Hotel employee incentive programs have long been a way to motivate staff, increase revenue and improve performance. Yet, many hotels still rely on ‘one-size-fits-all' incentive plans that don't achieve the best results. In this article, FPG’s Stephen Levins, Vice President - International, shares his expert advice into how he helps to create effective incentive plans that benefit both hotels and their employees.
How to Create a Winning Hotel Employee Incentive Program
As Levins says, “The only way you know you’ve got a good incentive plan is if your team actually believe that it’s a good incentive plan. The outcome it creates will determine its success.” Many hotels, he explains, already have some kind of incentive plan in place and it’s typically a flat commission. “You sell a product, and you get anywhere between 5–10%,” Levins says. While this system can work, it often lacks the necessary structure to truly motivate all employees. That’s why FPG has a different approach. “We recommend completing a revenue assessment to understand the potential and then designing an incentive plan based on the potential revenue for the hotel," Levins explains. This ensures that each incentive plan is tailored to meet the specific revenue goals and team capabilities of the hotel.
The Importance of Tiers for Performance-Based Motivation
One key factor that differentiates top-performing hotels from others is the structure of their incentive plans. Levins suggests using a tiered structure, where employees are rewarded based on their performance level. For example, “If you're paying a flat 10% incentive, that should now become your middle tier,” Levins explains. From there, hotels can create additional performance tiers above and below that middle tier, rewarding top performers with higher percentages, while offering lower rewards for those who are underperforming. This approach ensures that everyone, from the high achievers to the lower performers, is motivated. “If you're not contributing more than a minimum expectation—or a certain percentage towards the overall goal— then you're going to get less,” Levins says. “The logic is that your lower performers get a wake-up call, while your high performers are motivated by the opportunity to earn more.”
FPG's approach involves redistributing the incentive payouts, so instead of giving everyone the same percentage, the top performers should get a larger share, and those underperforming receive less. However, as a department, it remains the same as an overall % payout. This motivates the lower performers to improve while also helping to retain the top talent, that’s vital to the hotel's success.
Create Multiple Incentive Plans for Different Hotel Products
Levins emphasizes that incentive programs should be flexible enough to cover different hotel services. “If you offer an F&B upsell package for example, you might not want to incentivize 10% or 15% on a breakfast upsell,” he advises. Since breakfast has a cost associated with it, a flat 5% or 10% may be more appropriate for food and beverage upsells, while room upsells could use the tiered structure. This approach allows hotels to design separate incentive plans for different hotel offerings, such as Rooms, F&B, Transportation and Spa services, maximizing potential revenue from each department.
Motivation Beyond Money: Recognition and Accountability
While money is a powerful motivator, Levins recognizes that motivation can be different for everyone. “There are three main motivators in the workplace, some people are motivated by money, some by recognition, and some by accountability,” he says. For employees who thrive on recognition, tools like leaderboards, certificates and town hall announcements are incredibly effective. “Our software, IN-Gauge has a leaderboard, so you can really see who your top performer is in many different KPIs,” says Levins.The IN-Gauge system, Levins explains, is designed to provide full visibility to employees, allowing them to track their performance and incentives in real-time. “The fact that it gives transparency on the system to see how your incentives are month-to-date, really provides that drive and excitement,” he says.
Real-life Impact: Motivating Employees and Improving Retention
Incentive programs can have profound effects on employee retention and overall morale. Levins shares a touching story about one hotel employee who was able to reunite with his family due to the rewards from a successful incentive plan. “One employee I met in Dubai had only ever been home twice in five years and had missed the birth of his child. But through our recommended incentive program, he was able to earn enough in incentives and bring his family to Dubai, that was life changing for him and his family.”
When employees feel motivated and valued, it leads to stronger retention. “Over the years, I’ve seen people leave a hotel to join another because they have a more attractive incentive plan in place,” says Levins. He believes that a well-structured incentive program can be the deciding factor when it comes to attracting and keeping top talent. "If you can offer an extra $100 in the form of an incentive that requires employees to generate $1,000, then it's a win-win for both the team member, the hotel and most importantly—the guest."
Role of Transparency in Incentive Programs
One of the most powerful aspects of FPG’s incentive programs is transparency. “If you ask a team member now that doesn’t have FPG’s program in place, what’s your incentive looking like month-to-date? It is highly likely that they don’t know,” Levins says. Our program however, provides employees with full visibility into their incentives and performance. This transparency builds trust but also ensures that employees feel confident in the process. “If leadership are required to deny an upsell transaction, due to a guest dispute for example, as the person who completed the upsell, I can still see the transaction and also why it was denied,” Levins explains.
This level of visibility and clarity ensures that the incentive program remains fair and accountable. “Trust is a big factor, because I believe sometimes that there is a lack of trust and confidence in the numbers out there, especially when incentives are calculated manually on an excel file. The audit trail section in our software plays a massive role in increasing the trust, without a system like IN-Gauge, the team is left recording everything in a shared Excel file. Every time the team makes an upsell, they add a row in Excel and input the upsell value, which is obviously open to unethical behavior and simple human errors."
Levins points out an area where the hospitality market has significant potential—the approach to recruitment and incentive structures. "Currently, many roles are advertised with a base salary, such as AED 1500, without highlighting the potential for additional earnings through incentive plans. If job postings were to emphasize not just the base pay but also the opportunity to earn incentives—say, an additional $2-3,000—this could attract a higher caliber of candidates."
Levins also highlights, there appears to be a gap in the process, from recruitment to onboarding, where the potential for incentives and performance-based rewards is not always clearly communicated. He says, "Front office team members in hotels are often not informed about upsell KPIs or held accountable for them." So by integrating these expectations early on and aligning them with incentive plans, Levins says organizations could attract more motivated candidates and also create a culture of accountability and performance excellence. This shift could significantly enhance both employee satisfaction and operational outcomes.
Incentive Programs as Key to Hotel Success
The right hotel employee incentive programs increase revenue, motivate employees, boost loyalty and enhance retention. By tailoring incentives to individual hotel goals and ensuring that there is a fair, transparent system in place, hotels can create an environment where employees are motivated to perform at their best. By implementing these strategies, hotels can create a passionate workforce and a successful business model.
If you’d like to discuss a FREE revenue assessment and find out how incentives can benefit your property, simply email discover@frontlinepg.com
