Hospitality bosses enjoyed 12% pay increase in 2006

Executive pay packets in the hospitality and leisure sector continued to soar last year, with the average chief executive seeing a rise of nearly 12%, according to a new report.

The highest-paid executive listed in the latest Pay for Performance report, which surveyed 20 companies' 2006 annual reports, was Mike Bailey, former Compass Group chief executive, who pocketed nearly £1.6m.

Bailey's pay package included an £830,000 performance-related bonus, despite having led the company through three profit warnings and a UN contract scandal.

Compass said earlier this year that executive pay would be far more closely linked to its performance in the future.

The highest basic salary in the sector was paid to InterContinental Hotels Group (IHG) chief executive Andrew Cosslett, who received £688,000.

Cosslett also collected a £549,000 bonus and saw his total earnings rocket by 91.3% to £1.27m, even though IHG's 2006 profits fell by 13% to £247m.

The survey found that the average salary for a hospitality and leisure employee in 2006 was £23,382, just 4.8% of the average chief executive's salary.

The biggest discrepancy between the two was at Whitbread, where the average employee's pay of £9,982 represented just 1.7% of chief executive Alan Parker‘s salary of £586,225.

However an industry analyst said: "Whitbread's discrepancy is not a reflection of the type of business it runs. It just reflects the nature of the sector, which employs lots of causal and part-time staff on minimum wage."

• For the full report visit www.janetsalmon.com

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By Kerstin Kuhn

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