increase may also be attributed to the emergence of quality standalone restaurants and food chains that are recruiting hotel professionals at extremely competitive packages.

The emergence of new hotel brands in the country has increased the war for talent and is showing in the significant increase in salary levels for the Director Sales & Marketing position. Salaries of hotel Chief Engineers have also witnessed a significant rise owing to development companies hiring this position to help them set up their Technical Services divisions in India

Table 3 shows the percentage of growth in median salary in 2010/11 over the year 2007/08 hotels in Mid Scale and Budget segment in India.

We forecast that the year 2011/12 will witness salary increases in the range of 12-15%. We believe that the functional heads of Sales and Marketing, Human Resources, and Culinary positions will see the maximum increase. This may be attributed to any one or a combination of the following:

• Sales and Marketing will play an even more critical role in defining the bottomline profitability, thereby, driving higher revenue margins.

• Human Resource delivery will play a decisive role in creating effective talent management strategies aimed at reducing employee turnover as well as attracting and retaining top talent.

• Culinary positions will play a critical role in retaining the hotel's cutting edge in the segment over competition from high-end standalone restaurants which have led to an increase in the market value of top talent in the kitchen.

Finally, to reiterate, a sustained focus on employee engagement and retention will be a key driver for maintenance of brand consistency and customer satisfaction, which in turn dominates the bottom line and offers organizations a competitive edge.

The 2011 HCE India Hotel Salary Survey© is now available for purchase. Information presented in the report includes:

• Total Annual compensation of 40 key Executive Committee, Department Head and Line Manager positions

• Analysis by hotel positioning• Analysis by location

We also have more customised reports available as below:

• Luxury and First Class Hotels in metro destination• Luxury and First Class Hotels in non-metro destination• Hotels in First Class segment at leisure destination• Hotels in Luxury segment at leisure destination• Mid Scale Hotels in metro destination• Mid Scale Hotels in non-metro destination• Budget Hotels in metro destination• Budget Hotels in non-metro destination• Customised city-wise reports for key metro locations

For further information on how to purchase the 2011 HCE India Hotel Salary Survey© and other compensation surveys, please contact Anupama Jaiswal at ajaiswal@hvs.com or Natwar Nagar at nnagar@hvs.com.

Percentage of Growth in

median salary in 2010/11

over 2007/8

1%

37%

38%

75%

56%

20%

70%

3%

33%

Position

General Manager

Financial Controller

Human Resources Manager

Front Office Manager

Executive Housekeeper

Food & Beverage Manager

Executive Chef

Sales Manager

Chief Engineer

0%

10%

20%

30%

40%

50%

60%

70%

80%

-

300,000

600,000

900,000

1,200,000

1,500,000

Manager Controller Resources Manager

Manager Housekeeper Beverage Manager

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2007/08 2010/11 Percentage of Growth in median salary in 2010/11 over 2007/8

Table 3 – Percentage of growth in median salaries in 2010/11 over 2007/08 across hotels in Mid Scale and Budget segmentsin India

Table 4 – Graphical representation of median salaries for key positions across hotels in Mid Scale and Budget hotel segment in India for the years 2007/08 and 2010/11

In the Mid Scale and Budget segments the positions of Front Office Manager and Executive Chef have witnessed the highest increase which can be attributed to the following reasoning.

?Emergence of branded hotels in the midscale and budget segment across cities in India that emphasize on creating and maintaining minimal staffing and hire for positions that require multiple skills for multi-tasking

2011 INDIA HOTEL VALUATION INDEX – COMPENSATION SURVEY | PAGE 12

Participating Hotel Companies - 2011 HCE India Salary Survey

About HVSHVS is the world's leading consulting and services organization focused on the hotel,

restaurant, shared ownership, gaming, and leisure industries. Established in 1980,

the company performs more than 2,000 assignments per year for virtually every

major industry participant. HVS principals are regarded as the leading professionals

in their respective regions of the globe. We are client driven, entrepreneurial, and

dedicated to providing the best advice and services in a timely and cost-efficient

manner. Through a worldwide network of 30 offices staffed by 400 seasoned

industry professionals, HVS provides an unparalleled range of complementary

services for the hospitality industry. For further information regarding our expertise

and specifics about our services, please visit www.hvs.com.

For further information please contact nnagar@hvs.com or ajaiswal@hvs.com

www.hvs.com HVS India Office th 6 Floor, Building 8-C, DLF Cyber City, Phase - II, Gurgaon 122 002 INDIA

About HVS Executive Search

HVS Executive Search provides advisory services to leaders of the hotel, restaurant,

retail, real-estate, healthcare, manufacturing, energy and education industries.

Practice areas include senior-level executive search, mid-management recruitment,

compensation consulting and performance management. Our goal is to provide

clients with highly customized solutions regardless of the engagement. Our senior

level executive search practice is industry specific focusing on functional specialty

areas including Chief Executive Officer & Board Directors, Financial Officers,

Acquisitions/Development, Asset Management, Human Resources, Operations and

Sales & Marketing.

About the AuthorsNatwar Nagar is Managing

Director of HVS Executive Search

in India. Natwar initiated the

division in 2001, and has more

than a decade of successful

experience in this field, built on

his insight into people dynamics

and the ability to seek out key executives whose

perspectives and competencies match the future

needs of the business. He has considered

attrition trends and the availability of a talent

pool to make successful forays into other sectors

like real estate, creating a strong presence in the

latter's territory.

Anupama Jaiswal is a Senior Associate with HVS Executive Search in New Delhi. A hospitality management graduate with over 12 years of experience in Hotel Operations and Human Resources.

Anupama specialises in hospitality executive search for HVS. A selection of her clients at HVS includes Oberoi Hotels & Resorts, Hilton Worldwide, Fairmont Raffles Hotels International and The Park Hotels.