While the gambling industry is trying to improve its DEI agenda, the hospitality sector seems to be evolving in this sense. At least, this is what indicators have shown on recent research conducted by the School of Hospitality Management at Pennsylvania State University, with financial support from the American Hotel & Lodging Association (AHLA) Foundation and funds provided from the Walter J. Conti Visiting Professorship in the School of Hospitality Management.
The 2022 data analysis involved 230 board members from 28 companies spanning the years 2016 to 2022. The document, Hotel Industry Board Diversity, expresses the representation of women and black members on hotel industry boards is on the rise. The surge surpasses the 2022 averages for firms in the Russell 3000 Index, with 67% of newly appointed directors being women, while 22% of new board members in 2022 were black. The Russell 3000 Index represents a broad spectrum of the U.S. equity market. It encapsulates approximately 98% of the investable market, including 3000 of the largest U.S.-traded stocks.
Notable statistics from this year’s report reveal: a) Women occupied 31.3% of independent board seats on hotel public company boards in 2022, a significant increase from 22.5% in 2022. This exceeds the 2022 average for firms in the Russell 3000 Index, which was 28.4% women; b) Only one publicly traded hotel firm has no women on its board of directors. In 2021, there were two firms with no women on their boards; c) 67% of directors who were new to a board in 2022 were women; d) In 2022, 12.6% of hotel public company board members were black, a clear upsurge from 6.5% in 2021. This exceeds the 2022 average for firms in the Russell 300 Index, which was approximately 6% black and is approaching the overall percentage of the U.S. population that is black (13.6%); e) 22% of directors who were new to a board in 2022 were black, and f) 17 of the 28 companies (60.7%) in the 2022 sample had at least 1 black board member.
CHALLENGES THAT STILL NEED TO BE ADDRESSED
Although hotel boards are becoming decidedly more diverse, with growing numbers of seats now held by women and black members, however, there are some issues to solve and a large path to walk through.
For instance, no boards in the hotel industry have yet achieved gender parity. The most gender-diverse boards across hotel firms have approximately 40-45% women directors. Currently, 94% of women holding board seats are outside members, a slight decrease in inside members from 2021, when women serving as outside directors made up 92% of the women in the sample.
One of the primary roadblocks to diversifying boards of directors is board turnover or board refreshment. Board turnover levels have been low over the past several years at approximately 9%, and remained at this level in 2022. Given that boards of directors have traditionally not been highly diverse, the long tenure of board members serves to limit opportunities for the addition of diverse board members.
About this report, Anna Blue, president, the AHLA Foundation, indicated: “Our industry recognizes that with the board’s role in governance and oversight, increased diversity on hotel boards is a pathway to a more diverse hotel sector. The increase revealed by our analysis exceeds the 2022 average of presence of women and black executives for firms in the Russell 3000 Index, signaling progress in the effort to diversify corporate board. The business case for diversity is clear. Research underscores the worth of varied perspectives and experiences within our organizations, resulting in enhanced recruitment and retention, heightened innovation, and overall greater success.”
The study is a component of the AHLA Foundation’s five-year, USD 5 million’s initiative to promote diversity, equity and inclusion throughout the hospitality industry. Last month, the AHLA Foundation re-launched its ForWard program, aimed at advancing women in hotel industry leadership and ownership. The Foundation aims to integrate the program with the Castell Project, a not-for-profit organization focused on empowering women in hospitality leadership, which it acquired last year.