Cookies on HFTP Bytes

This site uses cookies to store information on your computer. Some are essential to make our site work; others help us give you the best possible user experience.
By using the site, you consent to the placement of these cookies. However, you can change your cookie settings at any time. Read our Privacy Notice to learn more.

I understand
  • Meet Minneapolis: Travel to the Twin Cities this Summer for HITEC 2019

    We all know that travel can be a real hassle. So, what about a trip makes it worth packing up your suitcase, saying goodbye to your family for the next few days, fighting the airport and staying in a.

  • 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.

  • A Series of Must-Read Articles on Cybersecurity Produced by the HFTP Research Centers

    Data security remains a pressing concern and top priority for the hospitality industry. The HFTP Research Centers are dedicated to producing findings that can significantly aid hospitality businesses in their efforts to protect their guests’ privacy and personal information against potential cyber threats and attacks.

  • HITEC Special: Does EU GDPR Affect U.S. Hospitality Companies?

    By Alvaro Hidalgo. The EU General Data Protection Regulation has set a path towards protecting personal data which many other countries will follow. In a global industry such as hospitality, it should be a primary objective to take the steps towards compliance.

AETHOS Participates in HR and Talent Management Discussion During EHL's Young Hotelier's Summit: "Organisational Culture Critical to Success"

AETHOS Consulting Group ·19 April 2019
London - During last month's 10th Edition of the Ecole Hoteliere De Lausanne's (EHL) Young Hoteliers Summit, panels and sessions focused on the multifaceted aspect of hospitality and its growing complexity. EHL alum and AETHOS London Managing Director Thomas Mielke, through his panel participation, discussed the "Pitfalls and Challenges of 21st Century Management and Leadership." Mielke exchanged his thoughts and views with fellow panelists: Dorchester Collection Chief People and Culture Officer Eugenio Pirri, Director of People and Culture for Four Seasons Hotels & Resorts Michael Hirschler, Swiss International Airlines' Lorenzo Stoll (Head of Western Switzerland), and Viking Cruises' Niko Viramo, Director Onboard Operations.Among Mielke's key messages:An Organisation's Culture is a Company's Greatest AssetShares Mielke, "Strong cultures are based on shared values driven both from the bottom-up and top-down. These values need to be authentic, and most importantly, they also need to be ingrained and re-inforced by an organisation's strategies, best practices and behaviours."Referencing AETHOS research, Mielke adds, "Based on a hospitality-specific study, AETHOS has actually been able to identify common denominators which define company cultures within the most successful hospitality organisations globally - collaboration, empathy, enthusiasm, innovation, integrity and performance excellence." The pitfalls of an overly strong, or rigid, company culture create an organisation which will become inflexible and unable to adjust to changes in the business or work environment. As a consequence, such organisations stifle innovation and create obstacles for effective decision-making.A Shift in Structure Can Lead to a Network Organisation. "There are not many Zappos-equivalents found in the (traditional) hospitality industry. And what is the hospitality sector if not a shining example of the success of centralised organisations?" asks Mielke. "For example, in the Food and Beverage space, we have seen the proliferation of casual dining or fast food brands. And, of course, in the hotel space the brands and management companies are getting bigger and more diversified year-by-year, most of them backed by centralised and formulaic management structures." However, the industry is somewhat 'schizophrenic' in that regard."Although many industry players are based on centralised structures, this does not mean that the sector is hierarchical in all its leadership and management aspects. On the contrary, entrepreneurial talent is very often high on the priority list of AETHOS' hospitality clients - individuals who think on their own feet and take decisive actions." In the lodging sector and, perhaps even more so in the hugely complex cruise segment, leaders are very much asked to 'run their own show'."There still is an Inherent Need for Diversity in the Hospitality Industry.Mielke acknowledged that 'diversity' is a hotly debated topic in the sector. Referencing recent AETHOS studies, Mielke highlighted that "in the US restaurant industry, for example, we have noted that the number of board seats held by women has only marginally improved over the last four-years [from 18% in 2015 to 19% in 2018]." In the hotel space, the improvement was much more significant - albeit starting from a lower base."We have reviewed the 50 largest hotel management companies in the world. In 2018, 16% of the CEOs were women. Eight to ten years ago, this was at 2%. So, it is moving into the right direction, but it is nowhere near where it should be."Mielke continued questioning whether quotas might help make a difference. "From what we are seeing in the industry, this is at least a short- to mid-term solution. And, what we are witnessing in the industry is that it has helped put 'diversity' front of mind also with our clients." But we also need to stress that the picture is not as grim as it may look. "If we are looking as Chief Sales Officer or Heads of Sales & Marketing, I'd argue that probably 40%-50% of the executives in those roles are women. The same things hold true for HR roles. So, there are certain functions where women are at least as represented, if not more, than men."Thomas Mielke is a Founding Partner and Managing Director at AETHOS Consulting Group. He is a fully certified executive search consultant by the AESC and has a track record in senior level appointments at leading hospitality organizations across the globe; with a particular focus on the lodging, restaurant, food service, real estate, cruise and tourism sectors. Acting as a trusted advisor, Thomas equally supports the process of identifying and developing values and best practices that define and foster a corporate culture and consults his clients on talent management programs. Thomas has authored numerous articles on corporate governance and leadership and can be reached at tmielke@aethoscg.com
Article by Chris Mumford

Are a Hotelier's Expat Days Numbered?

AETHOS Consulting Group ·12 April 2019
While in Singapore in March of this year, I was fortunate enough to be given a tour of a newly opened, luxury hotel by the front office manager. As we wandered the halls it occurred to me that, while the demand for a beautifully designed, 5-star property overflowing with luxurious service and experience shows no sign of diminishing, the guy showing me around might be one of a dying breed. A German national, the front office manager had transferred to Singapore for the hotel's opening following several years working his way up the career ladder within the same group across three different cities and hotels in China. Our business is full of people who have made similar journeys away from home, exploring the world, leading an expatriate life. Indeed, for many, it is one of the appeals that attracts them to the industry in the first place. A good friend of mine in the business and I first met while we were both working in New York. In the ensuing 20 years that we have known one another, he and his family have worked and lived in six different cities across the United States, the Middle East and Asia.One wonders, however, if the days of the expatriate are numbered and if those entering the business 10, 20 years from now will have the same options open to them. My visit to Singapore also took in the HICAP Update conference. During the 'Investment Outlook' panel, when asked to name his number one cost-saving measure in relation to his firm's hotel portfolio, one of the region's leading investors half-jokingly replied, "Get rid of the expats." While this raised a chuckle from the audience (at least 50% expats themselves), there is some seriousness in his statement that reflects an increasing move to localise many management positions in the hotel sector. The fact is that foreign executives are expensive when compared to local hires, often requiring significant additional cost above base pay in terms of allowances and benefits, such as housing, schooling, relocation, insurances, etc. With labour costs typically being one of the heaviest line items on a P&L, it is no wonder that hotel owners are keen to lessen their dependency on imported expertise.Many governments are also pushing for greater localisation of jobs. Singapore, for example, has seen a prioritisation of hiring Singaporeans since the introduction of the Fair Consideration Framework. As China's hospitality market, for example, evolves and matures, localisation of top management jobs becomes a major concern for many international hotels operating under heightened cost pressure from ownership. While the availability and insufficient standard level of local talent still compels many hotels, especially in the luxury segment, to recruit management expertise from abroad, the 'bells and whistles' compensation packages of yesterday are being phased out. Allowances for housing, transportation, utilities, relocation, business class flights home, schooling, etc., are subject to greater scrutiny and limitation by ownership. In destinations such as Dubai, where there is simply not a large enough local national workforce population to fill every job, we are witnessing a change in the profile of the foreign worker as a result. Jobs once held by Western workers, from the likes of Europe, Australia, and South Africa, are increasingly being filled by cheaper sources of labour from markets such as South Asia at salaries that are 60% of what they were previously.Over time, as training and experience levels increase, many positions today held by expats will be filled by local employees, or by foreigners but on local employment terms. Given the global village nature of the hotel sector, experience in multiple international locations is valued; indeed, we have seen the number of hotel group CEOs with prior international experience increase by one-third over the last 14 years (AETHOS CEO Turnover Study 2018). Those embarking on a global career in the industry may find themselves in the future, however, having to accept either a local package or be willing to work in emerging markets (such as Vietnam currently) where a premium is still paid for foreign expertise.
Article by Thomas Mielke & Andrew Hazelton

AETHOS Takes a Deep Look at Leadership in The (US and UK) Restaurant Sectors

AETHOS Consulting Group · 5 April 2019
AETHOS Consulting Group, the leading global hospitality-focused human capital and leadership advisory firm, conducted survey research and reviewed data to uncover common traits while also comparing leadership longevity in the restaurant sector as compared to that of the lodging sector:AETHOS' latest US-based research focused on Restaurant Operations Executives and evaluated a curated group of high performers in senior operations roles using its proprietary 20|20 Skills psychometric assessment. In doing so, AETHOS discovered a common success profile. The research revealed that the superstar leaders are characterized by a mixture of marked and nuanced competencies across the categories of Execution, People and Cognitive Skills.Explains Andrew Hazelton, AETHOS' Philadelphia-based Managing Director and author of this study, "The successful executives keep their 'threats' in check by maintaining self-awareness, perspective and realistic expectations of others. And, more than ever, how results are achieved is a significant part of the equation for an individual's personal success and the company's culture and brand equity." For more of Hazelton's article visit this link.AETHOS' London-based Managing Director Thomas Mielke has also studied traits in successful restaurant executives to determine how to properly apply these skill sets (or place the individuals themselves) in the lodging discipline. With a hotel's restaurant and bar offering suddenly in the limelight now more than ever, the lodging sector is increasingly focused on how to turn the business around and boost profitability. Generally speaking, restaurant businesses (in hotels) have tweaked concepts, lured guests with celebrity chefs, altered layouts and rolled out open lobby concepts. Increasingly, though, attention is being diverted to replacing senior leadership with executives from the restaurant industry."The number of times our international clients in the lodging sector have sought assistance to poach and retain senior executives specifically from the system chain restaurant or contract catering industries (and even the retail sector) has probably quadrupled in the last 24 months," shares Mielke. "Hoteliers have identified certain skill sets and character traits that these 'industry outsiders could bring to the table and that could be helpful in the accommodations discipline." Yet, says Mielke, "not all players in the hotel and lodging sector are as open to take on board senior leaders from other sectors, nor do they appreciate what it takes -- financially speaking -- to secure some of the talent."To review Mielke's SWOT analysis and read the article in its entirety, click here.A separate research study by Mielke looks at the longevity of the UK-based Restaurant CEOs. A review of the leadership teams at some of the UK's prevalent fast casual and casual dining restaurant operators appears to indicate that spearheading a restaurant company is a "very hot seat" with far more instability as compared to CEOs in lodging, for example.Looking at the average tenure of an organization's last two CEOs, as well as at the tenure of the incumbent CEOs, and analyzing the CEO-'churn rate,' Mielke reviewed the dining operations companies and determined:- Approximately 25% of the CEOs surveyed have been in their role for a maximum of 1 1/2 years; besides a few long-standing industry veterans, there are a number of senior executives who have fairly recently joined their organizations. In fact, since 2016, there has been a reliably high number of changes in the C-Suite, typically around five per year;- The average tenure of the last two CEOs is meant to provide and additional measure of the stability of the leadership teams at the UK's leading system chain restaurant organizations. With an average of nearly five years across the surveyed companies, the sector is miles behind the hotel industry and even more unstable as it relates to the C-Suite. The tenure of incumbent hotel CEOs already stands well above that figure, with more than nine years;- The CEO "churn rate" indicates the turnover during a three-year time period for the organizations included in the study. Notably, several restaurant brands have a churn rate of 100% (or more), indicating that there is a revolving door of CEOs joining and leaving organizations. In fact, this is the case with nearly 25% of the surveyed companies. An additional 25% have a churn rate of 67%. In other words, these companies have had two CEO changes in the last three years. Read this for the further details of this study.
Article by Chris Mumford

The Labour Challenge for Japan's Casino Resorts

AETHOS Consulting Group · 4 April 2019
It is the resort nature of these casinos - no less than 100,000 square meters of guest room space and exhibition and conference facilities of between 120,000 and 200,000 square meters - that will provide operators with one more challenge however, namely that of labour. When Singapore took the plunge into the IR world and opened ResortsWorld and Marina Bay Sands it saw the creation of 20,000 jobs. In Macau employment connected to gaming, both directly and indirectly, accounts for 3 in every 4 jobs. One can assume that the eventual integrated resorts in Japan will therefore employ tens of thousands of people, but where will they come from?As is widely document, Japan has a rapidly ageing population and an ever falling birth rate. At the same time, the country is experiencing year-on-year record levels of inbound foreign tourist numbers compounded by the forthcoming Rugby World Cup and 2020 Tokyo Olympics. Contrary to many countries around the world which are currently looking to tighten their immigration policies, Japan, faced with the need to desperately find more workers to fill jobs, has been forced to look at loosening its traditionally strict immigration laws in order to allow more foreign labour into the country.Prime Minister Shinzo Abe has seen parliament accept his proposal that will open the door to 300,000+ immigrant workers between now and 2025 to the benefit of the agriculture, nursing, construction, and food and hospitality sectors. There are still however some hurdles to entry, namely:the visa will be for a maximum period of 5 yearsthe applicant will not be allowed to bring family members with themapplicants will also need to demonstrate Japanese language proficiencyIn addition to assessing language ability, the government is also making a test for each field of work, the first of which for the hospitality sector will be ready in April 2019. Furthermore, companies recruiting foreign workers will have a duty of care that includes assisting the workers find housing and take language classes. Currently there are an estimated 1.28 million foreign workers in Japan, 1% of the total population. Of these roughly a third come from China with other significant numbers coming from Vietnam, Philippines, Brazil and Nepal.As is the case for the broader hotel sector in Japan, the ability to recruit and train sufficient numbers of staff will be a real challenge for those casino operators that successfully land an IR licence. Some are already taking measures to address this such as hiring Japanese staff to work in their operations in other locations with a view to returning them to Japan when the time is right. A potential source of labour will no doubt be staff currently in regional casino markets - Australia, Macau, Philippines, Singapore - provided operators are prepared to invest in the necessary Japanese language training and to provide assistance with housing and integration. In Japan itself casino schools have begun to pop up to train the croupiers of the future but numbers are small and the negative perception of gaming makes it difficult to attractive prospective employees of the future. The greatest volume of roles to be filled will be those focused on delivering world class guest experience in the areas of hotel, restaurants, meetings and events, and entertainment. To that end, Japan's government may find itself being pressured to further relax its immigration laws while foreign casino groups seek to stockpile well trained employees elsewhere in readiness of deployment to the Land of the Rising Sun.
Article by Thomas Mielke

The 'Hot Seat' of a Restaurant CEO

AETHOS Consulting Group · 3 April 2019
AETHOS recently reviewed the stability of the C-Suite at the Top50 largest hotel organisations across the globe (click here). The findings revealed that CEO turnover at these management companies has remained relatively low - at 8% in 2018. The 10-year average stands at just below 10%.In very stark contrast, AETHOS conducted a recent study of the leadership teams at some of the UK's prevalent fast casual and casual dining restaurant operators. The study indicates what many have pointed out for a while now - spearheading a restaurant company is a very 'hot seat' indeed.It should be established that these organisations obviously only represent just a subsegment of the industry, but the brands are certainly amongst the more prominent ones on the high street. The peer group is thus only a snapshot, but a very relevant one. Looking at the tenure of the incumbent restaurant CEOs, the average tenure of an organisation's last two CEOs, and analysing the CEO 'churn rate,' the numbers depict an industry that is seemingly defined by short-term fixes.The tenure of incumbent restaurant CEOs helps to assess whether we are presently in 'times of change.' On average, the current CEOs have been in their position for just about four years. At first sight, those are not too bad numbers. Yet, looking at additional data points provides a clearer picture: 25% of the CEOs have only been in their role for a maximum of a year and a half - in other words, besides some long-standing industry veterans, there are quite a few senior executives who have fairly recently joined their organisation. In fact, since 2016 there has been a reliably high number of changes in the C-suite - typically around five per year. It is hereby noteworthy to highlight that we have already seen five CEO departures since December of last year. Although the Top50 hotel companies have also recorded between four and five CEO changes during that same time period, those represent a much lower percentile of the surveyed group.The average tenure of the last two CEOs is meant to provide an additional measure of the stability of the leadership teams at the UK's leading system chain restaurant organisations. With an average of nearly five years across the surveyed companies, the sector is certainly miles behind the hotel industry, and a lot more instable as it relates to its C-suite - the tenure of incumbent hotel CEOs already stands well above that figure, with more than nine years... Again, it is noteworthy to highlight that a few very long-standing restaurant CEOs skew the picture as 25% of the surveyed restaurant organisations have had their last two CEOs for only two years and a couple of months each - leaving very little time to those executives to develop, implement and subsequently adjust and/or amend a business strategy.The CEO 'churn rate' indicates the turnover during a three-year time period for the organisations included within the study. Remarkably, several restaurant brands have a churn rate of 100% (or more), indicating essentially that there is a revolving door of CEOs joining and leaving the organisations (e.g., Bill's, Byron). In fact, this is the case with approximately 25% of the surveyed companies. A further 25% have a churn rate of 67%; in other words, these organisations have had two CEO changes in the last three years (e.g., PizzaExpress, Wagamama). In stark contrast, only one hotel company has had two CEOs in the last three years (Millennium & Copthorne).Data seem to suggest that the restaurant industry is more volatile than the hotel space and that the CEO seat is a lot less secure than in the accommodation sector. Additionally, findings appear to indicate that - most likely heightened by the recent turbulent times as it relates to M&A activity, economic uncertainly and a higher level of competition - 'instability' within the UK restaurant industry has remained high throughout the last few years. This is not only depicted in the number of restaurants which the likes of - for example - Prezzo, Byron, Carluccio's and Gourmet Burger Kitchen have had to close during 2018 (Giraffe and Ed's Easy Diner are already following suit), but also in the changing faces in the board rooms of those organisations. In essence then, data appears to show that business shareholders are not willing to wait for long-term solutions, but instead opt for (potentially) short-term fixes. This is indicative of an industry that, as pessimists might say, is fighting for survival. On the flip side, optimists might suggest that the industry is merely adapting to change, with business owners pursuing a strategy in which one is happy to fail, but where one wants to fail fast and then move on.By looking more closely at the CEO churn rate, one might find evidence supporting the latter view of the optimists - whilst approximately 50% of the surveyed companies have a churn rate of at least 67%, the other half of companies have not had any CEO changes in the last three years. The market is therefore split in half. On the one hand, there are companies that seem to have struggled to adapt to current market conditions or where the initial gumption and leadership from the brand founders have been difficult to replicate in their successors. On the other hand, there are those companies in which leadership has successfully ridden the turbulent waves of the recent past. Most interestingly, a great majority of these organisations are playing within the fast casual dining segment (such as, for example, Nando's, PizzaHut and TGI Friday's).Be that as it may, for one reason or another, the restaurant industry remains highly volatile - or agile - however one wants to spin it. Arguably, some of the CEO turnover can be attributed to the fact that some CEOs may have opted to 'cash in' when private equity ownership groups decided to exit their investment. Other investors, upon rapidly expanding the footprint of their brands, may have recognised that the incumbent CEOs are not 'fit for purpose.' Yet, whilst change should be embraced, surely some companies may want to take a closer look at, for example, the Casual Dining Group, and see what can be learned from its CEO Steve Richards, who has been in place since late 2013. Then again, he has just announced his departure, leaving in May to join Parkdean Holidays...
Article by Thomas Mielke

Directing The Spotlight On 'Big Data', Technology And Sustainability

AETHOS Consulting Group · 2 April 2019
In essence, commerciality and business strategy are at the forefront of what will be discussed - no doubt an accurate reflection of what is of interest to travel and tourism business stakeholders. Yet, considering the global impact of the travel and tourism sector, should delegates not raise the topic of sustainability and how technology and big data can help drive change? Is that not the topic that should keep everyone up at night?Changing The Topic Of ConversationIt is understandable that industry stakeholders are keen to focus in on business strategies and best practices and/or innovative ways to better leverage technology to drive commercial success. Yet, it seems that there already is a healthy and ongoing discussion around these topics. In fact, savvy executives will find, and have access to, a plethora of research that centres on and focuses around the commercial aspects of technology and its integration and application within the hospitality industry. Most notably, a lot of recent studies have honed-in on cloud computing, interconnectivity and interoperability (e.g., Buhalisa, D. & Leung, R. [April 2018]. "Smart Hospitality - Interconnectivity and Interoperability Towards An Ecosystem", International journal of Hospitality Management, Vol.71, PP. 41-50). Facilitated by big data, industry stakeholders are eager to enhance overall communication between the various parties involved, with a view to ultimately drive efficiencies, create more targeted service and product offerings and leverage tailored marketing campaigns to drive profits. Enhanced business intelligence, facilitated by systems, tools and devices, which all speak to one another and exchange valuable information, is - in most cases - the ultimate end goal, pursued to drive the bottom line.In contrast, it seems that those discussions and research papers that centre around sustainability often fall to the wayside. Sure enough, industry executives are talking about food waste, banning plastics and conserving water and/or energy. Yet, ask a randomly selected list of 100 delegates at the upcoming HITEC (or any of the other hospitality events that attract an international delegate list) whether they were aware that 2017 was announced as the "International Year of Sustainable Tourism Development" by the United Nations World Tourism Organization and you will probably find out that the majority were not - not because they do not care or do not value sustainability, but because it is not at the forefront of their everyday discussions.Given how intertwined technology is with sustainability, and the potential positive impact it could have on driving change, surely there is somewhere a missed opportunity for the industry to gather and identify, share and/or develop best practices to leverage technology, artificial intelligence and big data to drive the sustainability agenda. This is not to say that it does not happen at all, but in an age in which everything is discussed ad infinitum via social media, one would hope that 'sustainability' finds its way into a more prominent spot at some of the larger hospitality conferences around the globe. Presumably, for example, big data and user-generated content (UGC) might help destinations better manage (and anticipate and prepare for) tourism crowds. Furthermore, big data should prove extremely valuable when assessing social and environmental impact of tourism - and what to do about it. Moreover, results of business intelligence might help identify 'quality' tourists who generate real value-add and who foster positive social transformation for destinations and their local economies and communities whilst supporting sustainable practices. Integrated and interconnected systems might help 'push' sustainable tourism packages to those travellers that are more susceptive to such ideas and dissuade others of going to Venice, Amsterdam or Barcelona, for example, when those cities are already suffering from over-tourism. And, of course, technology can be - and already has shown to be - effective when pursuing waste reduction and energy preservation initiatives.There is no doubt that technology can transform tourism management and prove impactful when promoting sustainable tourism; however, for this to happen, we need to stop thinking of technology as merely a utilitarian (and commercial) tool. Instead, we need to think of it as a mean to transform and positively impact change.
Article by David Mansbach

Board Diversity Within The Lodging Industry - Moving Away From Ordinary Thinking

AETHOS Consulting Group · 1 April 2019
Stay in front of the mandates -- In 2018, California required 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. Other powerful influencers such as hedge funds and proxy advisory firms are following suit with similar expectations. Currently, the hospitality industry is massively unprepared and needs to pivot to get in front of this impending problem.Challenge the status quo - According to a recent PWC study, in 2018, 32 new female, independent directors under the age of 50 were elected to S&P 500 board; the days of having to be a current/past Chief Executive Officer and in your 60s are over. Forward thinking companies within the lodging space have already started to recognize that there is great value in seeking out a younger board director community. Reward is not only in the area of gender parity; these individuals will have a very different skill set than more tenured board members in the areas of technology, thought and sustainability; and, in almost all cases, will have a closer connection to the consumer.Hold the Gatekeepers Accountable - I read an article where the recently retired CEO of Unilever, Paul Polman, so accurately stated, "I would have a hard time even understanding how you can be successful as a business if you cannot mirror the society that you serve in the "first place" and that driving diversity really has to be done with conviction by the CEO of that company." Maybe it is time to hold the gatekeepers accountable. I have never seen a nominating/governance committee compensation program tied to the success and/or failure of gender diversity initiatives - maybe it is time.The ideas above do not only apply to public companies; I encourage private companies throughout the lodging community to take this initiative seriously. Whether you are a management company, private owner/operator or private equity group a greater female base at the board level is a critical formula for success.
Article by Andrew Hazelton

Redefining "Environ-mental Impact" in Cruise: The Fusion of Wellness, Design, & Hospitality

AETHOS Consulting Group ·29 March 2019
A 2.5-Million-Year-Old Business Concept"Wellness" sounds trendy, but the concept has always been inherent to the hospitality industry its beginning is arguably rooted in historic spa locations where mineral-rich waters were used for medicinal baths. Belief in the restorative powers of such waters actually dates to prehistoric times. This curious fact underscores another fact -- interest in the concept of wellness is not a modern fad. And, it's a bankable product and service offering, as exemplified by recent statistics:The global wellness industry grew 12.8% from 2015 to 2017, from a USD $3.7 trillion to a USD $4.2 trillion market. To put that in economic context, from 2015 to 2017, the wellness economy grew 6.4% annually, nearly twice as fast as global economic growth (3.6%).Wellness expenditures ($4.2 trillion) are now more than half as large as total global health expenditures (USD $7.3 trillion). The wellness industry represents 5.3% of global economic output.Among the 10 wellness markets analysed, revenue growth leaders, from 2015 to 2017 (per annum), were the spa industry at 9.8%, followed by wellness tourism at 6.5% and wellness real estate at 6.4%.Cruise companies have been dipping their toe in the wellness waters for quite some time, with Seaborne being one of the latest, announcing two new Wellness Cruises for 2019 and 2020, one from Athens to Dubai and the other from Auckland to Sydney. The question for the cruise industry is not whether to pursue wellness theory and practice to entice the "new-to-cruise" set, or even to help tantalize and retain loyal-cruisers. The critical question is how brands should best do this. As such, this article communicates important findings from leading-edge research and the current thinking about best practices to support the cruise industry and their employees and guests to "seas the day."Is Everyone a Wellness Traveller?The Wellness Tourism Association defines "wellness travel" as the following: "Travel that allows the traveller to maintain, enhance or kick-start a healthy lifestyle, and support or increase one's sense of well-being." Yet, a finer distinction might be warranted based on a guest's intent or motivation. Particularly, today's consumers might best be categorized as either active or passive wellness travellers.Active wellness travellers deliberately seek opportunities for physical exercise and adventure, whereas passive wellness travellers tend to gravitate toward the more psychological qualities of wellness settings, such as the fun, rejuvenation or serenity that comes from being immersed in an environment defined by clean air, luxurious spaces, fresh foods and beautiful sights or sounds.The bottom line is "yes" - everyone, knowingly or unwittingly, is fundamentally a "wellness" consumer in their attitudes or behaviours. That is, all employees and guests care about feeling good and relieving stress - or the so-called "dis-ease" of mind or body. This is especially true in today's environment of 24/7 work demands. Not convinced? Consider three sobering health statistics from the Global Organization for Stress (2018):75% of adults reported experiencing moderate to high levels of stress in the past month, and nearly half reported that their stress has increased in the past year. -American Psychological AssociationStress levels in the workplace are rising, with six in 10 workers in major global economies experiencing increased workplace stress, with China (86%) having the highest rise in workplace stress. -The Regus GroupApproximately 13.7 million working days are lost each year in the UK as a result of work-related illness, at a cost of USD $28.3 billion per year. -National Institute for Health and Clinical ExcellenceLeaders up and down the org chart in the cruise industry must think and act on the assumption that their guests and employees are wellness consumers. Accordingly, this premise can be used profitably to attract and retain these audiences. It's not only the humanistic thing to do, it's also a savvy business move.The Wellness Triangle to "Seas the Day"New articles and conference presentations about the many facets of wellness are appearing every day on the service hospitality scene. This signals that many organizations are recognizing or rediscovering that the "human touch" - and everything that enhances it - can be a prime differentiator within a competitor set that increasingly adopts and applies technology and autonomation in very public ways.A synopsis of best practices and research in this domain can be modelled by what AETHOS calls "The Wellness Triangle." In it, the fusion of "wellness, design and hospitality" addresses active and passive wellness consumers through enhancements in People, Product and Process. It looks straightforward but understand that the relationships between each category might not always be linear and that the three categories can sometimes overlap.1. People Factor - Promote SOPs, pre- and post-hire, that relieve guest and employee "dis-ease."Screen for the "hospitality gene": Sourcing and recruitment should deliberately assess for that "service x-factor" - a combination of attitudes and traits that ensure an individual will feel "at home" and perform at a high level in demanding hospitality environments. Read more here.Select candidates who already buy-in: Recruiting people with strong existing beliefs and attitudes that are compatible with a brand's core values is equally as important, or more so, as having the technical skills that define role fit. Strive to profile applicants who demonstrably embody wellness values.Proactively offer support: Cruise companies need to practice what they preach, offering the right benefits that align with their brand, such as holistic benefit programs to employees that are already in place.Foster an ownership mentality: Employees who partake in the art and design process, for example, feel a stronger ownership to a ship or property and create closer relationships with guests.Authentic experiences matter: As a brand you need to define yourself, even if subtlety. Take, for example, Viking Ocean Cruises' Nordic-inspired spa. It is perhaps the most unique spa offering; it features whirlpools, a sauna and a snow grotto, in which a snow machine releases flurries into the air to stimulate the circulatory system.2. Product Factor - Use Evidence-Based Design (EBD) and Evidence-Based Art (EBA) to capitalize on people's unique capacities to see, hear, touch, smell, navigate their spaces and settings, and stretch their imaginations.Sensory design matters: Brands must define a strategy for their design aesthetics to maximize the effects on guests' and employees' emotions and psyches. Done well, it enhances well-being - but done haphazardly or poorly, it can undermine it.Humans are primarily visual creatures: All sensory elements are important, but colour is primary to human physiology. Therefore, colour should be used in a calculated way, and that often means using outside experts to help match colours to certain physical or psychological environments.Remember to think holistically: Light and colour are fundamental, but the whole is always greater than the sum of its parts. So, brands must carefully mix or balance colour with the right sounds, textures, movements and aromas.Biophilic design: Remember that people tend to like authenticity in experience, so whenever feasible, design aesthetics should capitalize on people's innate attraction to connections with nature or naturalistic features - water, natural light, foliage, etc.3. Process Factor - Be intentional and disciplined in the use of technology and automation.Relieve employee "dis-ease" in service delivery: Two approaches should always be top-of-mind. First, automate service points that don't need the human touch, or that would detract from it. Second, streamline systems and processes to drive cost-effectiveness to allow greater investment in guest-facing and employee-facing perks that promote wellness.Relieve guest "dis-ease" in service receipt: Sensory design and materials impress the guests' minds and bodies by offering them multiple ways to communicate, perceive the environment, and find their way through the myriad of spaces and settings that cruises offer.The bottom line is, Wellness isn't going anywhere and hasn't for millions of years. To embrace the methodology and do it right, cruise companies need to have the right people, products and processes in place to set themselves apart and to attract both the active and passive wellness cruise travellers. AETHOS predicts that we will continue to see major brands innovate and create ways to cater components of their ships to those in the wellness crowd, while others, such as Blue World Voyages, will dedicate their entire ship to wellness. For the cruise industry, it's not only the humanistic thing to do, it's also a savvy business move.

Hospitality Leadership Solutions Series: The 'Hospitality X-Factor', Foundation Of Long-Term Success

AETHOS Consulting Group ·20 March 2019
Foundations of Long-Term Success (as published in Hotel Management, March '19) 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."People are the product in the hospitality industry." This simple principle implies that talent pipeline and continuity of bench strength are critical drivers of business success. If your company's goal is to identify those who will deliver the strongest return on investment, the sad fact is that you likely are screening applicants or appraising incumbents based on incomplete or misguided performance characteristics. Simply put, most organizations manage talent up and down the organizational chart using metrics tied to short-term or tactical views of performance versus a strategic one.Academic research and real-world HR practices alike traditionally emphasize task performance, which reflects the technical core of specific jobs, such as software expertise, menu knowledge or compliance with safety and sanitation standards. Domain knowledge is important, but it has limited utility, primarily because the focus is on a narrow (i.e., job-specific) set of tasks and responsibilities. Evaluations based on task competencies alone are tactically oriented and good when "hiring people for today." However, this approach is ineffective for identifying highly adaptable employees who are best at learning new information, growing with increased role demands and succeeding across different departments, geographies or platforms. "Future-casting" is how we describe this more strategic philosophy of "hiring people for tomorrow."AETHOS Consulting Group recently collaborated with Cornell University researchers to investigate characteristics that define individuals who are ripe for future-casting in hospitality settings. Instead of task performance, this study validated the modern concept of contextual performance, which refers to a set of knowledge, skills and attitudes that are relevant across a wide array of roles and settings. For example, the ability to effectively use a point-of-sale system is an example of a task-specific performance dimension because it may be essential for restaurant servers but unnecessary for restaurant cooks. However, teamwork and related behaviours arguably are important to effective job performance for servers and cooks, and many other jobs up and down the org chart, regardless of function-specific tasks. The AETHOS-Cornell study found that there was only one factor (i.e., a single characteristic) that encompassed what previously was thought to be three distinct facets of contextual performance:Conscientiousness initiative, such as persistence and taking on responsibilities that go beyond expectations.Interpersonal support, such as helping and cooperating with others, also known as organizational citizenship behaviour.Organizational support, such as favourably representing the organization and following procedures and rules.In other words, the three "mini behaviours" above are merely different expressions of just one overarching behaviour that we call the "Hospitality X-Factor." The study further discovered that this concept is defined by a highly stable (reliability = 0.89, p < 0.001) set of 13 performance attitudes and behaviours, which also are statistically robust regardless of employees' age and sex. These 13 characteristics can easily be grasped and appreciated when presented as a "word cloud," which shows the relative importance of each characteristic depicted by text size: the larger the text, the more important the attitude or behaviour.These research results are not some hypothetical mumbo jumbo--they have rather dramatic and real-world implications, as presented at the 2017 Cornell Hospitality Research Summit. Particularly, the study established that individuals who scored higher on the newly discovered scale for the Hospitality X-Factor also received statistically higher ratings by their supervisors on their overall job performance (r = 0.81, p <: 0.001). There also were some tantalizing implications for millennial workers, who have a reputation in pop culture for having a passive work ethic. Contrary to such beliefs, the AETHOS-Cornell study found that, even for younger employees, higher scores on the "Hospitality X-Factor" scale predicted solution-driven behaviours, including "accepting feedback with an open mind, taking on additional responsibilities and persisting in overcoming obstacles to complete their tasks."Adaptability and a solution mindset both are inherent to high levels of the X-Factor and allow these employees to be leveraged in many constructive ways by companies over time because these individuals tend to slide more readily and effectively into different roles and geographies, as well as functional settings that are becoming more fluid or dynamic, such as increased telecommuting, temporary office spaces or reliance on mobile technologies.In short, high X-Factor employees legitimately possess a widely transferrable skill set. Retaining such talent is akin to an "HR annuity" and it pays dividends in promoting productivity and ongoing bench strength in succession plans. The lesson is simple and straightforward--strive to hire and promote people who have a strong capacity for contextual performance, not just domain knowledge. Your service standards, guest satisfaction ratings and net promoter scores should increase in accordance with X Factor levels in your employees ... up and down the organizational chart.
Article by Andrew Hazelton & Matt Peterson

The Employee Benefit Hotel Businesses Can't Afford Not to Offer

AETHOS Consulting Group · 6 March 2019
Defining Employee EngagementEmployee engagement is a very old premise, but it has become an increasingly hot topic for our industry over the last decade. The concept is less about being "warm and fuzzy" to employees and more about aligning in a thoughtful way an organization's people practices and business practices. This means paying attention to a company's internal "brand personality" via a leadership culture and core value set that demonstrate support and empathy for its primary brand ambassadors.Engagement ultimately boils down to emotional connections between organizations and their employees, i.e., a marked sense of vested interest in their personal and professional success. This, in turn, generates positive influences on employee behaviour, drive and work ethic.Of course, this is simple in principle but less straightforward in practice. Achieving and sustaining an engaged workforce requires the hotel industry to treat its people fundamentally as their number one customer. Success or failure in this goal can entail long-term survival of a given business, since a disengaged workforce corresponds to multiple financial repercussions, including lack of productivity and the cost of an unwanted employee turnover.The Power of Engaged EmployeesMany studies show that higher levels of employee engagement deliver a competitive edge to organizations. To be sure, engaged employees exhibit greater loyalty and motivation due to their own great brand experience. Such employees actively deliver on external brand promises and thereby drive stronger guest satisfaction or net promoter scores. The bottom line is that there is a persuasive business case for treating employees as your top customers. In hotel terms, think of it this way: "employee engagement = guest satisfaction," which translates to higher occupancy plus greater spend plus greater ADR and a more successful business over the long term.Building an 'Engaged' CultureEmployee engagement must be an integral part of an organization's culture for it to be authentic and sustainable. Owners and leaders must commit to a meaningful, accountable and measurable employee engagement plan, which should include a platform or system that promotes two-way communications up-and-down the organizational chart, as well as targeted investments in ongoing training and development programs for employees. Again, the goal is to earmark employees as your number one customer, so this complex, integrated process should be implemented and managed with the same care and attention to detail as any other major branding initiative. Over time, it can revolutionize an organization's daily practices.Consider these key components to help evolve your company culture and workforce from being "disengaged" to "engaged":Passionately Adopt a 'Your Employee Is Your #1 Customer' Philosophy. The DNA of any great hotel organization is the people who have direct interaction with guests and other critical stakeholders. You need to establish a culture and expectations whereby leadership constantly contemplates how to improve its service to the #1 customer. Professional success and fulfilment of employees equate to business success and growth.Strengthen Working Relationships between Managers and Employees. The trust and working rapport that leaders have with their direct reports is critical, but the top-down engagement shown to employees must be genuine. This requires more frequent conversations or interactions with employees to proactively discuss their needs or priorities. At end of day, employees are more likely to go the extra mile for a company or a supervisor they trust, respect and believe in. This extra mile could be in the form of a guest experience, in supporting or training a co-worker, or simply NOT leaving your company for another. Position your employees for success outside your company, but ensure they never want to leave because they feel respected and valued as more than just an "employee."Establish a cultural of collaborating and innovative thinking. The relationship an employee has with their peers is a close second to the relationship they have with their direct reports. Therefore, it's important to foster an environment in which ideas and thoughts are shared and company goals are tackled in a team-oriented fashion. This directly leads into your employee's voice.Listening to the Employee Voice. Leadership should always strive for more innovative ways to give their teams a voice. Traditional training programs and sessions often involve large departments with many employees, so you might consider instead augmenting this with more intimate focus groups that can drill down on needs, priorities or strategic issues of the organization. Treating employees as "owners" of the business empowers them to share their insights and feedback, which fosters increased engagement and role satisfaction.Overcommunicate. Employees at all companies want to know about the latest strategic initiatives, even if they don't impact them immediately or directly. In fact, routinely sharing an appropriate level of detail about the company's plans and achievements fosters a positive culture and expectation of candour and transparency - variables that collectively help to connect and ground employees to an organization.These five talking points merely offer a quick snapshot, and each could elaborate on sub-point upon sub-point. It's important to keep in mind that no one can give you directions to the finish line, if you don't know where you are on the racetrack. Informal manager walk-arounds and 1:1s combined with more formal employee surveys and Q&A sessions are among the best and most productive tactics to extrapolate key data from your employees to get everyone aligned and moving in the right direction faster and with more purpose. Make no mistake, purpose is a make-or-break benefit that employees look for, stay for, or leave for.

CEO Turnover 2018: A Study of the Top50 Largest Hotel Management Companies

AETHOS Consulting Group · 3 March 2019
This sense of stability is enhanced further when we carve out the majors, the ten largest global hotel brands. Among this group there was not one change in the CEO role in 2018, and the two in the previous year had been very smooth, well-planned, succession events at Choice (Pat Pacious) and InterContinental Hotels Group (Keith Barr). Having tracked CEO turnover for the hotel industry since 2004, we have discerned a correlation between market conditions and the profile of required leadership. The days of the Global Financial Crisis witnessed a surge in new CEO appointments as boards sought the requisite executive direction to steer them out of economic difficulties - seven changes in 2018. Once out of recovery mode, stabilised and firmly into expansion mode, another spike in turnover was seen five to six years later when firms went after leaders who could deliver aggressive growth - eight changes in 2012.Click for larger imageAs David Mansbach, Managing Director at AETHOS Consulting Group, recently highlighted in his article on the lack of diversity at US restaurant groups (click here), so too is the hotel sector under-delivering in its representation of women in CEO roles. We are pleased to see a gradual climb in the number of female CEOs, having risen from 2% in 2011 to 16% in 2018, with the addition of Sabina Fluxa at Iberostar and Avia Mizrachi-Magen at Fattal. The pace of change however is glacial and, more disturbing, when we look at our Top 10 group, there is not one woman on the list. This issue seems especially pertinent in North America, where none of the largest hotel groups has a woman in the driver's seat.The time to be a CEO is clearly in one's 50s. Most assume office at the beginning of their sixth decade and leave shortly before hitting 60. The youngest CEOs are to be found in Asia and at private companies as opposed to publicly listed firms in which a few extra years of experience appear to be valued. When it comes to experience, boards of directors have shown a stronger preference for in-depth knowledge of and track record in the hospitality sector. The number of CEOs from the hotel space has gone up, particularly during the past few years of dynamic sector growth.If we focus on the Top 10 largest multinationals, we see that industry expertise has become much more highly valued over the past 15 years, with every CEO in this group having cut their teeth in the hospitality sector prior to taking the top job. The days of opting for a CEO hire from alternate sectors, such as FMCG, appear to be a thing of the past. Similarly, as global expansion has been at the forefront, the individuals holding these leadership positions have become increasingly better travelled than their predecessors.Click for larger imageThe percentage of CEOs with prior experience working in a foreign country rocketed from 20% to 60% over the 2004 to 2018 period. A positive trend has been the increased separation of CEO and Chair titles. When we began surveying, half of the CEOs were also Chairs of the board of directors. The pressure for better, more transparent, corporate governance has - we are pleased to say - resulted in clearer distinctions between the role of the Chairperson and CEO and their related accountabilities. The average tenure of CEOs at these Top 10 firms is heading back to tracking with the industry average of nine years. This had slipped in 2012 to an average tenure of three years, but the past few years of stability have seen this climb to six.According to industry talk, we may be at or near the peak of the cycle. If that is true, we should not be surprised to see turnover potentially picking back up in 2020/2021. As we have seen, economic adversity typically triggers a higher degree of scrutiny placed on those running businesses by their shareholders and owners, which often results in a new nameplate being fixed to the door of the CEO office.
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.

Newletter

Thank you for subscribing. Your email address has been added to our mailing list.
Close
To subscribe to the GDPR Bytes Newsletter please enter your contact details below.
An error occured, please check your input and try again.
I do want to receive the GDPR Bytes email newsletter.
By submitting this form, you have read and agreed to the Privacy Notice of HFTP.
You may unsubscribe to these emails at any time.
CancelSubscribe