It is generally the case that when trading conditions improve so too does an employee's earning power. Typically, people make more when the market is strong than during a downturn. The London hotel market has been showing signs of improved health in 2005. According to figures produced by The Daily Bench, London's five star hotels have experienced a year-on-year gain of 5.10% in RevPAR. We therefore decided to see if management's earning power has indeed increased in a corresponding manner.

Using data acquired through our proprietary HCE Hospitality Compensation Exchange® programme, we analysed average base salaries of seven key management positions at luxury hotels in London. We took the 2005 figures and compared them against those of 2004. As the table below illustrates, every position in the peer group recorded an increase in average annual base salary:

Annual Base Salary	2005 Average	2004 Average	% Increase
Resident Manager	£69,300	£64,508	7.43%
Financial Controller	£58,096	£51,747	12.27%
Director of Human Resources	£50,713	£49,021	3.45%
Director of Sales & Marketing	£71,275	£59,781	19.23%
Chief Engineer	£44,491	£40,804	9.04%
Director of Food & Beverage	£49,735	£48,093	3.41%
Executive Chef	£61,560	£57,210	7.60%

The average increase was 8.92% with Sales and Marketing Directors recording the greatest increases. We then explored further to see if the hotel's room count had any impact on the size of salary increase. We compared the average annual base salaries of management at hotels of less than 200 rooms against those at hotels of more than 200 rooms. The results indicate that management salaries rose modestly higher at smaller hotels than at larger hotels of over 200 rooms.

	2005 vs 2004 Increase
Average Annual Base Salary	Less than 200 rooms	Greater than 200 rooms
Resident Manager	1.37%	11.75%
Financial Controller	-2.96%	16.01%
Director of Human Resources	24.44%	-4.61%
Director of Sales & Marketing	7.87%	20.06%
Chief Engineer	11.95%	9.50%
Director of Food & Beverage	10.13%	5.92%
Executive Chef	11.40%	1.15%
Average Increase 2005 vs 2004:	9.17%	8.54%

We also saw that bonuses had increased significantly year-on-year, typically a clear indicator that trading conditions have improved. This was particularly emphasised by the dramatic increase in Sales and Marketing Directors' bonus awards which are typically tied directly to performance targets such as room night production and revenue generation. Chefs also recorded a considerable increase.

Average Annual Bonus	2005	2004	2005 vs 2004 Increase
Resident Manager	£8,709	£5,604	55.41%
Financial Controller	£7,137	£6,575	8.54%
Director of Human Resources	£6,215	£5,543	12.14%
Director of Sales & Marketing	£8,343	£4,677	78.38%
Chief Engineer	£4,107	£3,663	12.11%
Director of Food & Beverage	£5,951	£3,505	69.77%
Executive Chef	£8,165	£3,858	111.64%

It would appear therefore that salaries do indeed rise with improved market performance. In fact, London hotel management salary increases have considerably outstripped hotel operating performance increases as recorded in RevPAR. An average salary increase of 8.92% versus a recorded RevPAR increase of 5.10%. Unsurprisingly however, it is a different story further down the career ladder for those who are not in the management ranks. Our survey of luxury hotel salaries in London showed that the average increase in base salary for non-management positions is approximately one third of that accorded to their superiors, at 3.27%.