The hotel General Manager (GM) is the person ultimately responsible for a hotel’s performance. A GM’s ability to make decisions and take action will thus have an important impact on his or her hotel’s operational and strategic results. GMs, however, may not always have the autonomy to make these critical decisions as the hotel’s owner and/or hotel management company (HMC) may in fact limit this through their own decision-making interventions.
Through a survey of 116 hotel general managers working in independent and chain-managed upscale and luxury European hotels, we examined how much autonomy GMs actually have to make operational, financial, strategic, marketing and human resource decisions. We also examined the impact that hotel size and GM education and experience have on the GM’s independence.
Our findings suggest that while GMs report relatively high levels of autonomy in their position, these levels do vary substantially across individuals, and particularly across functional responsibilities, management structure and hotel size, and the degree of human capital.
It’s all about the function
We found that there were significant differences in the average level of autonomy across the different areas. The most autonomy was reported in marketing, followed by strategy, human resources, hotel operations and finally finance. Our findings confirmed previous research that finance is the area of least autonomy. However, we were surprised to find that hotel operations, although generally considered a core competency for most GMs, was ranked second-to-last on the autonomy scale.
In other words, if GMs are generally given vast control over operational issues, why did they rank this so low in terms of their autonomy? We were further surprised to find that the GMs we surveyed also reported “strategy” as the second highest area of autonomy. This finding intrigued us because strategy’s emergence as a GM competency is, according to most previous research, very recent and most GMs have reported little academic training in the area.
Independent VS chain hotels
We also found that GMs of independent hotels did in fact have more autonomy than their counterparts in HMC hotels. Leeway was given to GMs regarding operational, marketing and HR decisions; yet, they had little say when it came to financial or strategic issues. We suspect that this is because HMCs are known for their centralized policies and focus on economies of scale, both of which appear to reduce GM independence. Owners who contract an HMC for its management know-how expect the company to make and implement better decisions, and to guide the hotel GM, all of which is meant to result in improved operating performance.
We discovered that the effect of hotel size on autonomy is substantially different for independent and HMC-operated hotels. In independent hotels, GMs of smaller properties had more autonomy than GMs of larger ones. We believe that this is because such owners may wish to remain more involved in the management of their larger (and thus more expensive) hotels, which is sometimes referred to as “ego-ownership of trophy assets.”
However, hotel size had no impact on the level of GM autonomy in HMC-operated hotels. In follow-up interviews, many of our respondents suggested that this was because HMCs implement the same type of management model regardless of the type, scale or location of the hotel.
Education or experience? Both!
We found that within independent hotels, GMs with more managerial experience did in fact have more autonomy across all five functional areas, but education did not have a similar effect. In HMC hotels, meanwhile, neither experience nor education had an effect on GM decision-making authority. We then looked at this issue by combining education and experience and found that while there was no change in independent hotels, there was a significant impact in HMC hotels. This means that GMs running HMC-operated hotels who are better educated and have more experience have substantially more autonomy than other GMs.
The study has some important implications for GMs, owners, HMCs and hotel/business school programs in continued education.
Given that lower autonomy is often associated with greater job burnout, choices about education and training could also have important career implications for managers. Individuals seeking to attain the oft-coveted role of GM may benefit by focusing on, at least in the earlier stages of their career, on the traditional areas of hotel operations, marketing, and HR. Indeed, it appears that owners and HMCs expect their GMs to focus on and excel in these areas. This does not mean that finance and strategy should be neglected, but rather that skills in these areas may not be the deciding factor for being promoted to GM.
Those seeking to become a GM may also want to consider whether they are more likely to work for independent or HMC-operated hotels. Those interested in HMC-operated hotels are encouraged to earn advanced degrees along with extensive managerial experience as this combination appears to be valued by HMCs. Alternatively, GMs with extensive experience but limited education may be better served by following the independent hotel path as hotel owners do not seem to value education to the same extent.
Similarly, managers should consider the level of autonomy that they actually want in their job. Those who are content to have limited decision-making freedom may be better suited to working in large HMC-run hotels, while individuals seeking a high degree of autonomy would appear to find smaller and/or independent hotels as the best fit.
HMCs and owners would also benefit from considering the level of involvement they desire to have at the property level, and the ensuing amount of autonomy they are willing to grant their GM. HMCs and owners may find a better fit with GMs whose aspirations with regard to autonomy align with their own views. One clear implication is for realistic recruitment whereby owners and HMCs openly discuss expected autonomy levels with prospective GMs.
Hodari, D. and Sturman, M. Who’s in charge now? The decision autonomy of hotel general managers. Cornell Hospitality Quarterly 55;(4) (2014), pp. 433-447
Dr Demian Hodari – Associate Professor of strategic management at EHL. Connect with Demian on LinkedIn.
This article originally appeared on EHL Insights.