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The Future for Recruitment and Pay in Dubai.
By Chris Mumford
Thursday, 23rd April 2009
 
Where once hoteliers had their pick of jobs in Dubai now it is the employers who once again have the bargaining power as the economic crisis makes itself felt.

Where will we find all the people we are going to need to run all our hotels opening in the next two years? Where will we house them? How can we stop our staff from jumping to the latest hotel for a few Dirhams more per week? How do we keep expatriate compensation packages from spiralling out of control? Why is it so tough and expensive to find and hire good talent?

How it was

It was less than a year ago that such thoughts were keeping Regional VPs, General Managers and Human Resources Directors of hotel companies/ operators awake at night.

The majority of large international hotel operators were faced with development pipelines of tens of hotels set to come out of the ground over the next 5 years throughout the region. With hotels typically being in the 200 – 300 room size category and with multiple F&B outlets, the demands on staffing were huge. Regular recruiting trips to developing countries continued to keep the flow of line level labour at a constant but at the expatriate management level matters were becoming tougher.

Finding potential employees was the easy part as Western expats flooded Dubai. Offering tax free salaries, year round sunshine, and the chance to be part of the growth of one of the most dynamic cities in the world, Dubai promised to be every hotelier's paradise. The reality however was that Dubai was feeling the effects of rampant rent inflation over the preceding couple of years with the result that expat executives were complaining to head office that their accommodation allowance was pitifully out of touch with reality.

As such, employees' financial demands became stronger and, with a choice of jobs at hand, candidates' held all the cards when it came to offer negotiation. With no significant local labour force to turn to, employers' hands were tied and market rates for salary packages climbed by the month. The below table illustrates how salary packages for executive committee members at five star hotels in Dubai climbed between 2006 and 2007. Furthermore, HVS data shows that housing allowances alone for the same group went up by 13% between 2006 and 2007 and by a further 8% from 2007 to 2008.

4Hoteliers Image LibraryToday

Fast forward to today however and the global financial meltdown has turned the world upside down.

In Dubai hotel projects are being delayed and cancelled by the minute, developers are laying off staff by the hundreds, hotel occupancy and rates are falling, and the population of Dubai is widely expected to drop by 8% in 2009. With residency permits linked to employment, a loss of job in most cases means having to leave the country which can have a huge personal impact on family life.

Many companies are doing what they can to alleviate the severity of the situation by being as generous as they can with things such as notice period and timing departures of those executives with children to coincide with the end of the school year. Nonetheless, stories doings the rounds, such as those of hundreds of cars being abandoned at Dubai airport by fleeing workers, only serve to dull the gleam of Dubai and the state is in danger of having its employment brand tarnished.

So, how are the hotel operators dealing with this new situation?

Managing Headcount

Many international hotel chains operating in Dubai have hiring and salary freezes in place. In some cases this is a blanket policy affecting all hotels and regional offices, in others it is on a hotel by hotel basis. Unlike the local developers and locally based hotel groups, however, the international groups are by and large not reducing headcount through redundancy. Rather they are letting natural attrition take its course and not rushing to replace anyone who leaves.

As Craig Cochrane, Director of Human Resources Middle East and Asia at Moevenpick Hotels and Resorts, makes clear, "We are a hotel management company and as such our assets are our people." Many of these companies have development pipelines elsewhere in the region which are less impacted than those in Dubai which, in turn, offer up the opportunity to dispatch employees from a quiet hotel to a new opening.

As such, it is expected that there will be greater transference of personnel inter-regionally than has been the case in the past with Managers making the move, for example, from Dubai to Jeddah, to Abu Dhabi, to Muscat.

Salaries and Benefits

Hotel groups, with regional offices and hotels in Dubai, are also subject to the same corporate wide freeze on salaries as elsewhere in the world. Companies appear however to be able to review and approve pay rises on an individual case by case basis and to do what is necessary to keep their top performers. This is forcing hotel companies to come up with more creative ways in which to incentivise staff. As the market becomes tougher, companies are beginning to adopt the total rewards concept and variable pay in the form of bonuses and long-term incentives will represent a higher proportion of the average reward package than was previously the case.

In terms of salary packages for expatriates, housing allowances which have been in the spotlight for the past two years as rents soared are likely to be reviewed as rents head in the other direction. Where a company needed to pay AED 250,000 a year for an executive's housing only a year ago, this may well drop this year to AED 180,000 and the executive's allowance will follow suit.

The allowance review is less likely to affect current employees whose housing allowances are already in place and are only part way through a fixed term lease but is more likely to impact new hires and those whose leases are coming up for renewal.

Recruitment

Employers are now in the driving seat when it comes to negotiating salary packages and recruitment in general. As Cochrane notes, "Dubai was very much a candidate driven market and that has now changed." The generally held view is that a ‘normalisation' of the market was required in as much as Dubai eventually had to become more like other more established hotel markets such as London, New York, and Singapore and put an end to ever mounting employment costs.

As the number of job openings has contracted and the number of people losing jobs has risen, the competition has now become one for jobs not for candidates. Caroline Stevens, VP Human Resources Middle East and Africa at Hilton Hotels, affirms, "A correction was needed and people have recently had a reality check. There are some really good people available on the market. Candidates who turned job offers with us down are now banging on our door."

David Leman, VP Human Resources Middle East and Africa at Starwood, lends a note of caution, "People are less likely to hop between jobs and, because of a lack of local talent, we will still have to go overseas to find people and those people will stop and think twice about a job in Dubai now due to concerns over job security." Going forward, people will be looking for job security and long-term career development.

Companies with healthy expansion plans and strong internationally recognised brands will be in a stronger position. There is increased competition for each job and applicants now have realistic expectations as to what they will be offered.

The Future

Hotel operators are optimistic about the long-term employment market in Dubai. Gone are the days when the most important thing was to have a body at a desk with little regard for qualification.

Compared to other international hotel markets, standards of talent in Dubai were never the highest and, because of the speed of development, individuals who elsewhere would have been rated as average found themselves occupying senior high level positions.

A more competitive environment will drive up the quality of candidates and enrich the talent pool. The glory days of the comfortable lifestyle with a 3-bed villa with pool on an average salary are now past.

Once the dust has settled however Dubai will retain its cache of being an attractive destination to work, with some of the most exciting projects in the world, and the international hotel groups with strong brands will, in particular, be viewed as a safe bet.


About the Author

4Hoteliers Image LibraryChris Mumford is Managing Director of HVS Executive Search in London and specializes in executive search and compensation consulting for clients in the hospitality industry throughout Europe, the Middle East and Africa.

A regular speaker on industry related issues, Chris is a frequent author of articles on executive selection, compensation trends, and general Human Resources topics for a number of industry publications.

A selection of hospitality clients include Emaar (Armani) Hotels & Resorts, Fairmont Hotels & Resorts, Hilton Hotels Corporation, Mandarin Oriental Hotel Group, Maybourne Hotel Group, Sama Dubai, The Stein Group, Rezidor Hotel Group, Aareal Bank, Invesco and Starwood Capital.

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