A brief rundown on creating successful incentive programs in luxury multi-national hotel settings

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Cover Page
Evaluating Incentive programs in a 5 star hotel environment
Evidence-based Consultancy Report, 7002EHR, Evidence-based Practice in HRM
Author: Charles Audley

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Contents Page
1 Executive Overview
2 Aims and Scope
3 Research Design
4 Research Review
5 Findings and Implications
6 Conclusions and Recommendations
7 References
Appendices
Appendix 1
Appendix 2
Appendix 3

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Executive Overview
Charles Audley, s2158468.
Selected Option: Option 4, Head of HR, Multinational Hotel (5 star).
From: Head of HR, Multinational Hotel (5 star)
We have been thinking about using incentives to encourage our bar, restaurant
and front counter staff to sell more and better products for many years, but never
really followed it up. What is the “state of the art” on using incentives? I’ve always
heard there is “dark side” to incentive rewards; we certainly wouldn’t want that!
...but if they’d improve performance, we’d be interested.
· context and industry information
I will be investigating luxury hotel incentive strategies, with a focus on
Multinational companies that were founded in the USA, such as Marriott and
Hilton hotel chains. I will discuss the costs in rolling out such incentive strategies
and how this is best considered as a return on investment.
· nature of the problem
I will be investigating the efficacy of incentive programs and how the can be best
tailored to suit employees wants, rather than what managers think their’
employees want. I will also discuss how inflexible and poorly time-managed
incentive programs are destined to fail.
· review of the evidence
I will be analysing the latest peer-reviewed literature on incentive programs,
with a focus on food and beverage upselling, but also covering the upselling of
hotel rooms and in-hotel services (spa treatments, valet parking etc.).
· analysis of options
In this section I will look at evidence-based solutions. I will critically analyse why
certain strategies may or may not translate to improved sales in a multinational
context, and provide reasons for my perspective. I will attempt to cover incentive
programs that have either been validated with a luxury hotel brand or are
suitable candidates.
· recommendations
My recommendations will be based on the most up-to-date information available
and consider factors such as employee demographics, location, age, family status

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etc, to tailor the incentive program effectively. I will also discuss time frames and
estimate costs for a typical location/area.
Aims and Scope
1 To explore incentive programs across sectors
2 To identify currently proven incentive programs in hotel setting
3 To focus on what’s working in luxury hotel chains
Must make mention on an incentive program which rewards signing up clients to
a Loyalty program. This effectively results in a permanent upsell. Include data.

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Research Design
Exploratory
Research Review
It is vital that the incentive program is not a replacement to a training need.
Training in upselling is critical to the success of any incentive program aimed at
increasing revenue from existing customers (Blumberg, 2005).
As part of a compensation strategy for hotel employees, rewards/incentive
programs are increasingly being used (Fischer, Gross & Freidman, 2003).
Similarly, Quain, Sansbury and LeBruto (1999) suggest that increases in revenue
are typically not derived from new sources, they come from your existing
customers.
Quain, Sansbury and LeBruto (1999) suggest that rewarding the server is a top
ten strategy for increasing profits in the restaurant industry.
According to Simons and Enz (1995), employees from different departments
responded in a different way to the job rewards offered by the organization,
suggesting that individual differences and individual-level variables should be
considered when designing incentive programs (from Maroudas, Kyriakidou &
Vacharis (2008).
Essentially, the incentive program needs to be something that the employees
want, not necessarily cash, or what line managers think they want. Ideally, a
choice is offered. The time frame is also particularly relevant, with short-term
superior to long-term. Feedback is vital, and a real-time display is the most
effective way of maintaining motivation. The desired change in behaviour should
not be too difficult to obtain – it should not be a replacement for training
required to carry out the function. Another consideration is how the incentive
program is delivered; a massive roll-out will be less effective than a staggered or

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incremental change, and the more that the idea is discussed and explained by all
levels of management, the more likely it will be accepted by the target
employees. Finally, the program needs to remain fresh, or employees will quickly
lose focus. Considerations such as Return On Investment (ROI) are important, as
well as having a clearly defined goal/s. Popular programs currently use gift
certificates, travel/accommodation vouchers, an employee trophy that is passed
around by employees, a points system which corresponds to a gift catalogue,
providing opportunities to additional training/workshops, enabling staff to
create their own roster for a week, a weekly/monthly newsletter - preferably
with pictures, additional paid days off etc. Whatever the staff most wants
(employee needs) will be the most effective reward for a given scenario. Maslow
(1943)introduced the hierarchy of needs, and then McGregor (1960) introduced
Theory X and Theory Y. Essentially, yes employees will become bored if not
challenged on the job, but essentially their lower order needs are mostly being
met (OH &S, minimum pay etc), so incentive programs should target higher
order needs (MKV, 2008). Also include a few tables rating employee satisfaction
with incentive programs.
Useful links:
http://www.hvs.com/Jump/?aid=2899
http://www.hvs.com/article/5030/why-is-upselling-important-how-can-hotels-
improve-revenue/
http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1024&context=gra
dconf_hospitality&sei-
redir=1&referer=http%3A%2F%2Fscholar.google.com.au%2Fscholar%3Fhl%3
Den%26q%3Dreview%2Bhotel%2Bemployees%2Bincentive%2Bprograms%26
btnG%3DSearch%26as_sdt%3D0%252C5%26as_ylo%3D2005%26as_vis%3D0
%23search=%22review%20hotel%20employees%20incentive%20programs%
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Conclusions and Recommendations
Bottom line is, if the rollout of an incentive program is not offset by an increase
in revenue, the program is a failure. Unfortunately, measuring the efficacy of an
incentive program is not as straightforward as it might be.

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References
Blumberg, S. (2005). Foodservice employee recognition programs. Journal of the
American Dietetic Association, 105 (7). 1055-1056.
Fischer, K., Gross, S. E. and Friedman, H. M. (2003). Marriott makes the business
case for an innovative total rewards strategy. Journal of Organizational
Excellence, 22 (2), 19-24.
Quain, B., Sansbury, M. W. and LeBruto, S. M. (1999). Revenue Enhancement, part
4. Cornell Hospitality Quarterly, 40 (3), 38-47.
Simons, T. and Hinkin, T. (2001). The effect of employee turnover on hotel
profits. Cornell Hotel and Restaurant Administration Quarterly, 42 (4), 65-69.

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