Over the past decade the Eastern Europe hotel market has opened up significantly as both corporate leisure business looks East. Today cities such as St. Petersburg, Prague and Budapest are receiving great interest from visitors and hotel developers alike. International hotel chains such as Hilton, Marriott, Rezidor SAS, Kempinski and Corinthia already in the marketplace are already well represented in the marketplace. In addition, local groups such as Danubius in Hungary are actively increasing their market presence.
This industry growth has, in turn, seen an influx of foreign management as well as a steady increase in homegrown talent. In recent studies of compensation levels at hotels in the four and five star sectors we found that in Budapest 50% of the General Managers are expatriate, in Prague 80% and in St. Petersburg 100%.
Further down the hotel hierarchy, management positions are increasingly occupied by local professionals. For example, only 20% of the four and five star hotels in Budapest have an expatriate Director of Sales. Some hotels however obviously still feel that there is not enough local talent for certain positions. For example, Executive Chefs are very often expatriate employees: 33% in Budapest, 100% in St. Petersburg, and 20% in Prague.
But which city pays the best? As Eastern Europe increasingly appears on the 'Next Assignment' list for hotel managers we thought we would take a look at pay levels in the Budapest, St. Petersburg and Prague to see how they compare. We have recently conducted surveys of salary and bonus levels in management positions at four and five star hotels in each city and have analysed the results together to see if there is any disparity between the three markets. For comparison purposes, we have converted all figures into US Dollars net of tax.
Table A below illustrates General Manager base salaries in each city.
A percentile is a measure of location in a distribution of numbers that defines the value below, which a given percentage of the data fall. For example, the 75th percentile is the point below which 75 percent of the data fall.
As we can see, St. Petersburg hotels pay the highest while the average base salary for General Managers in Budapest is 18% below that of St. Petersburg. We were curious to see if this was also the case for other positions so we analysed data for Director of Sales & Marketing and the Executive Chef positions. As you can see, St. Petersburg still pays the best but Prague now pays less than Budapest.
But what about bonuses? Again, it's the same story with St. Petersburg paying an average General Manager bonus of $21,547. It should be noted however when reviewing Prague's data that 2003 was a poor year in terms of financial performance due to the impact of the sever flooding in the city and closure of some hotels.
It therefore appears that St. Petersburg has the highest financial rewards of all three cities. Something worth bearing in mind when your company next mentions that move to Eastern Europe.
About the Author
Christopher Mumford is Managing Director of HVS Executive Search in London and specializes in sourcing talent for the hospitality industry throughout Europe, the Middle East and Africa.