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Historically, the hotel industry is not known for its leading-edge approach to reward. However, increasing competition both for staff and customers coupled with a typically high level of employee turnover and the need for organisations to grow and expand has prompted many employers in the sector to take a fresh look at what they offer.
Over the past decade, the UK hotel industry has undergone something of a change with a number of smaller boutique hotels springing up alongside major well-known chains such as Hilton and Marriott.
Among the first to launch were Malmaison and Hotel du Vin, which opened the doors to their first hotels in 1994. At the time, both were launched independently, however, in 2004, Hotel du Vin was taken over by Malmaison’s owner, Marylebone Warwick Balfour and the two chains are now run together by the same management team. Although each brand has since retained its own identity, both have undergone a benefits revamp in order to align the reward package for employees across the two chains.
Sean Wheeler, group director of people development for both brands, explains that both chains are in fact facing very similar issues. “Malmaison is more of a cosmopolitan hotel, more city based. Hotel du Vin is more rural, more like a stately home-type place, [it] is much more classic, it has a lot more of the leisure market, it’s usually in cathedral cities and towns of interest, whereas Malmaison is much more fast-moving [and has] got a bit more edge to it. Interestingly, when you get into the core of what both hotel companies are about, they’re exactly the same. They’re about great service, great quality, delivered by people who want to give the guests a great time every time they come back. That’s exactly the same [for both], they’re just packaged in different boxes.”
Currently at the top of the company’s agenda is expansion. Three new hotels will be opened by the end of this year, followed by a further five next year and another four in 2008.
Unsurprisingly, recruiting staff for each of these hotels is currently high priority. But Wheeler explains that retaining existing employees is just as critical. “It’s important we retain as many of the people who’ve got the product knowledge and the hospitality service skills as we can, so that, as we grow, we can transfer that knowledge to new hotels. At least 30% of the team in a new hotel will come from within. That’s why we want to retain [people] because we want to try and take some of the culture and values to the new hotel, and then that team will develop and nurture the new team from local areas.”
Since joining the company 18 months ago, Wheeler has looked to achieve this by overhauling the reward package. This was particularly key for Hotel du Vin employees, who previously received very little in the way of perks. His work culminated in the launch of benefits such as a voluntary benefits plan last year, foot care treatments in January and a childcare voucher scheme, which was introduced in May.
Such is the importance placed on benefits, that the company has chosen to take money away from other areas to spend on perks. “Last year, we actually took money off our marketing budget and moved it into the pension budget because we felt that’s where we wanted to focus,” says Wheeler.
The main element of its revamped package, however, is its flexible benefits scheme, which was launched in January this year. This offers employees three tiers of benefits provision depending on their grade, and primarily includes protection benefits such as critical illness cover, income protection and life assurance.
All employees qualify for life assurance and critical illness cover after one years’ service, those at a supervisory level can also opt for income protection, while the package for managerial staff also includes the option of taking out private medical insurance.
This type of scheme is still relatively rare among employers in the hotel industry. Gareth Edwards, director of communications and PR for Springboard, which promotes careers in hospitality, says: “It’s still in its early days. [Employers] are aware of the need for things like flexible working. The issues are always going to be those of cost. [Employers] are very aware that the more attractive the benefits package is, the more people are going to apply for jobs.” He adds that this will also aid staff retention.
So far, the approach seems to be working, with the company recording reduced rates for staff turnover, which currently stands at about 30% and is below the industry average. “If you think about how much money we spend on recruiting somebody, it actually saves us money on recruitment costs and will improve our productivity. So we know that while there is a cost to us, it’s actually an investment because it will save us money on trying to develop new people or trying to find new people because we know if they’re hooked in they’re likely to give guests better service. They’ve got more confidence, more knowledge about what we do, who we are and how we look after guests so we think it’s a good investment to make,” Wheeler explains.
He aims to build on the momentum created by the new package of benefits by regularly updating what is offered to staff. The next items on the list are likely to be healthcare and the option for employees to buy up to an extra week’s holiday a year. “We try to launch something every six months to keep things fresh,” he adds.
The company’s bonus scheme is also currently under review. From next year, some groups of employees will be able to participate in it for the first time in order to drive business in particular areas of hotel management. Currently, restaurant managers do not qualify for a bonus, while sales managers can earn up to 20% of their salary.
“We want to make it really tough but worth earning. We haven’t finalised it yet but [among] our restaurant managers, we see a big opportunity to drive sales in the restaurant. We want to give them 20% of their salary if they hit certain targets, be it sales targets or profit targets. For our sales managers, we want to give up to 50% of their salary if they achieve certain targets. So there are going to be tough targets but there’s a real prize at the end if they hit them,” says Wheeler.
One thing that is evident from spending time in one of Malmaison’s hotels is that the company prides itself on the personal touch for both employees and guests. To enable staff to experience hotel life from the other side, the company offers them the opportunity to take up rooms for themselves, and friends and family, at a heavily-discounted rate. At the end of their induction period, meanwhile, all are invited to bring their partners for a free meal and night in the hotel where they work. “That’s important because, from a business perspective, they can have much more conversation with the guests about their experience. It’s really low cost but high value to us,” explains Wheeler.
He adds that the practice can also help employees in their home lives by allowing them to show their families where they work. With the long hours that hotel staff are often expected to put in, this can help to build a greater sense of engagement with the hotel and its practices.
This sense of building personal relationships extends into the communication of the benefits package. At its launch, and subsequently once a quarter, representatives from the company’s benefits consultants Davidson Asset Management visit each of the hotels to explain the package to staff and answer any queries they might have. Wheeler explains that he hopes to retain the practice as the company expands.
The proof of the scheme’s success, however, will be in employees’ view of their package. Wheeler hopes this will be reflected in the results of the company’s next annual staff survey. “It was number two on the top three issues they thought we could improve about the company. I want to see that down the list or off the list this year.”
Malmaison at a glance
Malmaison opened the first of its boutique hotels in Edinburgh and Glasgow in 1994, when the company was founded by Ken McCulloch. As the hotel chain grew, its ownership changed hands several times, before it was acquired by property group Marylebone Warwick Balfour (MWB). In 2004, MWB purchased boutique hotel chain Hotel du Vin to operate alongside Malmaison.
Despite the similarities in the concept of both brands, however, there is very little overlap between the two. Malmaison hotels are primarily city based, while Hotel du Vin sites are typically located in more rural locations and cathedral towns.
MWB now operates nine Malmaison and seven Hotel du Vin hotels, with three new openings planned by the end of this year, followed by a further nine over the course of the next two years. Between the two brands, the company employs some 1,500 staff.
Group personal pension available to managers after three months’ service and all other employees after one year. Employer contributions of up to 3%, 5% or 10% depending on employee grade.
Private medical insurance (PMI) for executive staff. Life assurance and critical illness cover included in flexible benefits scheme for all employees. Income protection offered to supervisors and PMI to managers through flex.
Voluntary benefits scheme provided by HBOS. All employees can take advantage of a staff rate on hotel stays of £35 a night, and a family and friends rate of £60 a night for bed and breakfast. Staff also receive 35% off meals in hotel restaurants for themselves and up to four guests.
25 days as standard.
Vouchers awarded through employee recognition scheme, Mal Moments. The firm’s annual employee award ceremony is known as the Corkers.
Employee case study
John Woodward, a head chef at Malmaison, joined the company when it opened its London hotel in 2004.He particularly values membership of the company’s pension scheme because it is the first one he has belonged to. “I find it really useful as I never really had one before.”
Working in an industry where staff typically tend to move between employers, Woodward likes the fact that he will be able to continue to save into the scheme should he ever wish to move on. “This one’s not really tied to Malmaison so if I move on I can take it with me.”
The company’s healthcare benefits, such as life assurance and critical illness cover, are also important to him. Woodward explains that they give him peace of mind: “If something happened to me, my wife would still get a chunk [of money].”
Sean Wheeler joined Malmaison and Hotel du Vin as group director of people development 18 months ago. Prior to this, he spent eight years as group HR manager for the restaurant group of Mitchells and Butler, where he was responsible for brands such as All Bar One and Vintage Inns.
He began his career at the operations end of people management working for TGI Friday’s in roles such as UK national training manager and operations director for London and the M25. Wheeler believes this experience has been invaluable in his current job.
“What’s been quite good in this role is the knowledge of working in different cultures because Hotel du Vin and Malmaison are quite different and you have to act differently, so it’s not been that difficult for me. I’m used to working across different cultures all the time and [understand] how you behave. I’ve always been in hospitality at the front end of people management but from an operational perspective. I think that’s really helped me now. It’s a different environment, but it’s about looking after customers, [and] about delivering food quality and service. I’ve done that throughout my career so I have an empathy with the guys on the floor. I’m a little bit removed from it these days but you never really lose it.”