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  • New Global Directors Join the 2018-2019 HFTP Board

    The HFTP 2018-2019 Global Board of Directors was installed during the association's 2018 Annual Convention and introduces new directors Toni Bau, Carson Booth, CHTP and Mark Fancourt. These extensive director profiles give insight into the distinguished professions and personal goals of HFTP's newest association leaders.

  • HFTP Compensation and Benefits Report: 2018 Data on Hospitality Staffing and Compensation

    The 2018 HFTP Compensation and Benefits Survey was released this summer and made available to HFTP members. This is a biannual report that was developed to provide information on salaries and benefits, and to give an ongoing profile of accounting, finance and technology professionals in the hospitality industry.

  • Members Only: 2018 HFTP Compensation and Benefits Report

    By Tanya Venegas, MBA, MHM, CHIA. Results to the biannual survey conducted by Hospitality Financial and Technology Professionals (HFTP). Information includes data on compensation and benefits trends for finance and technology professionals in the club and lodging industries.

  • Primary Club Metrics

    Survey results identify which metrics are most often used to determine performance. By Agnes DeFranco, Ed.D., CHAE; Tanya Venegas, MBA, MHM, CHIA; and Amanda Belarmino

Article by Keith Kefgen

Compensation for US CEOs in Lodging: Fair Pay is a Real Issue

AETHOS Consulting Group ·19 February 2019
AETHOS New York Managing Director Keith Kefgen, in his annual review of CEO compensation for a variety of hospitality disciplines, shares candid insights as a result of his latest look at CEOs of U.S. lodging companies:"What we have found over the twenty years of studying CEO pay, is that the many public boards did a poor job at linking CEO pay to company performance," observes Kefgen. "In fact, that was the goal of creating our pay-for-performance model." The AETHOS Pay-for-Performance Model analyzes key financial metrics such as market capitalization, stock appreciation, EBITDA growth, and total direct compensation. What AETHOS discovered in last year's hotel industry pay practices is that most CEOs were paid appropriately, with a few outliers.However, the latest "shaming of U.S. CEOs appears to be in the form of the Dodd-Frank CEO Pay Ratio initiative," Kefgen continues. "Groups such as the AFL-CIO are using this topic to rationalize the disappearance of the middle-class.""Their most recent analysis puts the average CEO pay at 361 times the typical worker ($14 million - $39 million). This will continue to be a sore spot for income equality proponents. But think about CEO pay in relation to athlete pay. Floyd Mayweather made over $275 million last year for exhibition fights, while Lionel Messi earned $101 million for playing soccer and his sneaker endorsements. Super Bowl winning Quarterback Tom Brady earned $34 million in salary, bonus and endorsements last year too.""Yes, CEOs make a lot of money. Yes, some of them don't deserve it. But the answer is in better compensation administration, not government regulation. Will the CEO pay gap create economic instability or unsustainability? I think not," adds Kefgen.According to AETHOS' 2018 Lodging CEO Compensation survey, the market capitalization varied from Walt Disney's $167 billion to InnSuites' $22 million. Comparing CEOs from two vastly different companies might appear difficult, but that is what the AETHOS model intends to do. In fact, it illustrated that Bob Iger at Disney generally merited his $36 million paycheck, while James Wirth at InnSuites (barely) deserved his $134,000 paycheck. "Ultimately, investors seek stock performance not payroll containment."As in previous years, the highest paid CEOs in the industry ran the largest companies, according to AETHOS. The top ten CEOs each earned more than $10 million with Bob Iger topping the list at $36 million. Glenn Fogel at Booking Holdings earned nearly $28 million and Chris Nassetta of Hilton earned just under $19 million. Although their pay packages were significant, these CEOs had an AETHOS Value Index (AVI) of 85. A score of 100 would be a perfect pay-for-performance match. This year's top performing CEO based on the model was Jorge Gonzalez at St. Joe Company with an AVI of 210. This marks a big swing for Gonzalez who has been stewarding St. Joe through some very difficult times.Eight CEOs in the hospitality industry received a base salary of $1 million or more: Bob Iger topped the list with a salary of $2.5 million, followed by Frank Del Rio at $1.5 million. Many of these same CEOs received significant bonuses, with Iger taking home a $20 million bonus, followed by Fogel at $6 million. The largest disparities between salary and bonus belonged to Adam Portnoy at RMR - $300,000 salary to $2.6 million in bonus, and Fogel at a salary of $750,000 to his $6 million bonus. "Interesting to see so much of their pay is at risk," notes Kefgen.Like the CEOs in the Fortune 500, long-term incentive plans (LTIP) were a significant portion of overall CEO pay in the hotel industry. Most LTIPs were in the form of restricted stock grants and to a lesser extent, stock options. The largest stock grant went to Fogel, with a value at just over $21 million. Thirty CEOs on the list had multi-million-dollar grants, which comprised much of their pay."We are also seeing more of the LTIP awards having performance vesting attached to them. A strong sign that compensation committees are doing a better job of tying pay and performance."Kefgen shared suggestions for the industry. "Although I believe that most income equality advocates miss the boat, fair pay is a real issue. For starters, minimum wage needs to increase. Our industry is a beckon for first-time job-seekers and we should do are part to keep them. Secondly, more employees should be included in bonus programs. If the CEO can earn millions in bonus pay, managers should be able to participate. And finally, many argue about the effectiveness of equity pay at lower levels of the organization chart, but that is truly the fastest way to get employees thinking like shareholders."
Article by Chris Mumford

The Evolution Of Private Clubs

AETHOS Consulting Group · 7 February 2019
For the following hundred years or so, clubs remained the purview of the elite as discreet, no-questions-asked venues for socialising, pursuing leisure interests, exchanging gossip, and wining and dining. As the elite aged and the 'gentleman' was replaced by the 'businessman', many private member's clubs became relics of a distant age and struggled to remain relevant. That all changed in the mid-1990s when, just as Ian Schrager reinvented what a hotel could look like, Nick Jones turned the club world in London on its head with the introduction of Soho House. Over the subsequent two decades Soho House has spawned and inspired a thriving industry sector of member's clubs that are in tune with the lifestyle zeitgeist of the times. Think boutique hotel design, rooftop pools, award-winning mixologists, yoga classes, converted historic building, celebrity chefs and guest speakers opining mindfulness, cryptocurrency and coding. If proof were needed that the member's club has been fully reinvigorated and accepted by the consumer market, Soho House, which began life specifically targeting the arts and media worlds and taking delight in rebuffing those from financial services, opened its biggest site, The Ned, in 2017 bang opposite London's financial heart, the Bank of England.The member's club has become a global phenomenon in recent years with a proliferation of trendy clubs opening in key cities in the United States as well as established clubs launching outposts in European capitals and gateway Asian markets. The concept however has evolved from those 19th century days of a club being a townhouse with dining room, room, library, billiards room and a handful of bedrooms upstairs. Over the years many clubs have increased and upgraded their accommodation component, in particular in a bid to compete with hotels and offer their members even more reason to remain in-house. Similarly, where feasible, clubs have begun expanding their leisure facilities to include gyms and swimming pools.The club concept is also having to adapt itself to the wants and needs of its membership base. Clubs are no longer homes-away-from-home or simply places for leisure and relaxation. Increasingly today, they are places in which to conduct work and professional networking. Indeed, in this high-tech era of mobile working, many business people are eschewing fixed office space in favour of working remotely from their club on their laptop and phone. We are beginning to see the worlds of member's clubs and co-working spaces collide. A number of member's clubs are now creating dedicated workspace for their members with full connectivity and business services. Similarly, co-working groups, many of which operate on a membership model, such as Fora in London and The Great Room and Kafnu in Asia, are designing spaces and amenities with a strong social focus and 'clubby' environment.Hotels are also entering the private club game, recognising the additional revenue stream that a membership base can provide. Creating a member's club as a private sanctuary within a larger hospitality offering can convey a perception of exclusivity and desirability, which positively translates to increased brand equity for the property as a whole. A membership base also helps reduce the hotel owner's fretting about distribution and looking for guests to fill as many beds as possible every night, as well as helping to drive increased F&B business from a captive audience. Concepts such as Gansevoort's The Curtain in London have shown how a hotel can cater to both traditional hotel guests and fee-paying members within the same building, through the provision of an active membership events programme, co-working space and dynamic F&B offering.Some hoteliers are going even further and starting to dabble with the wholesale conversion of hotels into private membership clubs. This idea is potentially well suited to the small, independent, luxury hotel sector in which properties often command strong, long-term guest loyalty and repeat customers. The annual membership model lessens management's fixation on occupancy and rate, allows for much more predictable staffing and purchasing patterns, and gives a solid foundation of income. For the right product the conversion of a guest from a paying-by-the-night customer into an annual fee-paying member is a purchase decision driven as much by emotional as financial reasons.As the divide between pleasure time and work time has eroded, so too have the distinctions between what constitutes a member's club, a co-working space and a hotel. Expect to see these lines blur ever more over the coming years as property owners seek more and more ways to maximise the revenue potential of every square inch. The membership model continues to hold appeal, and the question facing club operators will be whether this remains a proposition best suited to the top end of the market or if it can be stretched to become more accessible to a broader audience in the future.

C-Suite Miniseries: The Hospitality CMO - A Global Profile Of The Evolving Role

AETHOS Consulting Group · 6 February 2019
Thus far, we have profiled the changing roles, competency sets and backgrounds of the Chief Commercial Officer, the Chief Human Resources Officer and the Chief Information Officer. Arguably, the CMO is another important piece of the puzzle - not yet completing, but certainly providing a much more comprehensive picture of the management teams of hospitality organisations around the globe.Profiling Today's CMO Throughout the Hospital IndustryAETHOS commenced by looking at the current or most recent senior marketing executives sitting on the management teams of the foremost hospitality companies around the globe within three subsegments of the industry - cruise, lodging and gaming. The selection was narrowed down to just five globally renowned organisations per segment - to serve as representatives for the hiring practices of "best-in-class" hospitality organisations.First things first - What's the best route to the top? We investigated the executives' educational background and their exposure to different industry segments. Contrary to what one might expect, a major in marketing is not what is needed to succeed. Instead, most of the commercial leaders are true business generalists. They have pursued studies such as business economics or political science, or they majored in highly specialised business functions such as accounting or engineering. When it comes to the educational background of the CMOs, it appears, though, that a master's degree or MBA is "preferred," with 60% of the executives holding such advanced degrees.Looking at the career paths and the experience gained in different industry segments or sectors, it becomes apparent that having previously worked in the hospitality (or travel) industry remains a key factor in securing the top marketing seat at any of the selected hospitality organisations. Because many organisations keep reiterating their need to "change up" their talent pool and gain "fresh perspectives" by recruiting from other sectors, it is somewhat of a surprise that only four out of the 15 selected CMOs came from outside the sector. The marketing function should be one of the few roles in which greater cross-industry exposure would make a lot of sense. Executives from the retail sector, fast moving consumer goods (FMCG) or any consumer-driven industry should be well-equipped to add value and new ideas to the hospitality industry. Unfortunately, only Hilton Worldwide, Marriott International, MGM and Norwegian Cruise Line seem to have taken the plunge and the "risk" to opt for an industry outsider. Arguably, though, some firms have a successful track record in recruiting from the FMCG or retail sector for other leadership functions within their organisations (most notably Royal Caribbean).We also looked at internal versus external recruits as well as cross-border hires. In other words, have the CMOs previously worked with the organisation before assuming their current function and do they come from the same regions as their company headquarters? Or, do they share the same cultural background? Firstly, it is interesting to note that approximately one-third of the CMOs have previously been known to, and have worked with, their current employers - albeit in a different role. This includes, for example, Michael Weaver at Wynn and Meg Lee at Norwegian Cruise Line, who both "auditioned" for the role having previously held an SVP/VP function. Kevin Clayton at Galaxy Entertainment returned to the organisation having previously worked with the company five years prior to his appointment as CMO. Secondly, somewhat astonishingly (although most of the CMOs do bring on board international experience), most CMOs share the same cultural routes as the organisations they are working with - with Claire Bennett at IHG being one of the few exceptions to the rule. In an industry that can truly be described as an international business, not seeing more cross-border hires is quite remarkable.The selected peer group is thus painting a fairly clear picture. To reach the top and assume the CMO function, executives are likely to be generalists and strategists, highly educated and savvy as it relates to all aspects of the business, not just their own domain. They are also, at least to date, highly likely to be industry experts - or insiders as some might say. They will have grown up throughout the ranks within a hospitality and/or travel-related business and proven their worth within a people- or service-driven organisation. Exceptions to the rule include, for example, Riccardo Casalino at MSC Cruises (who has a background with Proctor & Gamble), Karin Timpone at Marriott International (who brings on board a lot of experience in the media segment with Disney and Universal Studios), Kellyn Smith Kenny at Hilton Worldwide (who has worked with Uber and Microsoft) and Meg Lee at Norwegian Cruise Line (who has a background with Johnson & Johnson).Coincidentally, did you notice that the last three named executives are all women? In fact, 40% of our surveyed CMOs are female leaders. When it comes to gender diversity, this is not a bad place to be and it is certainly a much better ration than for most other leadership roles within the hospitality industry. Although both Claire Bennet (IHG) and Kellyn Smith Kenny (Hilton Worldwide) are relatively new to their positions, they join Kathy Mayor (Carnival Corporation), Meg Lee (Norwegian Cruise Line) and Karin Timpone (Marriott International) in spearheading the marketing functions at their respective organisations (note: Kathy Mayor has now assumed the Chief Digital Officer function). The lodging industry, on- and off-shore, is thus the stand-out subsegment in which women are at the forefront of commercial leadership, especially keeping in mind that another woman, Maud Bailly, is heading up the commercial department at Accor as Chief Digital Officer (in charge of distribution, sales and information systems). This is a contrast to the gaming industry, where, for the moment part, the senior leadership team remains a "boys club." Lilian Tomovich at MGM is the only woman waving the gender diversity flag for the casino sector.

Gaming CEO Pay In A Year Of Reckoning

AETHOS Consulting Group · 5 February 2019
In our twelfth annual study of gaming industry pay, we evaluated the performance of 34 public gaming companies in determining whether a CEO deserved his or her pay. The AETHOS pay-for-performance model compares significant financial metrics such as company size (market cap), stock appreciation (rise in stock price over 3 years), EBITDA growth (over 3 years), and total direct compensation (combination of salary, bonus, LTIP & other). Our findings are illustrated below.Gaming CEO Pay (as published by the Casino Journal)It comes as no surprise that the highest paid CEOs in the gaming industry work for the largest companies. Steve Wynn topped the list again as the highest paid CEO in gaming at $34.5M in total compensation. Sheldon Adelson at Las Vegas Sands came in second at $26M in total compensation. Ken Alexander at GVC and Fissora both were $20+ million-dollar men.In total, 26 of the 34 CEOs made more than $1M in total compensation. Up two from last year, with two less companies in the study. The average CEO paycheck went up substantially to $7.2M. That is nearly $2M more than last year's study. CEOs are clearly getting larger equity packages in a consolidating marketplace. For a second year in a row, the best CEO on a pay-for-performance basis was Dan Lee, CEO at Full House. Other top performers included Gary Carano at Eldorado Resorts and Tim Wilmott at Penn National. In Lee's case, our analysis suggests he should have been paid double what he was paid, and Wilmott could have earned nearly $4M without jeopardizing his performance.Thirteen CEOs in the gaming industry received a base salary of $1M or more. Sheldon Adelson and Lawrence Ho had the largest salaries, at $5M and $3.5M respectively. The average salary of the group came in at just over $1.1M. As most bonus programs are tied to base pay, it comes as no surprise that many of the most highly paid CEOs also received the largest bonuses, with Wynn leading the group with a bonus of $15M. The next largest bonus was Adelson at $12.5M. The average CEO bonus for the group was $1.1M, rising another $600K from last year. Only four gaming CEOs received no bonus, and all had weak financial performance and low performance indices.The largest component of CEO compensation was long-term incentive plans (LTIPs). A sign that pay-for-performance continues to be a major focus for public boards. The average LTIP value was $3.7M, more than double from the previous year. Ken Alexander topped the list with his nearly $21M stock grant, followed by Fissora at $17M. Twenty-one CEOs received an equity grant worth over $1M, while only four received nothing at all. It appears that gaming boards are getting more in line with standard pay practices in the Fortune 1000.One of the most pressing issues for compensation committees is that of severance and claw-backs. With ISS and other watchdog organizations looking at how disgraced and underperforming CEOs are being paid as they exit the company. For example, Wells Fargo clawed back over $75M in pay from former CEO, John Stumpf. In contrast, former Fox News President Roger Ailes received $47 million in severance when he left 21st Century Fox amid sexual harassment allegations. Interestingly, the Wynn board came to an agreement with Steve Wynn that paid him nothing in severance. Per his employment contract, he would have been paid him nearly $250 million had he been dismissed from the company "without cause."
Article by David Mansbach

The Broken Record Discussion - Boardroom Diversity Within The Restaurant Industry

AETHOS Consulting Group · 4 February 2019
While top governance experts have been promoting greater gender diversity for more than a decade, not much has changed within the restaurant industry. These glum statistics say it all.In 2015, of the 392 board seats available among the 45 U.S. public restaurant chains, only 69 were occupied by women (18%).In 2019, of the 414 board seats available among the 51 U.S. public restaurant chains, only 80 were occupied by women (19%).A 1% increase - seriously? In its simplest form, 80% of all consumer spending is driven by women. Logic dictates a board with more female representation encourages deliberative thinking in critical areas such as strategy culture, governance, risk, diversity and shareholder engagement, especially in the restaurant business.When a concept is broken, influencers step in; powerful groups such as hedge funds and mutual funds and governmental bodies are pushing for non-negotiable change.In 2018, California mandated that companies incorporated in the state and listed on a major U.S. stock exchange have at least one female director by the end of 2019 and at least three female directors by the end of 2021.Starting in 2020, Institutional Shareholder Services (ISS - the leading proxy advisory firm) will vote "no" on re-election of a Nominating and Governance Chairman if their company does not have at least one woman on their board.This is not a new concept. In 2008, Norway set quotas of 40% female representation, and other western European countries have set 30% targets for female board representation. A vast majority of our global clients agree that executing on this mandate was not easy, but it has paid off incredibly well.Although these accountability measures will apply predominantly to public restaurant companies, I implore the thousands of private restaurant organizations to take this initiative very seriously. While the current restaurant C-Suite and succession planning pipeline is male-dominated, I have personally worked with many extraordinary female executives throughout the industry who can deliver incredible value within the boardroom. Private companies' "keepers of the castle," such as nominating/governance committees, private equity owners, founders, family offices and executive recruiters, need to hold each other accountable and change their thinking around boardroom diversity initiatives.
Article by Matt Peterson

2019 and Lodging Technology: Is There A One-Size-Fits-All Approach?

AETHOS Consulting Group · 1 February 2019
Turning the page on another calendar year is always fun and reflective. As we look to 2019, there are some interesting trends and new technologies that should continue to impact the lodging industry. Following is a look into two specific groups, employee and customer experiences, and how we should continue to embrace technology so it can positively affect the bottom line.With higher costs and questionable growth over the next few years, employee costs and retention will continue to be a hot topic. It goes without saying that a "happy" or "satisfied" employee is more likely to stay with their employer, but how do we make sure that they are as content as we might think? Investing and embracing technology when it comes to systems and processes is one way to ease the workflow and create a better work environment. Easier said than done, yes, but something that any employer, big or small, can consider. This doesn't need to be an entire systems overhaul. It can be as simple as integrated systems onto tablets or mobile devices, or embracing mobile devices and allowing employees to communicate internally via chat or instant messaging. This can be especially useful for interaction between departments and when there is a guest who is expecting an immediate response. Of course, this is not a one-size-fits-all idea or solution. Using employee satisfaction surveys and asking first-hand how we can improve our employees' workday is still the best and easiest way to see higher employee morale and a greater return on your investment.In line with employee satisfaction is guest satisfaction. This is not a new theory and we have been hearing it for years. However, in addition to embracing technology to increase employee satisfaction, we will continue to see greater demands and expectations from the guest in terms of technology and interaction. From mobile booking and property and/or brand-specific apps to in-room dining, concierge and dinner/spa reservations, connecting with the guest has never been more important. The guest continues to become savvier when looking at pricing, packages and deals. Having a social media team, internal or external, to engage, interact and react with guests has never been more important. It is no longer important to just react to a TripAdvisor review or a tweet. Connecting with your guest over the life cycle of their trip will lead to higher conversion numbers, a greater spend per guest while on-property and more re-bookings and return guests.If a dedicated app or social media team is too costly, consider creating a concierge text message line so guests can still interact via their smart phones. Then, tie your sales team's bonus to online engagement. In a day and age in which smart phones are only getting smarter, this should be a no-brainer.The underlying technology can vary, and this is not a one-size-fits-all solution. What may work for a large portfolio company might not make sense for an independent asset and vice versa. However, with "big data" and cloud technology, we are living in a more complex world in which more information is accessible and, if properly tracked and coded, can be mined to maximize employee and guest satisfaction. Of course, those scores should lead to higher occupancy, greater flow-through and increased profits.
Article by Thomas Mielke and Chris Mumford

Rise in the Hospitality "Footprint" Among Trends for 2019

AETHOS Consulting Group ·29 January 2019
AETHOS Consulting Group's London Managing Directors Thomas Mielke and Chris Mumford have gathered their collective thought leadership and now share predictions, concerns and issues for 2019. While some of these issues transcend across borders and continents, the commentary here pertains to AEMEA - Asia, Europe, Middle East and Africa:Impact of Politics and the Economy on UK Hospitality Workforce: The political environment in certain European markets such as the UK is stoking a high degree of uncertainty for hospitality businesses and provoking concerns over the health of the economy, transaction activity and labour market. In addition, increased competition, high rents and (food) inflation, are all putting significant pressure on operating costs. Furthermore, in some mature markets in Western Europe, wage growth is not keeping pace with rises in cost of living and the hospitality sector, with a high dependence on lower-paid labour, is particularly at risk from an increased manpower shortage. In the UK specifically, the impact of impending Brexit has already seen significant drops in job applicant numbers within hospitality and one can assume that this fall will not be reversed any time soon, whatever Brexit's outcome.Oversupply of Hotels and Rooms in the Middle East: In the Middle East, in particular Dubai, hospitality players are dealing with a 'self-inflicted' challenge, namely substantial oversupply. It is true that, to date, the region has been outstanding in constantly re-inventing itself to generate demand, having successfully positioned itself as a destination and transportation hub between East and West. However, despite all the hopes placed on Expo 2020 and the 2022 Qatar World Cup, hoteliers and restaurateurs are facing some harsh realities right now; given the oversupply, advisory firms are constantly revising performance figures downwards. To some extent, this is a sign of a maturing market. As such, we can expect more owners to begin taking things into their own hands and increasingly opting for franchise agreements to try and gain back control and to drive the bottom line themselves.Artificial Intelligence and its Effects on Human Capital: The application of data and artificial intelligence will continue to be explored aggressively in the pursuit of better yield, more efficiently targeted customer segments, and the ability to create more profitable F&B promotions. We also expect to see a continued exodus of expensive western expats in the Asian and Middle Eastern markets as companies seek to both leverage technology for lower level roles and to promote home-grown local talent into senior positions. Contrary to the situation in Europe, the strong growth in visitor numbers and supply in markets such as Japan is forcing countries to review their immigration policies and begin to loosen the rules in order to service new hotels with sufficient staffing levels.Minimalistic and Humble or Extravagant and Luxurious? Humble and smart concepts will outpace extravagant luxury in growth. We are NOT predicting the fall of luxury operators but rather that smart money is likely continuing to be funneled into "no frills" concepts that stand out through their solid, reliable product offering. Think 'lean luxury' at Ruby Hotels in Germany, R.evo in Austria, private equity darling B&B Hotels of France, or Emaar's Rove concept.Offshoots of Hospitality in Other Disciplines: We are also seeing the worlds of hospitality and serviced-offices morphing with the rise of local and regional players challenging WeWork in the co-working space. Think Design Offices and Kafnu. These brands are incorporating Food and Beverage as well as Meeting and Events and even accommodation, thereby providing more competition to the lodging and restaurant sectors. Expect to see more hotel groups desperately trying to get a piece of this action in the very near future.Increased Hospitality Footprint: "Footprint," the new buzz word that can be interpreted in multiple ways. First, owners and operators will continue to look much more critically at their space utilisation and potential untapped revenue streams. Think more retail-led environments and significant improvements to hotel F&B concepts to lure in passers-by, as well as much more shared-spaces to enliven public areas and generate additional revenue. Second, owners and operators alike will re-evaluate more carefully their "local footprint," i.e. their specific micro-location in town centres, tourist hot spots etc. They will cleverly outsource their hotel services to neighbours and local businesses and to once again become a "community hub" (think Accor). And third, travelers and consumers will continue to become much more conscientious of their own socio-ecological footprint. They will more critically evaluate their choices in regard to food, transportation and lodging.As a consequence of all of the above, owners and operators will likely look for different talent. Flexibility, creativity and "taking ownership and initiative" will become much more valued character traits. Cross-industry exposure is equally sought, for example in Food and Beverage, but is not without its challenges as many companies struggle to successfully integrate these 'outsiders.'Diversity will remain high on the agenda in 2019. At the General Manager level in particular, many hospitality organisations are seeking ways to actively build pipelines of female General Manager candidates and will ensure that one of every final two candidates for an open position is a woman.Companies will also want to re-evaluate their compensation schemes and salary bands. If hiring from the retail sector, for example, hospitality companies may well find that their current compensation packages are not sufficiently attractive to engage the right talent. At the "no frills" end of the market, many lifestyle hospitality concepts are known for offering 'up-and-coming' talent the chance to prove themselves -- many of them still under the misguided impression that because they have a unique "cool" product offering and culture they can offer below market salary packages. We are beginning to see a mind shift in the younger generation of employees as they "speak up" and point out that they are being given significant responsibilities which are often not commensurate with their financial packages. This generation is also well aware that the concept of job security that their parents may have once enjoyed does not apply in the current world of work. With the amount of ongoing M&A and consolidation activity in the industry, no one's position can be taken as guaranteed.
Article by Thomas Mielke

Time to Speak Up: The Achilles Heel of Industry Corporate Governance Structures

AETHOS Consulting Group ·21 January 2019
We are living in politically interesting times; what happens across the globe in the various Houses of Parliament and the Houses of Representatives has obvious and direct consequences on the economies and us "little people." Avoiding any political discussion, what we witnessed in 2017 and 2018 on both sides of the Atlantic Ocean, for example, can be described as a political farce - marred with false truths, accusations and superficial and unchallenged "debate." The word debate is within quotation marks as the alleged "deep conversations" we have been listening to really just resemble political bolstering without engagement of any true discussion or argument.[?] argument [?], noun - An exchange of diverging or opposite views whose origins come from Latin argumentum, from arguer, to make clear, to prove, to accuse.It thus is rather surprising, and unsettling, how little we tend to speak up. How quickly we all seem to resign to new-found realities even though what happens has sometimes negative impacts on us, and that given due participation, engagement and challenge, could have been avoided altogether.This is no call for rebellion, but I cannot help but draw parallels to the big and small corporations and entrepreneurial firms in the hospitality industry and their leadership structure with corporate governance models. In theory, the right structures and policies are all in place to help regulate decision-making and successful leadership. Yet, time-and-again, I see that hospitality organisations are coming to us for help: from replacing seemingly unsuccessful leadership figures to rejiggling organisational structures and governance models, and/or re-aligning compensation and benefits schemes to help drive and incentivise the right behaviour. However, in a surprisingly large number of cases, the issue does not lie with leadership, the governance or structure of an organisation, nor with the benefits scheme in place. Instead, the issue is often more deeply routed within the organisational culture.Whether we are talking about a nation, a corporation or a small start-up, if the elected leadership is not challenged or upheld to its formal duties, infrastructural aspects may either start to derail or fractures appear which are fed by a growing disgruntlement with certain behaviour or decision-making.It is easy to find the fault in the person at the helm of a nation or an organisation, to brandish this particular individual as the "trouble-maker" or to call for new leadership to step in on the basis that the incumbent has not fulfilled their promises. But we are forgetting that there is a "collective responsibility." As we are seeing in the current political landscape, leadership is in fact quite often following through with what they set out to do in the first place. We have just not fully listened or considered the consequences of what has been suggested as the course of action; nor has leadership clearly pointed it out to us. Thus, there appears to prevail a culture defined by superficial and oft meaningless conversations. Yes, of course there are also voices of concern or, at times, a challenge - yet, it seems that at the first hurdle, people are simply giving up.So, putting politics aside, what does all this mean for the leadership of hospitality organisations across the globe? What can be better in 2019? Knowing that employees seemingly hesitate to voice their opinion loud enough, leadership should proactively, and regularly seek their thoughts and views. This does not mean to delegate responsibility - it means that, just as in any democracy, we are reminding ourselves that government is "by the people." Active participation and engagement is therefore a must, and not just an option.Town hall meetings, which unfortunately seem to have gone out of fashion, are in fact a perfect platform for leadership to engage with employees in a deeper dialogue and proper discourse about decisions, actions and strategies. The words of many grandmothers and grandfathers will ring true to most of us: "if you do not speak up, you do not have a voice - nor do you have a right to complain." So, let's remind ourselves that a culture defined by superficial dialogue and complacency goes against this old truth. Staying silent is, rightly or wrongly, equated to agreeing, to approving of what has been done. So, let's all resolve in 2019 to speak up.

AETHOS Consulting Group Shares 2019 Insights for Human Capital in Hospitality: Challenges in Finding Labor and Artificial Intelligence Among Trends in the US

AETHOS Consulting Group · 3 January 2019
1. Challenges to Finding Labor for Hospitality ServicesLabor Skilled to Meet Current Travel Trends: AETHOS New York Managing Director Keith Kefgen weighs in that although lifestyle and wellness hotels have become all the rage, as every major chain is now involved, the real issue is the lack of experienced talent. "We have a plethora of mandates that demand previous 'lifestyle' and 'opening' experience. The fact is, there are not enough experienced people to fill all these roles. What happens? Companies take risks on under-qualified people, who get in over their heads.Look at the turnover rates at the well-known lifestyle companies: Schrager, Kimpton, Standard, Proper and the like - It is a veritable turnstile. More will have to be done to educate and train young managers in this arena.""And today, travelers are expecting hotels to be sensitive to wellness issues, (allergies, spas, yoga, healthy food, workouts) and so forth. Companies that can be at the forefront in the wellness arena will have a real competitive edge."Issues Restricting Labor: Due to immigration policies in North America, "finding labor will be a significant issue impacting hotels and restaurants, particularly in the United States," says Matt Peterson, Managing Director of AETHOS' office in Los Angeles. "Additionally, and with the rising costs of minimum wage and labor as a whole, now it is more important than ever to retain talent. The obvious response is to increase compensation, but it is just as important to train, mentor and provide career progression for employees."2. Use of Artificial Intelligence in the Hotel Hiring and Experience OfferingsDavid Mansbach, also Managing Director in New York, is also quick to discuss AI and its impact for human capital in hospitality." AI is the buzzword for 2019. Artificial Intelligence and machine learning is still so new; we have not yet even entered into the first inning. But for the foreseeable future, the hospitality industry should continue to embrace human interaction with the customer.""As for 'Blockchain,' get familiar with this if you are at all involved in strategy decisions." Adds Mansbach, "Blockchain technology is evolving rapidly and will change many areas of the hospitality industry including human resources, cyber-security, healthcare and the securitization of customer information."3. Revenue Management SkillsMansbach also emphasizes revenue management as a key skill set for owners and operators in all facets of hospitality moving forward. "Revenue Management Strategies are critical. Hotel owners and operators should seek the top 1% of organizations that lead in revenue management strategy and philosophy. Owners truly recognize the significance of investing in human capital and technology to win."Andrew Hazelton, Managing Director of AETHOS's office in Philadelphia sees a blending of sales and revenue management skills necessary for the next generation of "Chief Commercial Officer." "Within the hotel industry the lines of sales, marketing and revenue management will continue to blur and hotel organizations will move to a model where such functions merge together under a single point of leadership - ultimately making their businesses more efficient and effective. This is truly helpful as organizations drive toward more personalized services to meet the wants and needs of customers."4.Experiences and TechnologyIn addition to the lodging sector, AETHOS observes momentum in the restaurant and food service disciplines as well as the cruise sector. Andrew Hazelton notes, "Competition at sea will continue to be tight as demand for cruising will increase much like it did this past year. But North American-based companies such as Royal Caribbean and Carnival are not only focusing each other's customers, they are also keen to pursue those of Marriott and Hilton. With a robust pipeline of new ships to come on line these next few years, the cruise industry will continue its mantra of 'going big' in 2019, while striving to focus on 'customer experience' across all segments/types."Hazelton continues, "As for the restaurant industry, specifically the quick service restaurant segment (QSR), this sector will continue to focus time, energy and money into technology, marketing and loyalty programs. Over the last few years, companies such as Starbucks have led the push for further leveraging mobile technology and developing a 'true' loyalty program. Others will have to continue to follow."About AETHOS Consulting GroupAETHOS Consulting Group is a global advisory firm serving the hospitality industry. The firm enhances value for its partner organizations via access, know-how and fresh thinking. Core competencies include executive search, compensation consulting, business strategy and psychometric assessments. The firm is designed as a single partnership operating from ten locations in North America, Europe and Asia Pacific. www.aethoscg.com.

On the topic of embracing charisma, not stoicism

AETHOS Consulting Group ·19 October 2018
Noted hospitality thought leaders and corporate governance/ performance management experts Kefgen and "Dr. Jim" share common management challenges while providing time-tested, field-tested or just simple "quick-fix" ideas to keep professionals inspired, effective and successful.Some of the most memorable and effective mid-managers and senior executives utilize leadership charisma to bolster their personal brands, build alliances, gain buy-in from team members and maximize their influence internally and externally to their organizations. But some of the most charismatic leaders have used these skills to wreak havoc. Think of Charles Manson, Adolf Hitler and David Koresh, to name a few. Today, many leadership pundits promote a style of "servant leadership" and empathy that better serves leaders in a modern world. In "Good to Great," author James Collins calls it Level 5 Leadership. But all too often the "command-and-control" management style still dominates in many workplaces.This more transactional and authoritative approach is both outdated and counterproductive in today's organizational environments. Aspiring leaders are encouraged to reject such management styles that undermine collaboration, flexibility, inspiration and humility. Rather, we encourage others to seize the myriad benefits linked to genuine leadership charisma. Learning, practicing and embodying three specific attitudes or behavioural principles will help to get you there because they provide a tactical definition of what leadership charisma means in practice. They seem simple in principle but can be difficult to exhibit consistently without some conscious effort.Be mindful of and practice three core attitudes in your interactions up and down the organizational chart and with external stakeholders:Attitude 1: Be engaged with those in front of you. The term "engagement" has somewhat staled, but here it means showing genuine interest in the success of the organization and individual team members. To clarify, interested and engaged people do not multitask, fidget with their smartphones or otherwise dilute their attention and participation during interactions and meetings. Instead, engaged leaders actively listen, proactively comment on others' contributions and offer constructive feedback or insights to others' questions.Attitude 2: Be solution-focused with those relying on you. Naysaying is easy to do--but undoing its often ugly and lingering effects is not. Using language and framing your contributions and feedback in constructive and supportive terms typically has a "charismatic effect" on others. People like, respect and gravitate toward those who help to build momentum for success versus slowing it down.Attitude 3: Be relatable with those around you. People want to be heard and understood, but active listening itself is not always enough. Leaders must communicate and interact in ways that best match the target audience. Showing humility, spontaneity and openness equates to being relatable. And constituents bestow credibility and trust to those with whom they can relate.Leadership charisma does not mean being "larger than life," a "dynamic speaker," or having a strong "executive presence." Rather, leaders fundamentally stand out in their ability to focus on others and not on themselves. This "service to others" is at the core of genuine charisma--it is inspirational in its message and its ability to bring people together to realize a common goal and share in that success. Charisma coupled with substance and empathy is a very powerful tool.

The 'Hack' Leaders Should Use In Today's Quagmire Of Ambiguity

AETHOS Consulting Group ·11 October 2018
Common sense dictates that the more information people have the more informed decisions they will make. This reasoning works flawlessly with problems or issues that are composed of well-defined "cause-and-effect" relationships. Of course, business in the real-world does not get done in sterile environments but instead takes place in dirty test tubes. Here, critical information in an equation is neither always known nor can be properly measured.Indeed, this era of rapid technological advances and marked disruption often brings problems that are poorly structured or involve non-routine decisions, as well as challenges with no real precedents or plagued by conflicting facts or inadequate information. Also confounding this "quagmire of ambiguity" are motivational factors, including the perceived importance of the decision or its potential impact on the decision-maker.For some time now, tech firms, social media platforms and marketing companies have positioned "big data" as the silver bullet of problem-solving. Big data is to contemporary decision-making what "training" was to HR functions in the 1980s. Make no mistake, we agree that more data is always more useful than less. But, this assumes that data is synonymous with information or insight - and that often can be a tenuous proposition. Data must be interpretable in order to be actionable and by extension to be useful and by further extension to be profitable."We agree that more data is always more useful than less. But, this assumes that data is synonymous with information or insight - and that often can be a tenuous proposition."Having enormous bytes of ambiguous data is arguably no better than having nothing at all. In fact, having data can be considerably worse if it leads to the wrong inferences and hence, ineffective decisions. We are referring to a common trap that has been known to statisticians for decades, i.e., large samples of data can make random or fluke occurrences appear meaningful. Dr. Paul Meehl - a famous Professor of Psychology at the University of Minnesota who was within the top 100 most cited psychologists of the 20th century -- put it another way when he cautioned that "everything correlates to some extent with everything else". Therefore, overblown or even illusory trends are lurking about in all samples of big data.Although big data might not be the silver bullet for decision-making in today's "quagmire of ambiguity," new research using computer modelling is validating a simple "hack" voiced in interviews with top leaders in the hospitality industry. These leaders have independently touted the utility of a "Personal Board of Advisors (PBA)" throughout their careers and current problem solving. The PBAs created by these leaders tended to have the same general characteristics - they were carefully selected to be (1) small in the number of advisors selected, (2) composed of individuals with markedly diverse skill sets, e.g., some members were sports coaches and economics professors, and almost always the PBA included the leader's spouse, and (3) the advisors were independent from the organization to guard against group think, internal politics, and the blind-spots that come when everyone is watching the same proverbial ball. And plus, this impartiality enabled advisors to be completely candid, honest, and focused only on the leader's best interests. Having access to such a resource also protected leaders from the inherent loneliness, heaviness, and isolation that comes with leadership roles.That said, computer modelling by renowned psychometrician and computer scientist Dr. Rense Lange revealed some other critical nuances when leaders put their PBAs to work. Here we are interested in dynamic decision-making, where it the intent is to keep gathering information until one of the two solutions can confidently be rejected. For the purpose of the computer simulations, this approach was applied to the situation where an executive needs to gather from his/her colleagues or staff additional information to reject one of two, clearly different alternatives, i.e., it does not resemble a 50-50 coin flip. Rather, the scenario is one where a reasonable amount of statistical risk is acceptable, but the time available to consult staff members is limited. Accordingly, Lange compared the case where two outcomes (called "no" vs. "yes", or "low" vs. "high") are thought to occur with probabilities of 20 vs. 80% - and this situation was compared to the more extreme case where these outcomes occur with 10 vs. 90% likelihood, or the less extreme case of 40 vs. 60%.t was built into the modeling that additional consultations would be sought until there was a 90% certainty, i.e., the consultation process stops when it is clear that the outcome is either "low" (its chance of occurring is 20% or less) or "high" (its chance of occurring is 80% or higher) - with additional information being sought otherwise. Throughout, it was also assumed that the likelihood of making an erroneous final decision (i.e., we label being "low" as "high", or vice-versa) is allowed to occur in at most 10% of the cases.These simulations showed that, in practice, a leader only needs to consult at least three (3) advisors but very rarely no more than seven (7) advisors to make the most reasoned decisions. Unlike what is assumed in this environment of big data, more data is not necessarily better. Moreover, the advisors in the computer models were consulted in a sequential, cumulative way, versus leaders taking a poll or allow the advisors to deliberate collectively akin to a trial jury. That is, leaders should consult sequentially with each advisor one-on-one and without the advisor being influenced by feedback from any previous advisors.In short, there is both an art and science to gaining and leveraging advice... and it is a tactic and skill that helps to define great leadership.
Article by Andrew Hazelton

Reimagining Sales Leadership with Josh Lesnick, President & CEO, Associated Luxury Hotels

AETHOS Consulting Group ·21 September 2018
Lesnick is no stranger to leading complex global teams, having recently served as the Executive Vice President and Chief Marketing Officer of Wydndham Hotel Group. Given the hospitality industry's ever-changing landscape, AETHOS wanted to gain insight about how Josh successfully navigated the acquisition of a highly-respected brand, simultaneously created a 'synergistic' culture between WorldHotels and ALHI, as well as preserved the best of the 'individual' cultures upon each was founded. Our conversation culminated in learning how Josh best develops and leads a sophisticated and truly global sales force. Spoiler alert - there is some reimagining ahead.Since taking the helm, Associated Luxury Hotels has made a lot of positive noise with the acquisition of WorldHotels, growing the member portfolio for Associated Luxury Hotel International (ALHI) and making several executive-level hires. What are you building all this momentum towards?Our mission is to be the voice and trusted resource for independent luxury hotels for both consumers and meeting professionals. Rather than strictly being a membership company that collects monthly dues, our goal is to be a topline revenue generator for our hotels. With recent acquisitions in the industry, such as Marriott of Starwood and AccorHotels of Fairmont, there is an unprecedented consolidation of hospitality brands. However, an interesting statistic is that two-thirds of all hotels around the globe are independents and not part of big brands. This gives us a great opportunity to provide many of the benefits that a big brand offers without requiring our members to sacrifice their independence.To achieve this, we are very focused on bringing in best-in-class talent to help us expand WorldHotels and grow the ALHI portfolio. This is the first-time that hoteliers are running WorldHotels, which was previously owned by a technology company. The difference now is that our leadership team truly understands the importance of a customer-centric approach in driving revenue for our properties. Our aggressive growth strategy is completely customer-driven.How do you best assess executive-level talent for competency and cultural fit, specifically when it comes to leaders across the sales, marketing and commercial functions of our business?When assessing a candidate, I place an enormous value on a person's cultural fit and what job they may have in the organization in 2-4 years. I rarely hire someone just for a specific role as the market is so dynamic today that you need that kind of flexibility and depth within your organization. I also place a very high value on people who are able to inspire other people and who can think on their feet, are not afraid to propose bold ideas, and who challenge outdated ways of doing things.With two different but complementary business units, how have you and your leadership team created a 'synergistic' culture between the WorldHotels and ALHI while simultaneously maintaining some of the 'individual' cultures each was founded on?Since the acquisition of WorldHotels, we've operated ALHI and WorldHotels as separate entities. However, this is about to change as we are now very focused on more closely aligning our two two sales teams to drive more revenue for our member hotels. We have already begun to roll out shared services in areas such as finance, portfolio development, and human resources. Striking the balance of ensuring you take the best of these two long-standing companies and supercharge it with new and fresh ideas is one of the hardest things you can do as a leader. It requires open communication and a willingness to continually listen and push associates to think differently and share their ideas and concerns.As a leader of a substantial global sales force within a highly 'customer-centric' environment, how do you promote employee engagement to best ensure success for your business?At the end of the day, I believe all associates want to have a voice and want to have a say in their company's success. In my prior role, I had a very large team in one location. Several times a week I would have my assistant block a few hours and do "walkabouts"-simply walk through the department and casually engage associates to see what they were working on and get their feedback. I remember an instance where I startled one of my employees working in her cubicle. She told me the last CMO didn't know her name and never seemed interested in what she was working on and how we could make it easier for her to do her job. Several people advised me to not over expose myself and limit access intentionally. Personally, I think great leadership is exactly the opposite. Great ideas come from all levels of the organization and getting unfiltered honest feedback is critical in today's rapidly evolving workplace and markets. decisions. It's easy to get insulated and loose touch and you need to work to not fall victim to that way of thinking and operating. An approach like this also really starts to tear down the silos and the walls and gets people to start to share the ideas they have had but never had a forum to exchange. Without a doubt, I get my energy and motivation from associates and exchanging ideas.Knowing that the hospitality industry is 'high-touch' and ever changing, what advice do you have for future sales leaders to prepare for running the business 10-15 years from now? Any words of wisdom from your own experience?Make sure to surround yourself with people who are open, honest, and flexible. Strike a good balance on using data but also talking to your employees and customers to make sure you use the information you have in a way that creates value for them. Be authentic and establish who you are, the culture you want, and then spend the time to ensure people are all driving to the same end game and goals.
Article by Thomas Mielke

Hospitality & Technology - Innovation is Being Stifled By Lack Of Leadership

AETHOS Consulting Group ·21 September 2018
Technology-enabled interaction has become a "must," not a "nice to have," and guests expect to be engaged and recognized at an ever more personalized level--it is no longer just a marketing gimmick. However, sitting down for a conversation with Klaus Kohlmayr, chief evangelist at IDeaS Revenue Solutions, he confirmed that the sector is playing catch-up. We agreed, gutsy leadership is needed to bring the technology departments at hotel organizations worldwide into the 21st century. More importantly, we agreed that the root of the problem lies in out-of-date software, systems and infrastructure. Too many hotel operators are running on archaic platforms and trying to compete with a horse-drawn carriage in a Formula 1 race.Dealing with Legacy Systems: Leadership Is Asked to Take Responsibility"Technology innovation has never really been the strength, or focus, of the hotel industry," said Kohlmayr. Most of us have probably never thought about it, but the fact of the matter is the majority of branded properties run on reservation systems with core architecture that is over half a century old. Kohlmayr challenges the industry for only paying lip service to technological innovation and said, "Artificial Intelligence, natural-language processing and blockchain make for good marketing copy, but ultimately, most hotels cannot even properly identify and service their most loyal guests walking into their property." In fact, a recent study by industry startup hospitalityPulse found that only five percent of guests actually end up in the room type they booked.Old and out-of-date technology platforms hinder and slow down the progress of an organization and can reduce its competitiveness. "Widespread adoption of true cloud-based platforms is, for example, far from being best practice," said Kohlmayr. It seems almost inevitable that hotel companies reach sooner rather than later a point of no return where "legacy systems" are crippling organizations with only one way out--to cut one's losses and rebuild from scratch. To get ahead of the game, it is about time that senior company leadership makes some tough decisions.Like in many situations, though, it is easy to get bogged down by the day-to-day needs of an operating business. We therefore brainstormed what advice we could give executives who want to drive change and innovation -- this boils down to:Avoid complacency at a departmental level, whilst ensuring the right people are put in charge who understand a consumer-centric technology strategy. "I remember a conversation with a senior executive of a global hotel operator," said Kohlmayr. "The company was about to embark on a refresh of its 40-year-old (!) central-reservation platform, and I questioned the wisdom of spending millions on putting lipstick on a pig." The answer Kohlmayr received was shocking, albeit indicative of the industry's lack of appetite to drive innovation. "Uptime is 99.9 percent, and we have a large volume of transactions this platform handles well, so why replace it?" questioned the hotel executive.Increase awareness at an ownership-level. "Even though institutional investment, especially in the US, has accelerated, let's not forget that most hotels around the world remain owner-operated--and many are either family businesses or small private groups owning a handful of units," said Kohlmayr. Mostly, when deciding where to spend the hard-earned capital, technology comes last. It is understandable that the perceived need for a sophisticated system, built on the latest technology architecture and with all the bells and whistles, is low when the system bought many years ago does the trick. Yet, a mentality which says it is "good enough" is not going to convince clientele which has become much more demanding and accustomed to technology infiltrating every aspect of their lives.Take advantage of new, modular technology architecture. Technology has evolved to a point where it doesn't cost an arm and a leg to replace a system. Companies like Amazon, Google and Microsoft, with their respective clouds, the advent of APIs, which make it easy for systems to communicate with each other, and modular designs around microservices make it increasingly affordable to replace outdated technology. These new, open-minded, next-generation software-as-a-service providers allow a hotel to pick and choose the right "services" fit for their needs and budget and keep disruption to the business during implementation at a minimum.Kohlmayr and I concurred that tactical managers focused on short-term fixes are far too often in the driver's seat, frequently forgetting about, or completely ignoring, the changing needs of tomorrow's consumers. "Yes, some very old systems and platforms still work to this day and they are good at handling large volumes of transactions," said Kohlmayr. "But they are inflexible, extremely hard to integrate and there are not many people around anymore who know how to maintain them."It is easy for senior leadership to pass the buck for driving technological change to their managers. Yet, by doing so, many are unwillingly stifling innovation. But progress is difficult to stop, and rising customer expectations, fostered by the mobile revolution, together with online travel agencies spending billions on engaging and connecting with consumers, are sure enough exerting extra pressure on the industry to innovate. Those organizations and leaders willing take the plunge, deciding to strip out their old systems to put in something new, will quickly come to recognize that "it does the job" is not the same as "it is fit for purpose"--the former is a statement of a complacent leader, the latter that of a forward-thinking senior executive who understands that technology should be tailored to an organization's strategies and goals.On that closing remark, it may be worthwhile to draw the attention to what innovative hotel company Yotel has recently announced. Appreciating that, to stay ahead of the game, external help might sometimes be needed, its CEO Hubert Viriot was quoted commenting on the brand's collaboration with a technology start-up incubator, "[...] our business is to manage hotels, not to spend the entire time figuring out new technology. We put innovation at the core, but to be effective, we wanted a partnership with someone that does this as a business" (see full article here). Since new ideas constantly pop-up, across all divisions of a hotel company, Viriot highlighted the benefit of having an external expert telling you what you might not know. Ultimately, though, and in line with what AETHOS discussed with Kohlmayr, he agreed that success depends upon the senior management team's involvement - and for the C-suite to acknowledge this responsibly.

Hospitality Leadership Solutions Series: Is Self-Confidence Friend Or Foe?

AETHOS Consulting Group ·19 September 2018
Self-confidence can be a friend and foe to emerging leaders and seasoned executives alike. In many cases, leaders must think and act against popular wisdom, and thus must exhibit confidence and grit in the face of severe--and even very public--opposition. Of course, self-confidence can also lead one down a very dark path of narcissism, nepotism and grandiosity if untampered, much less uncontrolled. As Herbert Joly, CEO of Best Buy told us, arrogance is the foe of self-confidence, not its equal. A healthy ego comprised of a sense of self-competence and self-esteem is important, but it is invariably dangerous if it lacks a corresponding sense of introspection.Ego is a natural, necessary and constructive part of leadership, but it must be balanced with humility and realism to be focused on bringing positive impacts. In our world of workplace psychology, we call this collective and balanced concept of ego "self-efficacy." This is a term for a combination of interrelated constructs that include drive, motivation, emotional intelligence, personal control and accountability. Fortunately, it can be fostered via three simple tactics:Reflection before action: The human brain is hardwired with a bias to act impulsively and reactively in favor of self-interests in a given moment. But leadership requires challenging personal assumptions and thinking beyond oneself and the moment to enact decisions that align to a defined strategic outcome--or greater good. One of the easiest and most effective ways to combat internal biases for self-gain is to ask oneself this simple question before taking important business actions: "How will this decision affect my team and the broader business?"Outside wisdom compensates blind-spots: Successful leaders know the benefits of a "personal board of advisors" when facing challenging issues. These are informal groups that are carefully selected to be (a) small in nature (three to seven members); (b) composed of individuals with markedly diverse skill sets; and (c) independent from a leader's organization to guard against group-think and internal politics. This impartiality enables leaders to gain completely candid, honest and balanced feedback that transcends the inherent biases, limited life experience and specific skill sets of individual leaders.Give daily gratitude: Leadership is a process of symbiotic success, i.e., leaders focus on making others successful in their roles and careers, and in turn, motivated teams work diligently to bring a shared strategic vision to life and make their leaders look good. Acknowledging this symbiosis via genuine recognition (public and private "thank-you's" to individuals and teams) reinforced with occasional celebrations of successful teamwork and meeting tangible targets go a long way in gaining others' currency in the form of their engagement, loyalty and accountability.Contrary to the stereotypical image of the big-ego CEO portrayed in the media, the best leaders simultaneously exhibit a marked degree of achievement-orientation on one hand, and empathy and humility on the other. Self-confidence is a foe when it serves only you; it is a friend when it fuels service to others.(First published in Hotel Management, August '18)
Article by Andrew Hazelton and Thomas Mielke

Hospitality Leadership Series On 'Professional Visibility': The 3 Cs of Executive Presence

AETHOS Consulting Group ·19 September 2018
Executive presence undoubtedly factors in any equation that predicts who gains visibility and who doesn't. It appears that people make first impressions of others within the first 11 seconds, according to a 2009 study published by neuroscientists at New York University and Harvard University. Executive presence can nevertheless be tricky to define, but people seem to know it when they see it. Actually, it's probably more accurate to say that people know it when they "experience" it. Moreover, it matters that others do experience it, since some research suggests that, on average, executive presence accounts for 25% of what it takes to get promoted.Alex Stadlin, the international-focused Chief Operating Officer at Playa Hotels and Resorts, pretty much cut to the chase with his definition that he shared with us several years ago - i.e., executive presence is "confidence without arrogance and an ability to communicate harmoniously." His view parallels other definitions we've heard from HR pros, hiring managers and C-suite execs over the years. It's also not far off from the results of a survey on executive presence that found 60% of senior executives cited "gravitas" (i.e., projected confidence, poise under pressure, and decisiveness) as its core characteristic, with 20% of executives also identifying good communication skills and only 5% of executives citing professional appearance.But, based on this collective feedback over 15 years of dealing with hospitality power-brokers, we humbly amend Alex's nice synopsis by adding that executive presence must have substance to complement the style. In other words, we propose a C3 model:Credibility: there's no executive presence without being in command of your material.Confidence: there's no executive presence without presenting material in a manner that conveys comfort with the domain expertise.Charisma: and finally, there's no executive presence without connecting information to the needs, interests or value set of the audience, i.e., making you and the material relevant and "relatable" (also see our previous pulse on this topic here).The quickest way to present material in a way that's irrelevant and unrelatable is to speak deliberately in overly "smart" or "sophisticated language." Such a person is called a "sesquipedalian" - and they usually don't connect well with audiences who simply want clear and concise communication. This doesn't mean words don't matter. To be sure, nearly 60% of respondents to the executive presence survey felt that unprofessional or uninformed speech is a critical detractor.In short, what we've heard from industry leaders and the available science on this topic is that executive presence doesn't equate to charm, status or natural intelligence. Rather, it reflects an individual's balance of the three above characteristics in the context of communicating or presenting, especially under pressure. The best part is that each component in this model can be learned - so get going.

A Welcomed Metamorphosis of the Chief Human Resources Officer Function

AETHOS Consulting Group ·29 June 2018
Profiling the Chief Human Resources Officer: A New Type Of 'Experience Engineer'Following a breakfast meeting with a senior executive from the UK restaurant industry, my attention was drawn to the fact that a small number of Food & Beverage businesses has started to hire marketers for their most senior human resource roles. Although this is not yet an overwhelming trend in hospitality, I wondered whether this approach made sense from a competency perspective. And, if so, would others follow suit? Could this be such a "butterfly moment" - one that defines roles to come as well as HR and talent management best practices for the greater hospitality industry?To address these questions, a gap analysis was needed which looks at the core competencies of senior hospitality executives holding leadership functions in marketing and compares those to the success profiles of human resources executives. Some intriguing insights emerged. Instead of looking at personality traits, AETHOS' proprietary psychometric assessment - 20|20 Skills - provides an overview of and benchmarks an individual's ten core competencies that predict job performance specifically in service-driven cultures:Execution skills - measuring Self-effectiveness, Loyalty to Company, Process Orientation and Service Orientation;People skills - measuring Team Building, Sense of Humour, Leadership, and Sensitivity to Diversity;Cognitive skills - measuring Creativity and Problem Solving.The aggregate 20|20 Skills profiles for HR versus marketing show both function leaders are well matched on Leadership, Creativity, Self-Efficacy, Sensitivity to Diversity, Humour and Service Orientation. Both the HR and marketing executives profile here as 'achievers', i.e. A-players - and strong generalists - compared to the hospitality industry's general success profile.Seemingly, then, there are many transferable skills between the two roles. Yet, there are also a few nuances worth exploring. Firstly, marketers are scoring higher on process orientation and problem-solving and therefore depict stronger analytical acumen as well as a more metric-driven mentality. In comparison, HR is slightly less rigid in its thinking and includes more often gut-reactions into its decision-making process. Secondly, marketers are scoring lower on company loyalty and thus more entrepreneurial and opportunistic. Their attitude is to fail as quickly as possible, learn from mistakes and move on and innovate. HR, on the other hand, is more concerned about long-term loyalty and engagement.At face value, some of these results may surprise - for example, one might have assumed that marketers should be less process-driven and depict a stronger creative streak with HR executives being the ones concerned about policies and procedures. The fact of the matter is, however, that in today's world marketing leaders are more aligned to quantitative problem solving and strategy (e.g. digital marketing, demand generation) and less about creative endeavors per se. Also, with the split of the traditional HR function, now being much more fragmented into administration and payroll, recruitment and training as well as retention and engagement, human resources executives have become more nimble and adaptable. Analytical and Metric Driven - New CHROs Focusing on Aligning Business Strategies to People PracticesHaving compared the success profiles of marketers with HR pros, one might suspect that - given the overlap of core competencies - companies that have started to recruit marketers into HR roles are on to something. At least it makes conceptual sense, because both marketers and human resources professionals are arguably 'experience engineers', i.e. executives who are concerned about driving and sustaining loyalty and engagement (the difference is that the marketing leader does so externally and the HR professional with a focus on the internal stakeholders).Assuming that the recruitment of commercial marketers for CHRO positions is one of those "butterfly moments," I thought about the possible consequences for the dynamic system, i.e. the organisations themselves.As the psychometrics suggest, one possible implication of this approach might be that HR departments will become more data-driven or even formulaic - with the new type of leadership increasingly or exclusively motivated by outcome metrics and business cases, possibly at the expense of relationships or people-first culture-building. Organisations might therefore run the risk of 'commoditising' the HR function, unless there is a conscious effort to maintain and foster a service-driven mentality. Given the analytical background of marketers, and their tendency to think in business metrics, one might also expect such new CHRO profiles asking for bigger budgets to be spend on testing, analysis and other initiatives to optimise people metrics for business outcomes.Commercial CHROs will therefore add the most value to organisations that strive to make better business sense of employee engagement, guest satisfaction, loyalty programs etc... A word of caution goes to those companies whose HR-departments are solely expected to (re-)define and/or hone brand loyalty and employee retention, and whose HR executives are supposed to look after the status quo and not 'rattle the cage'. Yet, in light of the general market conditions and the hospitality industry's competitiveness, company leaders would be unwise to pursue such talent management and HR strategies which are centred around the unwavering believe in predictability and business certainty. The truth is that today's business world is one of rapid, and chaotic, change. Commercial CHROs should be best suited to weather the proverbial storms.

Profiling Successful 'Chief Commercial Officers': the Rising Role Driving Alignment and Enterprise Value

AETHOS Consulting Group ·14 June 2018
The Role of the Chief Commercial OfficerOrganizations are increasingly handing their CCO's global responsibility for four major verticals - global sales, revenue and distribution, e-commerce, as well as brand and marketing communications. By moving away from a traditional structure where both the sales and marketing functions are bifurcated and instead bringing the functions together under a single point of leadership, businesses are more efficiently and effectively connecting the dots and thus aligning priorities and objectives. In doing so, the CCO drives an organization towards the personalized wants and needs of its customers. It also gives CEOs another informed voice to help shape an organization 'big picture,' as well as a new right-hand leader for all the company's consumer-facing activities that stem from the strategic vision. The CCO is the new, holistic internal strategist and external spokesperson that CEOs lean on for how the company should interface with its customers to drive growth.Defining the Chief Commercial Officer ProfileUndoubtedly, CCOs need a threshold of experience to be successful. They ideally are well-versed in all facets of the commercial side of our business and have the business acumen to develop and execute strategic initiatives across multiple disciplines and layered stakeholders. Yet, like any senior level role, having the optimal mix of core competencies is imperative - albeit not always recognized or well defined. Leveraging AETHOS' proprietary psychometric assessment - 20|20 Skills -- we can gain insights beyond traditional and outdated personality testing to measure ten core competencies that predict executive-level success. In particular, these ten competencies, attitudes and knowledge areas define three high-level dimensions of performance:Execution skills - measuring Self-effectiveness, Loyalty to Company, Process Orientation and Service Orientation;People skills - measuring Team Building, Sense of Humor, Leadership, and Sensitivity to Diversity;Cognitive skills - measuring Creativity and Problem Solving.We calculated the aggregate 20|20 Skills profile for an elite sample of "superstar" CCOs for which AETHOS had first-hand knowledge of outcomes. The result is a data-driven success profile that hospitality-driven companies and cultures can hire and train against.Specifically, we found that effective CCOs tend to be strong generalists across Execution, People and Cognitive skills and are seen to be highly versatile. They are characterized by high Service Orientation, strong analytical and numerical Problem Solving, ample Humor that promotes resilience and perspective, as well as Leadership that is grounded in a "servant" mindset - i.e., those who define personal success as their ability to make others successful. They are also self-driven, strategic individuals with a good capacity for team-building, respect and sensitivity to others. It is worth noting is that this CCO profile mirrors that of effective CEOs. They too have the strong generalist skill-set, accompanied by a decidedly strategic acumen.The Future of the Chief Commercial OfficerSo, what does the future hold for the Chief Commercial Officer? As hospitality organizations pivot and hone their overall commercial strategy in this ever-changing and consumer-driven industry, the CCO must ensure that the organization likewise follows suit to build and sustain an organizational and culture that adapts to these market forces. This doesn't necessarily mean we will see every company adopt the CCO role, but we believe that a greater number of organizations will move in this direction to establish a true keeper and strategist for commercial functions.We also predict that in due course - maybe over the next five years or so -- we will see increasingly more Chief Commercial Officers move into CEO or President roles. Historically, the CEO or President seat comes from the operations or finance side of the business. Although this trend likely will continue, we anticipate a shift in leaders coming from functional verticals that are closer to consumers. Additionally, our analysis indicates that CCOs readily have the overall skill-set and DNA to transition to the top role - assuming they are proactively groomed to handle the many subtleties, pressures and issues of executive presence that come with the CEO title.
Article by James Houran, Thomas Mielke and Andrew Hazelton

Innovating Brand Experience in the Cruise Industry: The Royal Caribbean Case Study

AETHOS Consulting Group ·25 May 2018
It is also a fierce competitive force for the broader hospitality industry. According to the '2018 Cruise Industry Outlook' report published by Cruise Lines International Association (CLIA), the demand for cruising has increased over the last five years by nearly 21%, with 27.2 million passengers expected to cruise in this year alone. The vast majority of passengers still hail from the US, followed now by China and Germany. This means that growing the market share is an opportunity to be tackled by the various cruise lines.Here we profile the current leader in the space - Royal Caribbean - and notably its international vertical. The idea was to understand what they are doing that works, and how their wins in branding and guest experience speak to the trends that exemplify the next phase of strategic approaches for cruising. Indeed, there are many ideas and insights to be mined by the wider hospitality community.A First-hand Brand Experience...AETHOS' own organizational psychologist "Dr. Jim" recently had the privilege and delight of being a "time traveller." Few people can know the excitement that the guests must have felt when boarding the grand RMS Titanic in 1912 - the largest ship afloat at the time. But Dr. Jim can relate, as he was invited on the maiden voyage of the world's largest cruise ship as of 2018 - the MS Symphony of the Seas, the latest Oasis-class, owned and operated by Royal Caribbean Cruises. Of course, unlike the Titanic, Symphony's story isn't a tragedy.Google the ship's name and you'll see 18 million hits about this behemoth of cutting-edge engineering. It was a media sensation leading up to its inaugural launch, and it's a supremely impressive technological marvel when pondering its vital statistics - standing 238 feet high, measuring 1,188 feet long, capable of hosting 6,680 passengers and costing 1.35 billion dollars (USD). But beyond its impressive physical presence, Dr. Jim was also privy to the company's equally impressive market and financial achievements, as well as the bold plans that define Royal Caribbean's future branding initiatives.As consultants to its international division, only so much can be disclosed. Yet, what can be shared serves as a case study in one company's commitment to evolving and innovating its brand experience, and more broadly speaking, the current and upcoming standards in the cruise industry.Cruising in the Present...Our case study puts Royal Caribbean's latest operational and guest experience effort - Symphony of the Seas - to the test. Onboard its maiden launch was a host of media, travel agents and Royal's own employees on vacation. And among this audience, were two mystery shoppers who fit the target demographic of Royal's sales and marketing campaigns - one was a Millennial with good disposable income for leisure activities, while the other was a seasoned marketer who's "new-to-cruise" and difficult to please. Interestingly, both mystery shoppers pinpointed the same "wow factors" in their experience -- here's what stood out to them and why:Unbounded space. Think ship-bound, and one might imagine little better than the unpleasant, cramped space of air travel. But instead, the mystery shoppers noted the excellent space activation onboard - even spaces as large, albeit naturally limited, as Symphony. Here space activation means more than offering many types of activities for diverse guests. It entails creating an "organic flow" among spaces that allow guests to avoid feelings of mental or physical confinement. This concept is used to describe the surface area of a sphere (and even the physical nature of the universe itself) - that is, a physical area that is "finite but unbounded." This core principle has been used effectively by retail outlets, most notably the women's clothing and accessory store, Anthropologie.Aesthetic diversity. Think ship-bound, and one might imagine little beyond the cold and impersonal elements of mechanical or engineering infrastructure. But instead, the mystery shoppers appreciated how space activation was coupled with aesthetic diversity to produce different moods around the ship. One moment you can feel like a Las Vegas high roller consumed by jazzy lights and music, and in another moment, you can take a relaxed stroll through Central Park. There's something for everyone, and this is about more than merely disrupting potential monotony in the decor. It's a concept that parallels current trends with boutique or lifestyle hotel concepts that capitalize on art, architecture and general design elements as differentiators, as exemplified by brands like Proper Hotels and Four Seasons Hotels. Art expert, curator and consultant Elizabeth Weiner often speaks about this topic at industry conferences (https://bit.ly/2ECBuPu).Experiential segregation. Think ship-bound, and one might imagine a "mosh-pit" of unstructured activity that ensures everyone is distracted and no one is having fun. But instead, the mystery shoppers called out how well space activation and aesthetic diversity was suitably segregated to appeal to specific age brackets. The ship experience is meant for entire families, couples on retreat or singles looking to expand their horizons. Customizing spaces for different motivations or demographics helps to ensure everyone gets the vacation getaway they expect. Perhaps this is most evident in the thoughtful design given to the "kid spaces" - where safety and security are constant, but the activities vary by maturity. The younger set will gravitate to the traditional water games and arcades, but teens can take the fun steps further by having their own spaces to congregate and indulge in offerings like "The Abyss" gigantic slide or captivating virtual reality games. All while the kids and adults don't intrude or otherwise bother each other. No more patchwork quilt of amenities."The little things". Think ship-bound, and one might imagine that much gets missed in the enormous complexity of operations. It makes sense - focus on the big things and the little things can get overlooked. It's a dilemma that happens at work and home. But instead, the mystery shoppers consistently pointed out the little touches and details that make an even great experience that much more memorable. Examples include associates smiling and telling guests from where they hail (emphasizing the brand's international character); the mandatory but boring safety lecture and review that was transformed into a fun Hollywood vignette; and the clever and entertaining applications of technology to make the cruise experience more accessible and efficient (can you saw robot bartenders and mobile-concierges to help select and book shoreside excursions). And one of the biggest "little details" heard from the mystery shoppers and other guests was the ridiculously decadent chocolate cake that could easily feed four people. This one culinary dish had an impact as large and positive as any of Symphony's "Broadway" style shows or colossal "adventure" attractions on the decks. In fact, these types of little things are what guests told us they most shared on social media. This point can't be overstated. Think about it, out of all the grandeur of a billion-dollar ship, it was often the little details, nuances and experiences that drove guest satisfaction and viral advertising.Cruising in the Future...Royal Caribbean has achieved what others in the broader hospitality industry constantly talk about - perfecting the concept of 'place making' that holds appeal for everyone, and not just a small niche market segment. This not only involves the ideal space activation, but also establishing the right kind of social platform that promotes a balance of interaction and seclusion. You can tell when a given concept is successful, when guests are found throughout the ship's space versus simply and predictably clustering at the bars.Keeping in mind the latest statistics, with many of the world's port destinations running at full capacity, Royal Caribbean's strategy to once again put the ship back at the centre of attention is a smart one. Going forward, we expect to see more firms pursuing a similar avenue. Already, we read about various cruise companies buying or even creating island destinations - Norwegian was the first to take on the 'island buying' trend in 1977 when it bought Great Stirrup Cay from Belcher Oil Company. Disney Cruises, Holland America, Princess and Royal Caribbean followed suit. The latter is currently giving its Bahamas Island, CocoCay, an USD$200 million face-lift.The trend to go big, as Royal Caribbean has done with the Symphony of the Seas, is also noticeable and the future cruise pipeline speaks volumes (see graph below showing an almost steady increase in gross tonnage and capacity over the past few decades). It is a trend that has been long in the making and was initially driven by the desire to broaden the customer base, and ultimately increase affordability.Yet, it is worthwhile to remind ourselves that Royal Caribbean has not only gone big, but it has also ensured that its latest vessel manages to have mass market appeal whilst being surprisingly 'bespoke'. One might argue that this is representative for the cruise industry's second iteration cycle - one which is defined by brand differentiation, product diversification and brand innovation. Cruise companies have understood that 'volume' does not automatically trickle down to the profit line. It has become a question of striking the right balance between offering the perfect ship and facilities, with the right design aesthetics as well as the most considered itinerary and program of activities, both onboard and offshore. And all this while keeping in mind that the profile of the average cruise customer has also changed - we have the experienced cruisers, the first-timers, the Millennials and Gen Y and Xers, as well as - the most exciting customers of them all as they represent a huge untapped opportunity for most cruise operators - the up-and-coming affluent Asian travellers. On this latter point, CLIA's 2017 report noted that the absolute volume of cruise travellers sourced from Asia has quadrupled since 2012, and the number of ships deployed in Asia grew 53% since 2013 - in fact, China is the main driver of growth in the region and the world when it comes to passenger volume, followed by the US.What the innovative cruise operators like Royal Caribbean are currently doing is shaping the industry for a new breed of cruisers years to come. It appears that the seemingly impossible goal has largely been reached - the 'one-ship-fits-all' approach that simultaneously offers uniquely customized and targeted holidays for each of its guests. And in the process of delivering on bold business visions and brand promises, the cruise industry arguably is also helping to define product, service and pricing standards that put positive pressure on all hospitality sectors to reflect soberly on their own performance and brand positioning... and up their game accordingly.AcknowledgmentsThanks to Gavin Smith, Adriana Machado and Michael Bayley for Dr. Jim's participation in the Symphony of the Seas maiden launch activities. He is still digesting the incredible chocolate cake.

Hiring People... Take A Chance

AETHOS Consulting Group ·24 May 2018
In fact, every time an employee joins your organization - whether or not you feel you are "taking a chance" - the truth is that every employee is taking a chance on you, on your company. They are proceeding in good faith. Have you ever considered this? Because, with this, comes a responsibility to deliver on the promise, in a fashion just as committed as your expectation of the employee. And, now that you are thinking about this perspective, ask yourself: How many employees come to work on their first day all down-in-the-mouth and unexcited? Virtually none. The vast majority come with eager anticipation, a genuine desire to do their job and do it well, and a belief that the company is what it appears to be, hence their decision to join.Unfortunately, in too many situations, what happens next is that the employee is judged, evaluated, critiqued and, sometimes, fired. Good leaders, no, great leaders, make and live a commitment to set each employee up for success; to make the goals clear, and to provide the tools, training, time, and environment to successfully achieve those goals. To consciously remove obstacles. Great leaders also listen when the good-faith employee provides input and observations that might change or refine the goal and/or the process for achieving it. In other words, a better approach. Hey, isn't that what we're paying them for?It's sad how many people "take a chance" on a company, only to be disappointed. Believe me, my profession gives me a front row seat to this show. But how often - let's be honest - does the company feel disappointed in itself for not being able to hold onto that employee? Shocker - some people are let go before the company has even gotten to know them; after the love affair recruitment, they're on their own.Honestly, that is the epitome of "taking a chance." Taking a chance that word spreads, especially in the era of social media, about your company not caring for its people. About a poor work environment. About saying one thing during the courting period only to disregard it once the hire is made.Earlier in my career, I was a management consulting professional with one of the major global accounting firms. A firm that hired only the top 5% and did so successfully because of the name brand and the perception of opportunity. But I watched as a number of colleagues - some Harvard, Wharton, Stanford MBA's, etc. - cried out on deaf ears and, ultimately, left to pursue other avenues. I'll never forget it when the Partner-in-Charge of Management Consulting and I were talking one day and he was telling me how proud he was that our turnover rate was well below the national average. Right then, I realized how mistaken his metric was. You see, it isn't what percentage of your people leave that is the key; it's WHO left that should be the concern. And if we don't think this way, the process is perpetuated - those who left "took a chance" that didn't pan out, and the firm's sloppiness "took a chance" of losing some stars, which it did. Multiple times.Enough said. Please, take a moment, "take a chance" and think about this.
Article by Matt Peterson

Q&A with Kristie Goshow, CMO at Preferred Hotels & Resorts

AETHOS Consulting Group ·24 May 2018
But leader-centred enterprises are quickly becoming outdated and irrelevant, as consumers across all service and product offerings become more educated, connected, mobile and discerning. And perhaps even selfish. That is, the proverbial script has flipped, and now brands must take the initiative to engage with consumers on levels that transcend traditional advertising or the transactional "bribery" of loyalty programs.I had the opportunity to sit down with Kristie Goshow, CMO at Preferred Hotels & Resorts, to discuss what loyalty programs were and what they need to become, in order to continuously attract and engage 21st century traveller:Are today's loyalty programs in over-drive?There has been significant coverage on the topic of consumer loyalty during the past few months. Major hospitality brands continue to rework, revamp, recalculate and ultimately, reimagine their loyalty propositions across consumer, trade and partnership audiences. Could such activity signal that loyalty programs have finally reached maturity and no longer delivering against their core objectives? Alternatively, are hospitality brands now 'really' ready to rally resources around their principal engagement lever to mitigate rising costs of sale and intermediary innovations around the shopping and booking experience?If we think back to the original inception of loyalty programs in the early 1980's, they were a vehicle to support marketing efforts amid airline deregulation and an opportunity for brands to obtain critical information about their guests. This overarching need for data has spurred the mass proliferation of loyalty programs across multiple industries, with travel and hospitality having led the way. The need for data remains albeit our consumption and use will witness a seismic adjustment.Fast forward 25 years, loyalty has become a ubiquitous term. Does it really matter anymore?From my perspective, it most definitely does still matter. Possibly more than ever before. What has and continues to change, is the interpretation of loyalty. It does not mean the same for everyone. Homogeneity in program benefits have now become the entry stakes for most schemes. This ground-work offering immediate gratification before loyalty has even been established between two parties, simply sets out why an individual may initiate a deeper level of engagement with a brand but not the reason to sustain such. Winning the consumer a second time requires a significant rewire in thought process.The concept of loyalty can be found in the seminal work of Abraham Maslow. It sits squarely with the need for 'belonging'. What has changed however, is the evolution of human needs. With many segments of society now finding themselves in the higher state of Maslow's hierarchy, loyalty programs must reward against the need for self-actualization. The recent explosion in 'experience driven' content and the increasing focus on transformative travel have raised the 'benefit bar'. Loyalty now has an elevated role to play in consumer's lives. It must absolutely help them to realize their true potential.What has worked and what have you seen not work in attracting new customers to loyalty programs?A fundamental aspect of program success lays in the hygiene factors of structure, technological interoperability and operational 'buy-in'. In short, many hours are often invested into refining the program benefits and overall marketing plan but not the mechanisms for seamless execution. The swan looks beautiful but under the water, the legs paddle furiously to get the swan where they need to be. I'm sure many hospitality colleagues can speak first hand of their experiences 'under water'!.When implementing a loyalty program, many hoteliers still struggle with the idea of engaging a guest they 'already had'. I'm sure Starbucks Branch Managers felt the same way when they had to start issuing stars and rewards. Loyalty has to be a consistent commitment. Imagine your local drive-through not honouring your free Latte because 'that location doesn't participate'. We cannot make our business structures the concern of our consumers. What we must absolutely ensure is suitable, robust measures of engagement that demonstrate that our program is performing both a defensive and offensive role.In summary, a commitment to training, consistent delivery of benefits and leadership buy-in will ensure a loyalty proposition has a winning chance in driving frequent, recent and highly engaged consumers who will lower your overall marketing costs as willing ambassadors. We all seek enhanced reach, visibility and a reason to speak with a large population motivated by 'something more'.With big brands buying small brands and the focus on 'boutique brands', where do you see this trend in 5 or 10 years?I would like to re-iterate my earlier point concerning evolved societies and consumer needs. Many of the larger brands have chosen to expand their propositions based on generational differentiators. Unfortunately, the golden thread remains a formulaic approach to physical product offerings where differentiation is reliant upon experience activation at a property level. It is my personal belief that the mass consumer will tire of the mass approach (both in organizational size and product standardization). The delivery of an experience will rely on singular hospitality destinations. Unique in design, build, ethos and culture. The consumer of today has stepped into collectorship mode again only this time, it's the collection of moments for betterment and that means an unbound hotel may face a future significantly brighter than today provided they have a global stage like Preferred Hotels on which to tell their story. And yes, I am unequivocally biased.

AETHOS Consulting Group Announces Strategic Alliance With Marsh & McLennan Agency

AETHOS Consulting Group ·22 May 2018
AETHOS Consulting Group and Marsh & McLennan Agency LLC (MMA), a subsidiary of insurance broker Marsh LLC, announced today that they have entered into a strategic alliance.Together, AETHOS and MMA plan to offer industry specific resources and solutions to the hospitality sector in the areas of executive & employee benefits and safety & risk management. David Mansbach, Managing Director of AETHOS Consulting Group states, "This relationship is exciting on several fronts; first and foremost, we always strive to deliver expertise that enhances our value proposition and the client experience. We have found in MMA, a world-class organization that provides extraordinary solutions." "In the creation of this alliance we spent a lot of time with Marsh & McLennan Agency's senior leadership," adds Mansbach. "Their ability to demystify the world of insurance was eye-opening and MMA's transparent and consultative style will be very welcomed by decision makers in the hospitality industry." MMA Northeast Region CEO Anthony Gruppo said, "AETHOS' top-notch leadership, client-centric culture and excellent reputation is a terrific addition to MMA's capabilities and resources. I look forward to working with the AETHOS team to fulfil our vision of delivering unrivaled resources and solutions for our clients."About Marsh & McLennan AgencyMarsh & McLennan Agency LLC is a subsidiary of Marsh established in 2008 to meet the needs of midsize businesses in the US. In 2015, it expanded its national footprint into Canada. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across North America.About MarshMarsh is a global leader in insurance and risk management. Marsh helps clients succeed by defining, designing, and delivering innovative industry-specific solutions that help them effectively manage risk. Marsh's approximately 30,000 colleagues work together to serve clients in more than 130 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and people. With annual revenue of US $13 billion and approximately 60,000 colleagues worldwide, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a leader in providing risk and reinsurance intermediary services; Mercer, a leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a leader in management consulting. Follow Marsh on Twitter, @MarshGlobal; LinkedIn; Facebook; and YouTube.
Article by James Houran

Linking Organizational Success to Employees' Personal Motivators

AETHOS Consulting Group ·23 April 2018
The FlawIf you want to improve employee performance, think about your daily (or "rolling") conversations with employees. No better opportunity exists to reinforce and help refine excellent employee performance. You have the chance to discuss new projects, talk about overdue assignments, give updates about completed tasks, and more. Unfortunately, many managers miss these opportunities and instead try to influence or control teams with the counterproductive "FUD" method, i.e., using explicit or implicit threats of Fear, Uncertainty or Doubt. Leaders instead should use rolling conversations to reinforce the importance of meeting or exceeding goals by linking an employee's performance to a specific workplace result. How? Read below for some in-depth guidance.The FixA results-based approach to rolling conversations works, because it allows you to explain the value of positive performance from different perspectives. The idea is to align results that are important to the organization to outcomes that are important to employees.If employees react negatively or passively to one perspective, you can use a different result to illustrate your performance conversation. In the end, it means you do not have to say, "Do it because I say so" or "because it's your job."Examples of Linking Employee Performance to Results Requested"When you submit your reports on time (improvement you want employee to make), we are able to meet our deadlines for submitting the monthly reports to the field office (result of improvement).""Entering customer feedback into the database by 5:00 PM every day (improvement you want employee to make) helps us achieve our strategic goal of quickly responding to guest issues (result of improvement)."When you order the janitorial supplies on time (improvement you want employee to make), that allows the maintenance employees to do their job in a timely manner (result of improvement).""If you attend the community meetings (action you want employee to take), you will have an opportunity to interact with all of the senior managers in the company (result of action).""By participating in the project (action you want employee to take), you will have an opportunity to learn more about the organization's strategic plan (result of action)."At the individual level, you can link employee performance to desirable outcomes such as greater autonomy, less stress, reduced workloads or increased visibility. These results emphasize personal and professional interests.On a broader level, employee performance can be linked to organization mission, office goals, customer service or team performance. These require employees to look at the larger impact of their performance results. Just make sure you include results that reflect personal interests of your employees as well as results that are important to your organization. Following are some specific examples:Link Performance to Job Enrichment. Employees want to feel that what they do is important. Doing more challenging work or working with different employees are just two examples. Investigate the things employees like about where they work. Determine what makes them excited. Use this information to explain how effective employee performance can lead to greater job enrichment.Link Employee Performance to Learning and Development. Consider your employees' strengths and weaknesses. Would new knowledge, skills or abilities be helpful? Or, maybe the employees can obtain certification in a job-related area. Use this information to show how positive employee performance can result in enhanced capabilities.Link Employee Performance to Career Advancement. Think about how certain actions give employees greater opportunities for advancement on the job. Perhaps you can consider possibilities for a job rotation or a high-profile assignment. Use this information to connect employee interests to performance, highlighting the impact on upward mobility or desired lateral moves.Link employee Performance to Money and Rewards. Identify the monetary perks that exist for employees. Go beyond the regular pay check. Include anything from cash payments to tickets to the theatre. Use this information to link employee performance to financial rewards or other types of benefits.Link Employee Performance to Other Employees' Performance. Identify who employee performance impacts? Consider managerial staff, technical staff, support staff and others. Use this information to emphasize how one employee's performance can positively or negatively impact another employee's performance and results.Link Employee Performance to Office Achievements and Results. Look at an organizational chart of your company, agency or association. Examine workflow processes and the products or services you provide to other offices or departments. Do they depend on materials or information from your employees? If so, consider what happens when they get what they need or when they don't get what they need. Use this information to explain why effective performance is important.Link Employee Performance to Organization Success and Results Measures. Think about how your organization measures success. Some organizations use sales quotas as a guide. Others track the acquisition of new customers. Look at strategic plans and operational goals for direct or indirect links. Use this information to explain the broad-level impact of doing or not doing certain activities.Link Employee Performance to Guiding Principles. Look at your organization's vision, mission and values statements. This information tells you the kind of fundamental practices that are important. Examine instructions on "how" employees should do things as well as "what" they should do. Also consider rules, regulations and policies. Use this information to support the importance of certain types of employee performance.As published in Hotel Management, April '18

Cruise Ships and Their Ports of Registration: Should Human Resources Worry About Perception?

AETHOS Consulting Group ·10 April 2018
AETHOS recently assessed what it takes for one of those new competitors, the traditional lodging operator, to move into the cruise sector - looking predominantly, at human resources and talent management. One key decision that we have not yet discussed is the relevance of the country where a cruise ship is registered - does or does it not impact the ability to attract and retain talent? Could it have an adverse impact on employer branding?The Flag of ConvenienceDuring times in which a new generation of employees is increasingly conscious of 'doing the right thing,' as it pertains to sustainability and corporate social responsibility (CSR), could the common best practice of flying a flag of convenience be considered 'bad form?'The flag of a cruise ship governs the rules, regulations and safety norms of a vessel; unlike common belief, an Italian cruise ship does not always fly the Italian flag nor does an American ship brandish the Stars and Stripes. What originated in the Americas of the 1920s, with companies wanting to circumvent the ban of alcohol by registering their vessels elsewhere, has continued to this day. Nowadays, organisations are predominantly seeking cost savings via lower fees and/or taxes. The term 'flag of convenience' was hence coined and these days the great majority of cruise ships are flying flags which are different to those of the brand's headquarters (92%).Naturally, any savvy business leader will strive to maximize returns for its shareholders; it is their fiduciary responsibility and flying a flag of convenience holds financial appeal. Voices raised by third parties about operators who chose such a strategy in order to drive profitability are thus not of concern here, nor a point of discussion - at least not from a commercial business perspective.Does Flying a Flag of Convenience Have Ramification When it Comes to Attracting Talent?Flying a flag of convenience can be viewed by some as responding purely to the needs of investors - but does it have an impact, positive or negative, on some of the other stakeholders of a firm, e.g. the employees? The fact is that often, by outsourcing the flag, an operator is also subject to more lenient labour laws in the form of less stringent minimum wage and benefits requirements, inferior employment protection and limited ability for employees to form unions. Frequently, the environmental gold standards also differ from the home country. Moreover, flying a foreign flag can make it difficult for employees to bring cases of criminal activity on-board back to their home jurisdictions for legal action...seemingly, not the best of outlooks then for employees. But, do they care? Research shows that individuals today are clearly concerned about socially responsible behaviour and good business ethics (i.e. CSR). For example:A study researching a potential correlation between a firm's Corporate Social Performance (CSP) and its reputation and attractiveness as an employer concluded that indeed the relationship is a positive one; i.e. results indicated that "a firm's CSP may provide a competitive advantage in attracting applicants" (Turban, D.B. & Greening, D.W. [2017]. Corporate Social Performance And Organizational Attractiveness To Prospective Employees. Academy of Management Journal,Vol 40, Iss 3.)A research paper investigating a job seeker's perception of importance of CSP and its potential impact on an organisation's attractiveness as an employer found that, whilst some sub-segments within CSP were considered more important than others, what a firm does overall in the area of CSP does have a re-affirming effect on its employer brand / attractiveness (Backhaus, K.B., Stone, B.A. & Heiner, K. [2002]. Exploring the Relationship Between Corporate Social Performance and Employer Attractiveness. Business & Society, Vol. 41, Iss. 3.)An AETHOS study investigating the career priorities of Gen X versus Gen Y concluded that Gen Y concerns itself with career choices and a sense of purpose and, interestingly enough, also about social consciousness (Houran, J., Kefgen, K. & Gold, N [2017]. What Millennials Want: The Real Career priorities of Gen X vs Gen Y. Hotel Yearbook).However, as pointed out by the AETHOS study, attitudes are at times poor predictors of actual behaviour. In fact, the research paper found that, according to Maslow's hierarchy of needs, "pragmatism trumps principle when faced with actual career decisions." In other words, at a high level, it seems that employees care about CSR. Yet, they do not always follow through and consider CSR when making key decisions as it relates to their career options. This bodes well for organisations who have opted to fly a flag of convenience - which, on paper, is at times at odds with what most would consider CSR best practice.At a time in which large companies such as Google, Facebook or Starbucks are scrutinised for where they pay taxes, and how much, will flying a flag of convenience become a potential HR liability? Could the very loud voices criticising (and accusing) the (merchant) shipping industry for flying flags of convenience negatively affect the reputation of the cruise companies who are doing the same?The clear answer to this should be a resolute "no." A cruise company's reputation as an employer of choice should remain intact as, although many of them do fly flags of convenience, they do a much better job than the shipping industry / merchant vessels in avoiding the HR pitfalls - precisely because they understand that '(brand) image' is key to their very own success. Reviewing the various corporate websites of the cruise operators reveals links and references to their HR best practices and the 'code of conduct and business ethics' as well as the 'modern slavery act' and the organisation's initiatives that address 'sustainability'. Yet, cruise companies and those organisations looking to move into the sector may be well advised to learn from other companies' mistakes. For example:A study looking into the top 150 hotel companies in the world found "a large number of organisations reporting commitment to CSR goals, but a much smaller number of them providing details of specific initiatives undertaken to contribute to these goals and even less of them report actual performance achieved" (De Grosbois, D. [2011]. Corporate social responsibility reporting by the global hotel industry: Commitment, initiatives and performance. International Journal of Hospitality Management. Vol. 31, Iss. 3.).A research paper investigating the transparency of hotel companies as it relates to their CSR best practices and testing the gap between CSR claims and actual practice concluded that official statements do not necessarily reflect actual operations. Larger hotel groups, for example, have comprehensive policies in place but are being let down by poor implementation (Font, X., Walmsley, A., Cogotti, S., McCombes, L & Haeusler, N. [2012]. Corporate Social Responsibility: The Disclosure-Performance Gap. Tourism Management, Vol. 33, Iss. 6.)Cruise operators should thus engage in a more open dialogue, rectifying any potential misperceptions or grey-areas. Ultimately, potential employees will know that just because 'loop holes' exist (curtesy to some 'flags of convenience'), it does not mean that those are always being exploited. But not being able to compare 'CSR performance' might become a deterrent for some employees and senior industry leaders - particular in an age where even consumers have started to become much more conscious of CSR best practices, with a reported 2:1 cruise travellers preferring cruise operators with good CSR policies and best practices in place (Adams, S.A., Font, X. & Stanford, D. [2017]. All aboard the corporate socially and environmentally responsible cruise ship: A conjoint analysis of consumer choices. Worldwide Hospitality and Tourism Themes, Vol. 9, Iss.1).
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GDPR in the EU and UK: AETHOS' 3 Steps for Complying with Employer Responsibilities

AETHOS Consulting Group · 6 April 2018
GDPR. Four letters of the alphabet that are proving to represent one of the biggest challenges facing businesses in 2018. The General Data Protection Regulation (GDPR) comes into effect on 25th May across the European Union, including the UK, and impacts any organisation that operates within the EU that processes data of EU citizens wherever they may be in the world. How organisations hold, store and process personal data will now be subject to higher and more consistent scrutiny - with potentially significant penalty for non-compliance. AETHOS Consulting Group's London Managing Director Chris Mumford emphasizes that much attention is already given to how customer data is handled under GDPR, especially in the hospitality sector where hotels process a high volume of personal information and payment data. "GDPR not only impacts how a business interacts with its external customers but also how it manages data internally with regard to its employees. In an industry such as hospitality where the labour force is so often highly diverse and comprised of multiple nationalities, most organisations will be affected by GDPR."Mumford spoke exclusively to Adele Martins, Partner and head of the Employment Department at law firm Magrath Sheldrick LLP, who clarified that GDPR is considerably stricter in its requirements than the UK's Data Protection Act (DPA). Mumford and Martins highlight a number of key features hospitality employers should consider as they address compliance with the new regulations:- What qualifies as 'sensitive data'? People will regard information about their health or their sexual orientation as more confidential. Technically Sensitive Personal Data or Special Categories of Data include information about a person's race or ethnic origin, their health or sex life, their sexual orientation, political opinions, religious / philosophical beliefs, trade union membership and genetic and biometric data.- How is employee consent defined and best obtained? The GDPR makes it clear that consent must be freely given, specific, informed and unambiguous. It can no longer be implied from silence, pre-ticked boxes or inactivity.- Regarding businesses which have external suppliers that are exposed to personal employee information (ie. payroll providers), where does GDPR compliance lie? With all parties. The advice to controllers is to have appropriate agreements in place with providers to ensure that those providers (processors) are contractually obligated to process data appropriately.- Would a hotel in New York which employs a French national in the kitchen be subject to GDPR? So, a hotel in NY employing a French national is processing the personal data of an EU national but that EU national is not within the EU. Does that mean they are off the hook? No. The EU national is still likely to be protected by the GDPR - not least because they are bound to return to the EU at some point and the processing will not stop when they do.- What are the sanctions for failing to comply? The maximum sanction under the GDPR is a whopping Euro 20,000,000 or in the case of a corporate undertaking 4% of global annual turnover - so potentially much higher than the maximum Euro 20 million figure.Mumford and Martins urge hospitality employers to immediately manage three critical steps to prepare for the GDPR compliance deadline:Dedicate data protection personnel internally and at a senior level;Appropriate security measures to ensure that personal data is properly stored, securely processed and retained only for as long as necessary;Clarify Privacy Notices to ensure that the individuals in question understand what data they are providing.

AETHOS Consulting Group Releases Hotel Asset Management Compensation Survey

AETHOS Consulting Group ·27 March 2018
With survey results of more than 200 responses from asset management executives at public lodging REITS, owners and developers, asset management advisory firms and hotel management companies; AETHOS Consulting Group releases the largest study of its kind: The Hotel Asset Management Compensation Report.According to AETHOS Managing Director David Mansbach, author of the study, "The hotel industry is at an inflection point; the current industry cycle calls for flawless execution on asset preservation initiatives, Yet the supply of high performing asset management executives is at an all-time low."Mansbach adds that it is not hard to understand why AETHOS received a significant survey response, "The hotel community, both employer and employee, are looking for real-time, accurate and trustworthy data to ensure compensation programs for asset management executives are positioned competitively."The Hotel Asset Management Compensation Report includes the following notable findings:The median base salary for a Director Asset Management - $156,000;The median cash bonus for a Vice President Asset Management - $72,500:The total cash compensation (combined base salary plus annual cash bonus) for a Senior Vice President of Asset Management - $587,500;And over 75% of the survey respondents receive long-term incentives and/or equity-based compensation.For more details about the findings of AETHOS' Hotel Asset Management Compensation Report, contact David Mansbach at dmansbach@aethoscg.com.

The State of the Global Cruise Industry

AETHOS Consulting Group ·27 March 2018
Optimism and energy were on display at this year's Seatrade Conference in Fort Lauderdale, Florida where industry insiders proclaimed that the 'cruise business is strong' and 'the future continues to look promising.' As usual the conference's annual keynote address did not disappoint, as executives from major cruise companies provided attendees with their candid and insightful opinion on the overall state of the cruise business and where it is heading. During the keynote we heard from strategic executives at Norwegian, Carnival, Royal Caribbean, MSC Cruises, Virgin Voyages and the Ritz-Carlton Yacht Collection. As we were in attendance this past week, AETHOS took note of a handful of major soundbites.An Industry on Steroids:Across the panel the mantra was that each organization was in the business of creating experiences and, not just any experience, but their customers 'best vacation experience!' Their success can be found in the numbers, as cruising is on the uptick; it is predicted that by the end of 2018, 27 million passengers will have cruised according to the Cruise Line International Association (CLIA). Customer demographics are shifting as well. More and more millennials are starting to hit the seas and rivers, expanding the ever growing target audience for cruise companies. As millennials further penetrate the overall cruise customer base, they look not just for value but also for diversity in experiences, on and off shore - leading to more and more (product) innovation and the development and exploration of new destinations. Moving forward, companies will roll out a number of new initiatives to appease their customers (for example, amenities such as 'go-karting' on Norwegian will soon come to light). The new players on the water, The Ritz-Carlton Yacht Collection and Virgin Voyages, plan to make a splash over the next coming years and are helping the industry to capture new customers. Note that neither company has the word 'cruise' in their name - their goal is to stand out by being 'atypical' and doing things differently. The Ritz-Carlton Yacht Collection will provide an intimate feel of 'casual luxury' on the seas while Virgin Voyages plans on providing their customers with an 'epic experience'. The takeaway - there is a large amount of excitement for both brands from everyone across the board.Pipeline & Destination Growth: In order to sustain their growing customer base, cruise companies will be investing USD $60 billion dollars in new ships over the next decade. This year alone, 27 new ships are expected to come on line. So where will they all be headed? To no one's surprise, the Caribbean will continue to be the hot ticket (especially Cuba) which has been resilient and bounced back nicely from this past year's hurricane season. Although restrictions have been put on travel to the island, nation ships to Cuba continue to be full at 'very high prices.' All the major players will also continue to look east as the emergence of Asia comes into the fold; specifically, a lot of energy and specific focus will be placed on China over the next coming year. According to Richard Fain, chairman of Royal Caribbean Cruises, "We [the cruise industry] are [already] mainstream and I think you are [definitely] seeing this in the U.S., [and you are] starting to see this in Europe, see it in Australia, and in due course you will see it in China and other parts of Asia."A Question of Sustainability: With every positive comes a negative, thus with such current and expected growth, the topic of over-tourism weighs heavily on everyone's mind. Cities such as Venice, Barcelona and Dubrovink have made headlines throughout the years for becoming overcrowded destinations. There are many players who contribute to the 'over-tourism' epidemic although it can be argued that land-based tourists are mainly to blame. Regardless, major cruise organizations have recognized the importance of listening and working with city officials. Executives agreed that cruise companies need to do a better job of spreading out their guests amongst the various ports and excursions. It was clear to all the major companies represented on the panel that they have a fiduciary responsibility to protecting the cultural integrity and environment of each and every port destination.With so much positivity across the industry, what is keeping our industry leaders up all night? Besides geo-political events that are out of everyone's control, 'change' itself is moving at a faster pace, therefore, getting in front of such change remains high on everyone's list. How to stay current and innovative in order to provide the much discussed customer experience also remains high on the 'worry list.' Additionally, the panel noted that they continue to think about the employee base; their overall success truly depends upon them. Thus, how can they continue to foster an environment, on and off shore, that satisfies such a diverse, global employee base?In conclusion, the cruise business is in the best place it has been for a long time. Most would agree with Norwegian's CEO, Frank Del Rio, when speaking to Peter Greenberg, CBS travel editor and panel moderator, "If this was Christmas and you were Santa Claus, I'd ask for nothing."

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