European Boards Working Harder


2009 was not an easy year for anyone. Across Europe, the hotel industry saw operators slashing room rates and desperately trying to replace the sudden absence of corporate demand with leisure guests. New supply was still entering the market and major currency fluctuations added to the complexity of the problem. Challenges aside, hotel companies learned how to re-focus on some of the fundamentals of the business: controlling and containing costs and expenses. Some companies went through major restructurings and others saw the weakness of their competitors as a chance to grow their market share. Being able to steer a company through an ever-changing business environment with certainty and confidence is a vital key to success; and it is the board of directors’ responsibility to oversee the strategies which provide the direction for the company. Sound corporate governance is, now more than ever, of utmost importance.

We reviewed 21 publicly listed European hotel companies. Studying the firms’ annual reports and, where necessary, conducting interviews, the companies were scored on their performance in four key categories:

  • Size, makeup and independence of the board
  • Committee structure and effectiveness
  • Presence of interlocks, insider participation and related transactions
  • Commitment to pay-for-performance for executives and director pay

For a third year in a row, the same three companies have dominated the top of our scoring. In first place in the 2009 Corporate Governance study came Whitbread, achieving a commendable 91% (up by 7%‐points). Last year’s winner, The Rezidor Hotel Group, achieved a very respectable second place (89%, up 3%‐points) and was followed by the InterContinental Hotels Group (84%, down 1%‐point).

Given the change in CEO, who also holds the position of Chairman, Accor dropped to fifth place (at 82%, down from 84% and joint third place last year). Notable improvements were achieved by MWB and Club Méditerranée, whose scores increased by 7%‐ and 8%‐points, respectively.

It is encouraging to note that overall, and despite being stricter in allocating points, average scores increased. Management has looked to the board for more guidance and in turn boards had a more hands‐on involvement in helping companies navigate through difficult times.

Read the complete report here.