Since the turn of the 21st century, hospitality has seen the emergence of new core competencies as consumer demand, legislation, and public policy have placed greater pressure on the industry, especially for public companies or those seeking to emulate public companies. Of particular interest are the specialized competencies within the areas of accounting and finance, asset management and ecological/green initiatives, all of which will continue to play a more critical role in the future.
Accounting and Finance
In the U.S., Sarbanes-Oxley emerged in 2002 requiring that the executives of publicly traded companies certify the accuracy of corporate financial statements. If these statements were found to be fraudulent in any way, the executives would be held legally liable. Enactment of this law required companies to examine corporate competencies in the areas of finance and accounting, and focus on recruiting top executives with in-depth knowledge and experience in the preparation of accounting and financial statements. Some common titles for this role include Chief Accounting Officer, Corporate Controller or Vice President of Internal Audit. Executives in these types of roles have had a greater focus on the accounting side of finance versus the transactional side. Over the last several years, the industry has seen and will continue to see an increase in the number of CPA’s headed for the Executive Office.
Similarly to accounting and finance, the discipline of asset management has become more professionalized in the last decade. A leading example of this is the formation of the Hotel Asset Managers Association (HAMA). As private equity groups have increasingly sought out hotels and hotel companies as acquisition targets, demand for industry experts to oversee operations and protect asset value has increased. Further, with current market trends where owners are defaulting or coming close to default, many receivers are recruiting professional asset managers to provide expert opinions and guidance. In the best practice companies, the asset manager has become the critical touch point between ownership and operations. The optimal background for individuals in this role combines a deep understanding of hotel operations with very strong financial skills and strategic thinking expertise; in an ideal world, this person has experience working both as a hotel General Manager and with a private equity group. A rare combination? Yes. However, companies willing to put together a formal training program for up-and-coming talent will become market leaders for this competency.
Sustainability or the “greening” of the hotel industry has become a hot topic in relatively recent history, and companies are trying to figure out how to be both green and profitable simultaneously. In the past, environmental roles, where they existed, were focused solely around compliance. Today, the industry is seeing new titles beyond Director or VP of Environmental Affairs including Director or VP of Sustainability, Responsible Business, and others. These newer, “green” roles are focused around many aspects of sustainability, including guest education, sustainable building design, transportation systems, energy (conservation, renewable, alternative), water, waste, purchasing, menu development and climate change. While industry professionals agree that a leadership position focused on sustainability is important, there is some debate about how to quantify the results that such a person brings to the company in terms of profitability. Some of the less quantifiable impacts of focusing on sustainability are: Improving employee morale (employees like to work for a company that is perceived as “caring” and “doing good”), improving the company’s external image and visibility, and reducing energy and other natural resource consumption. We predict that demand for talent in the field of sustainability will continue to rise going forward. New hires must have an educational background in the field. Many top-tier MBA programs are offering specialization in this area. Most importantly, in order to be successful, companies must be committed to promoting sustainability, which means these experts must have support from the highest level of the organization, and must have the power to effect change within the company.
As the industry evolves, new competencies will continue to emerge. As a global hospitality consultancy, we continue to keep a pulse on the industry through ongoing dialogue with our clients and we maintain a commitment to help make sense of these trends.