Tough Truths and Myths about the Hospitality Industry – Part 3

Perhaps to the relief of many, and obviously to my own relief, this article ends my focus on the subject of myths in the hospitality industry for the year. The subject may come up during ‘conversations’ with individuals I intend to be hosting on the platform in other series.

For now, imagine you are in an interview for a job or you are an employer interviewing to fill a vacancy.

‘What is your salary expectation?’ This question usually signals the end of the interview session. While interviewers use this question to assess and/or gauge their ability to pay, interviewees think it is a tricky question!

Here are some myths related to ‘salaries’:

1. Hospitality workers are not well paid.
2. All hospitality jobs pay minimum wage.
3. Jobs in the sector are underpaid.
4. Hospitality jobs are low wage positions.

‘Salaries’ is a sensitive subject to discuss. It is therefore usually discussed ‘behind closed doors’! However, it appears to be a deep concern among many, including students pursuing careers in this cherished industry to whom I’m dedicating this article.

People use different words to describe the amount of money they make from working at a job or career, hardly quantifying the benefits which come in kind. Below are some clarifications to establish a common understanding among ourselves before we plunge into the discussion.

Pay is the money that you earn for work done or services rendered. It may be your wage or salary.  Wage is the money that you will be paid and it is usually calculated on an hourly or daily basis.

Salary is the money that you will be paid every month for your work/services.

Earnings refer to money earned from employment which usually includes your salaries/hourly wages, tips, commissions and bonuses.

Personal income goes beyond your wages or salaries. Should you have some investments from which you are receiving some dividends, or other monies, these would add up as your income. It is total money received including earnings, benefits etc.

From the point of view of the Employer/Owner, salaries in themselves is just a tip of the ice berg! Employers must capture and properly account for their cost of employees; it goes beyond salaries. It involves direct labor costs (regular wages, overtime hours, workers insurance, and social security contributions) and indirect labor costs (expenses such as uniforms, bonuses, recruitment and turnover). It is more appropriate, therefore, to address the concerns about salaries under ‘total remuneration’.

Technically, the money you will receive for the work you perform is known as ‘salary’. Total remuneration on the other hand includes both financial (direct remuneration) and non-financial compensation (indirect remuneration). Remuneration only being the financial compensation which includes salary and any other financial compensation such as bonuses, tips, travel expenses and pension plans etc.  The non-financial compensation are benefits related to health/medical, educational/training opportunities, lifestyle and even child care assistance (which comes in various forms)! 

With the above understanding lets dig into the above myths which is represented by the statement below:

Hospitality workers are not well paid

There may be some truth to this statement, but a half truth is dangerous. I must confess it is challenging to assess the compensation structures and the packages employers are offering in this highly fragmented industry.

As indicated in my discussion in the previous post, the accommodation sector has hotels with standards ranging from budget, one through to five star rated hotels, guest houses and now Airbnb facilities.

Similarly, in the food and beverage service sector, there is the broad category of formal and informal businesses and within which are many different types and standards of eating and drinking facilities.

Further, job positions in the hospitality industry come with varied job specifications depending on the size of the hospitality facility and they are broadly divided into categories; unskilled, semi-skilled, skilled and managerial with each of these meeting different educational qualifications.

There are also different employment categories; part-time employees, fixed –term employees, casual workers, seasonal workers, agency workers, interns and self-employed (company owners)!

The question is on what basis are we asserting that ‘hospitality workers are not well paid’?

Entry-level positions may be paid the minimum wages but they in particular, have opportunities to supplement their income with tips and other benefits depending on the organization they are working with. Mid-level and executive positions offer reasonably competitive remuneration and like any other industries, valuing both practical experience with a tertiary certificate.  

Many factors influence what goes into compensation packages:

It was not too long ago, during the corona virus pandemic (2020) that the few hotels who were partially operating had to quickly renegotiate with their Unions. Some hotels with an average occupancy of 4% had to put as many as almost 90% of their staff on indefinite leave of absence. Due to low occupancy levels 50% of monthly employee salaries were paid. So how well a facility is performing influences the remuneration package.

Like any field, entry-level positions may start with lower wages, but the hospitality industry offers a wide salary range that increases with experience and position. Executive chefs, hotel managers, and event coordinators often have competitive salaries with other industries.

Average remuneration may indeed seem low but this could be due to the large salary discrepancy between basic, entry-level and those in executive management positions. Interns who are students and work for training purposes may be paid less or not at all but would enjoy some basic benefits.

Top executives take higher remuneration for their experience that will bring business to the company since some compensation structures incorporate incentives. Internationally, you may see various remuneration definitions: …it can be misleading only to benchmark the cash portion of pay (basic salary), as you may be comparing one company (40% benefits, 60 % basic salary) that offers fewer benefits in addition to cash, to another company (50% benefits, 50% basic salary) that offers more benefits.  Total guaranteed package for both is 100, but the mix varies. – What makes up your Remuneration?

Jobs in the sector are underpaid

“Remuneration quantum is influenced by level of hard work, honesty, commitment and loyalty. Skills and competencies are necessary but most people with education would have this. Results counts and not effort, when it comes to fixing remuneration. Certain skills e.g. Food and Beverage are critical and scarce and attract high remuneration.” – Reference to a Hotel Owner/Manager.

For this reason, educational institutions should ensure that their hospitality and tourism students have a lot of practical experience whether in the form of practical labs or an increase in the number of internships before they graduate. This would make them well prepared and hopefully better suited to thrive in the industry.

The industry provides avenues for you to climb up the ladder in your career. As with other industries, the higher you go, the wider your exposure and experience gained and the more you earn.

It is known a fact that labor expenses are the largest cost component in the hospitality sector!

I hope the above information is useful to our up-and-coming professionals!