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INTERVIEW Sven Heitkamp

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The news caused a sensation in the hotel industry: Marco Nussbaum, CEO of the Prizeotel Group, decided in September to double the salaries of his trainees. Why, Mr Nussbaum? We talked to him about recognition, management approaches and business cards.

Your announcement that you will double the salaries of your trainees has caused a furore in the sector. Why have you taken this unusual step? Are staff shortages as severe as critics are saying?

We're a long way from having staff shortages! All our positions are filled, and we only have seven trainees in any case. I don't think it's right to half-fill a hotel with trainees and use them as cheap labour.

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Marco Nussbaum: "A substantial boost to trainee motivation"

About

In his Facebook profile picture he wears a woollen hat with "Moin Moin" [a local greeting] written on it. On his website, a seahorse logo is displayed under "Awards". Prizeotel CEO Marco Nussbaum likes to come across as an easygoing, humorous lateral thinker. But the 48-year-old knows the hotel sector like the back of his hand: he was General Manager and Managing Director of Astron Hotels and – after it was taken over by the NH Group – sales and marketing manager. Later he became head of sales and marketing at Ramada Hotels. As a co-founder of Prizeotels, he has also been its CEO since 2005.  In 2009, the first hotel was opened in Bremen, followed by Hamburg-City, Hamburg-St. Pauli and Hanover, with further locations planned. Nussbaum is a member of the board of the German Hotel Association (IHA) and a member of the federal board of Dehoga, the German hotel and restaurant association.

So what was the reason for the hefty pay rise?

For me, it's about motivation! If you want to create a good atmosphere for your guests at the hotel, your colleagues must enjoy coming to work and feel appreciated. However, if trainees can barely afford a room in a flat share on the outskirts of town on their salary, if they're having to travel an hour by bus and train to get to work every day and if they're physically and mentally exhausted, you can't expect any passion from them. A job isn't attractive if it doesn't let you pay your living costs. So it's about employees' basic needs, not a PR campaign. We can't have the hotel industry reporting one record year after another and the values of properties rising higher and higher while employees get nothing from it.

What we usually hear is that low margins don't allow any salary increases. How will you finance your growing staff costs?

Our motto is "People before profit". That means we won't make a profit by exploiting people and we're prepared to forego some of our margin. As a businessman, I have a social responsibility. We'd therefore rather exploit potential savings elsewhere, such as in distribution.

What have reactions been like so far?

The trainees could hardly believe it. They were already doing all right, but the doubling of the salaries has given them another substantial boost. We've also received outstanding praise from outside the sector. It's only within the industry that some people are acting almost as if decent pay were somehow dishonourable. For me, it's about recognition. Our trainees do a great job, and we show them that by paying them higher salaries.

Critics are saying that the increase makes the differences in salary between trainees and fully qualified staff far too small.

That's nonsense. We also pay career starters who've completed their training more than the rate negotiated with trade unions – and not just for trainees.

Is motivation mainly about salary?

Pay isn't the only driving force, of course. A lot more factors are needed, such as meaningful work, good relationships with colleagues, appreciation within the team and the feeling that your own strengths are being recognised. It's important to me to have a good rapport with the people who work for me.

We'd rather exploit potential savings elsewhere, such as in distribution.

Do you regard yourself as a lone warrior – or will other hoteliers follow suit?

To be clear, there are more pioneers in the sector, very committed companies, that are doing more great actions than us. I really enjoy talking to these colleagues and I pick up a lot of good ideas. But I think there are still many hotels that have not understood how we will manage team members and working environments in the future. They are desperately trying to prolong the present because they're afraid they will no longer have a chance in future. Such black sheep still have too much influence on the industry's image.

So how should leadership be organised?

Managers should talk much more to young people and should be open to new blood and people coming from other industries, to help develop a new understanding of management. We should find out why so few prospective employees are applying, why it isn't sexy to work in the hotel industry and why these jobs are valued so little.

What would a new understanding of management look like?

Many hotels are still being run as in the Industrial Age in the last century, always from the top down, with all the trappings of power. That's where the term "hotel director" comes from! But what's the point of that today? The digital age urgently calls for a paradigm shift in our concept of management, towards the inclusion of employees in processes and new responsibilities. We need managers who can get out of their comfort zone and make room for new ways of thinking. Instead of working within rigid hierarchies, you can transfer responsibility to team members and say to them: I believe in you, you can think for yourselves and make decisions yourselves based on good common sense. That also encompasses issues relating to communication, feedback and conflict management. If you're surrounded by yes-men, nothing will happen.

How does that work in your hotels in practice?

As an example, when a well-known German punk band – Die Toten Hosen – postponed their concert in Hamburg, my people said on their own initiative that those guests who had booked an offer of an evening with us could reschedule their bookings free of charge. My colleagues found a great solution. By allowing people to use their brains like this, you can increase motivation in the team immensely.

It's a nice story, but that's not enough in itself.

Each trainee in our hotels probably has more scope for decision-making than a submissive puppet manager in a big corporation. If a guest complains because something wasn't working, each member of the team can refund the price of an overnight stay – without having to consult anyone. Why should a trainee start arguing with an irate manager who's well trained in rhetoric? He's only going to lose. But if he says: "Sorry, it was our mistake, we'll refund you the cost," we have won straight away and we have a good atmosphere in the hotel again. That's part of our concept.

Does it work?

It's like this: guests who are angry will quickly ask to speak to the manager. So for a while we printed a business card for each member of the team, right down to the young trainees, which said "Member of the Management". The aim was to make it clear to every guest that this person was allowed to make decisions. That isn't normally allowed in our hierarchical world.

Do you think you could inspire the industry to copy your ideas?

Unfortunately, solidarity and collective lobbying are not as widespread in the sector as they should be. Double standards often prevail, and we need to work on that. It's important for the hotel industry to have the courage to regulate demand not just through the price, but through quality and innovation. That's the only approach that's sustainable. Prices will have to go up – and then you can also do more for your staff. Everyone who welcomes a guest is a link between the brand and the guest. So I need to have well-trained, good-humoured colleagues in the company who will ensure there's a good atmosphere. That reflects positively on the brand. Ultimately, our business is all about emotions.