Industry Update
Opinion Article16 July 2007

"The New Russian Hotel Managers"

By Tatiana Veller

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Moscow has changed from the city under siege of the 1940s to one of Europe’s leading metropolis. The establishment of a market economy and an explosion of the Western lifestyle have led the city to emerge as the most expensive city in the world two years in a row*.

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Moscow is also a European market leader in terms of hotel performance. Not long ago international hotel brands entered the Russian market for mere representation – in Moscow, and sometimes also in St. Petersburg. Today numerous development directors are scouting the Russian market for land to build new hotels. They have discovered cities like Yekaterinburg, Kazan, Novosibirsk, Omsk, Perm, Samara, Ufa and others – all important Russian centres with over a million inhabitants.

What does this surge in development activity mean for hotel operators? And as importantly, what does it mean for the people dealing with recruitment for these new projects? HVS Executive Search looked at the most obvious trends in staff composition and qualitative characteristics, and discovered they are vastly different from those 7-10 years ago. This article will discuss some of the main issues in attracting and retaining Russian vs. expatriate management personnel for key positions in hotels in the territory of Russia.

In the 1990s, a common practice for hotels opening in Russia was to hire expats into all management positions – General Manager and Department Heads. Their international expertise was supplemented with local knowledge of Russian assistants and junior-to-middle management. Expats got paid much more, commanded several additional benefits and perks, and were considered gurus in the running of a successful and profitable hotel operation.

However, the hotel industry of today shows a different picture. "What I would like to emphasize is that the situation today has improved... I do recall years ago when almost 100% of the management team use to be expatriate, this is no longer the case. But it is true that talent is hard to find or to keep because today we are entering a phase of new hotel development and so [employees]... have choices which are dictated by the package offer," says Kamel Chaieb, GM of Novotel City Centre in Moscow. As more Russians get trained under the expat management, the number of expat managers employed in key positions is slowly on the decline.

But it seems that not all top executives in the industry are happy with this trend. Thomas Noll, General Manager of Grand Hotel Europe in St.-Petersburg shares, "Talent is not really short, we do have many great and talented employees... [but], employees that have the talent, many times do not want to take the management responsibility by going the extra mile, by being accountable and responsible at all times for the respective department. Most managers’ priority is on the weekend their dacha. Whereas the expats are here 7 days if needed and are more flexible to be in late night and on holidays. That is what we need in the luxury segment of hotel market in Russia..." Evidently it is not the talent and knowledge that are short in the Russian labour market, but the right attitude and willingness to take responsibility.

Another issue is that Russian managers are typically rather inflexible in geographic moves for career growth, thus making it hard for Hotel companies to promote local management. It is very likely that this feature of Russian mindset will change over time. Hotel professionals in Russia are simply not accustomed to moving to other cities to get further in their career. At the same time, it is not feasible for the hotel companies to devote time and financial resources to train people that afterwards will make all possible effort to stay in the market where they are currently located.

While there doesn’t seem to be an immediate solution to this problem, there is definitely hope of training the new breed of Russian youth to be more open-minded about hospitality as a career and not a temporary fix to earn a living. According to Thomas Noll, "... shortage should be improved soon if the numerous Russian students presently being educated at [international] hotel schools will return to their home country. I just came back from a visit to Switzerland where I met the Director of a well-known hotel school. He said that almost 50 % of his students are Russian. That is a very good sign."

It is also a notable fact that more and more hotel companies are targeting locals when searching for management staff. Notwithstanding the issues mentioned above, many clients of HVS Executive Search are now making it their preference to have a Russian native in any managerial position in their hotel or in a corporate role in Russia. The only exception to this preference is when the required skill set doesn’t exist in the local market yet. For example, when looking for Asset Managers or Revenue Managers, it can be difficult to find a native Russian with relevant experience.

One solution for the hotel chains expanding into Russia outside of the two main cities would be to initially commit extra resources to have expatriate presence in those new hotels. This way, the local pool of management talent will be trained and nurtured under a close sophisticated watch, as compared to temporarily transferring personnel into key management positions from Moscow. The focus has thus clearly shifted from replacing or supplementing unskilled labour to trying to train and infuse the talented labour pool with the right attitude, passion and desire to grow within the Russian hotel industry.

Tatiana Veller is Managing Director of HVS Executive Search – Russia. Tatiana specializes in Executive Search and compensation consulting for all facets of the Hospitality industry in the territory of Russia, CIS and the Baltics. For more information, questions and comments please contact Tatiana Veller at [email protected] or phone numbers +7 (495) 660-3653 and +7 (909) 642-0313.

* 2007 Cost of Living Survey from Mercer Human Resource Consulting

Tatiana Veller

Tatiana Veller is the Managing Director of HVS in Russia. Tatiana specializes in various types of strategic consulting for all facets of the hospitality industry in Russia, Georgia, CIS and Baltics. In addition to Tatiana’s HR Consulting background with leading firms in the US, she possesses six years experience in line and management positions with top companies in the Hospitality and Food Service industries in Russia and the US, along with a Bachelor’s degree in Hotel and Restaurant Management from the Russian Academy of Economics n.

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