Labor on the Line

In the bitter battle between hotels and union workers, planners brace for backlash

Striking hotel workersLocal labor battles rarely make the national news any more, but this one did. In October, 1,400 hotel workers in San Francisco staged a two-week strike against four properties. The action followed weeks of tough negotiations between Local 2 of the Unite Here union and the San Francisco Multi-Employer Group, which represents 14 of the city’s largest downtown meeting hotels, where labor contracts had expired on Aug. 14. Quickly, the SFMEG struck back by locking out 2,600 union workers at the other 10 properties.
    Other hot spots were erupting at about the same time. In Los Angeles, where contracts expired on June 1 at nine major downtown properties, a Labor Day protest march by workers and supporters turned ugly, as confrontations with police resulted in 46 arrests. Meanwhile, in Washington, D.C., where contracts at 29 hotels expired on Sept. 15, negotiators for both sides remained deadlocked, leading to workers voting overwhelmingly to authorize a strike. And in Atlantic City, thousands of workers at seven casinos walked off their jobs and onto the picket lines.
   While some of the specific issues in each city differ, two commonalities have emerged: The players at the bargaining tables have evolved from their historic roles, and the stakes are higher than before. Today, Unite Here, the New York City-based union representing a wide cross section of hotel workers, has 440,000 members and an annual budget of $70 million, 40 percent of which is earmarked for organizing. And for its part, the lodging industry has matured from groups of individually owned properties into a rarified strata of global corporations with portfolios of several chains under one umbrella, in a business that grossed $12.8 billion in pretax profits in 2003 and employs 1.7 million workers in the United States.
    All sides agree that how labor issues are handled this year will affect how they play out in 2006, when contracts are set to expire in Boston, Chicago, Honolulu, New York City and Toronto.
    “The reality is that 2006 will be a watershed for collective bargaining in the history of American lodging,” says John Wilhelm, president, hospitality division, of Unite Here. “We have to find a way to put this on a positive track. Without customers, the hotels don’t have profits, and our members the employees don’t have jobs. It is a recipe for disaster.” Not to mention a horrible bind for planners trying to book meetings in advance.

New state of the unions
Unite Here was created this June from the merger of two labor groups the Union of Needletrades, Industrial and Textile Employees, and an amalgam called Hotel Employees and Restaurant Employees, the “Unite” and “Here,” respectively, that comprise the new union’s name. In a time when labor’s strength in general appeared to be dwindling, due largely to the siphoning of manufacturing jobs overseas, this marriage signaled a new way of doing business, that of pooling members and financial resources into a collective bargaining front.
    “This is one of the leading unions today,” says professor Ruth Milkman, director of the Institute of Industrial Relations at the University of California at Los Angeles. “Their numbers are growing, they know the industries they deal with and they have hired people with a knowledge of business to help them.”
    Strong organizing is the backbone of Here’s success; over the past six years the union enrolled 6,000 to 12,000 new workers annually, largely through a concerted strategy of reaching out to the Latinos and Asians who have helped swell the ranks of hotel workers. Such aggressive efforts will continue to make the expanded union an increasingly powerful force, says Milkman.
    In addition, Unite Here has formed strong strategic alliances. At a Sept. 15 press conference in Washington, D.C., presidents Kweisi Mfume of the Baltimore, Md.-based NAACP and Raul Yzaguirre of the Washington, D.C.-based National Council of La Raza, the country’s most prominent Hispanic-American advisory group, pledged their support to the union.
    Snagging the endorsements was an especially savvy move, says Milkman. “It is a contest for public hearts and dollars,” she notes. “And if the NAACP can steer business away from the hotels, that helps the union. It is a growing union sophistication that is playing out for the first time in the hospitality industry on a national level.”

Hotels: Help Us Contain Costs
As a percentage of hotel operating expenses, labor costs come to about 45 percent and comprise “by far the single largest cost category in the hotel industry,” says Mark Woodworth, executive vice president for the lodging consulting firm PKF Consulting based in Atlanta. “It has a significant impact on profitability. We are projecting payroll costs to go up 5 percent in 2004. This is not a problem that is going to go away any time soon.”

In San Francisco, where strikes, pickets and lockouts were roiling the hospitality industry this autumn, the rising cost of health benefits was among the hot-button topics. The San Francisco Multi-Employer Group noted that member hotels were currently paying $650 per employee, per month, for health and welfare benefits, and that if current trends continued, the cost would rise to $1,200 per employee in five years. “We are not an unlimited resource,” said Matthew Adams (above), SFMEG vice president, in a New York Times interview last month. “We’re simply looking for some level of employee participation.” - C.A.S.

Both sides dig in
While there are many issues at stake, the sticking point has been Unite Here’s unilateral demand for two-year contracts, rather than the longer terms of three to five years offered by the hotels in the different cities. For their part, the hotels argue the union’s larger agenda of setting itself up as a power negotiator in 2006 is sabotaging the bargaining and is not in the best interests of the workers.
    On Sept. 24, hotels in Washington, D.C., which are offering a three-year contract, along with the Washington, D.C.-based American Hotel & Lodging Association, filed a complaint with the National Labor Relations Board accusing the union of not bargaining in good faith. “They are trying to negotiate on a national basis,” says Joe McInerney, president and CEO of the AH&LA. “The union wants this 2006 contract because their thinking is, if they struck all of the hotels at one time, they will drive you to your knees. Is that in the employees’ best interest? They may be union members, but they also are hotel employees.”
    John Wilhelm begs to differ. “We have never proposed a national contract,” he maintains. “We do not believe that makes any sense. But there definitely are issues that can be solved on a national level.” Further, he says, Unite Here’s demand for a two-year contract is a necessary strategic move designed to level the playing field between the lodging industry and the union and give the workers fair representation.
    “These large hotel corporations that now dominate our industry do not want a constructive partnership with their employees,” Wilhelm charges. “After 9/11, they all began to complain they don’t get recognition from the government for what they bring to the economy. But take a look at their profits. This is going to play out publicly, and it will only make the situation worse for them.”
    However, according to McInerney of the AH&LA, it is not so much the hotel corporations the Starwoods, Hiltons, etc. that get hurt by union action;  it is the hotel owners the real-estate investment trusts, banks and hospitality holding companies whose bottom lines are affected most severely. “Most hotel companies don’t own the hotels. They get a management fee and a percentage of profits,” says McInerney. “It is the owners, and some are publicly traded companies, who get hurt. They are the ones the union is putting at risk.”
    John Boardman, secretary treasurer for Local 25 of Unite Here in Washington, D.C., disagrees. “Management companies are not in business for altruistic reasons,” he says. “They have a vested stake in the business. They make money from their management, and if customers are disgruntled and the product is degraded, that company’s brand is affected.” And, he adds, the union in Washington, D.C., reached out to individual hotel owners, many of whom were receptive to the union’s position and indicated they would speak with their hotel management companies.

Workers: Eliminate Unpaid Work
Serkalem NessibuAs a service express associate at the Westin Embassy Row in Washington, D.C., Serkalem Nessibu’s voice is what guests hear when they phone in a request. If they need a car, she calls the valet. If they need towels, she contacts housekeeping. “If guests need anything, we take care of them,” says Nessibu (right).

While she’s been at the property since 1988, Nessibu -- who moved to the United States from Ethiopia in 1979 -- feels the past few years have been very difficult. In order to cut costs, she says, management downsized the hotel staff and combined positions. The result? “There is a shortage in every department,” she says.“If a guest complains, I tell them I’ll try my best to take care of it right away.”

Every eight-hour workday, Nessibu is allotted a single 30-minute lunch break -- without pay. But when the hotel is busy, she says, managers often ask her to return to work, for which she says she is not paid. That’s why Nessibu’s union in October negotiated for pay when employees are summoned during lunch. The amount in Nessibu’s case would be $6.50, or half of her $13 hourly wage an issue that was unresolved as of press time. “We want to take care of guests,” says Nessibu, “but if we do that, we think the hotel should pay us.” - BRUCE MYINT

Issues that divide
Lower health-care costs, improved working conditions, better hourly wages,   secure pensions, dignity and respect all remain the core demands of Unite Here at the bargaining tables. Taken at a glance, such a wish list seems hardly different from what any worker, in any industry, would present to an employer. Yet, in the particularly labor-intensive hospitality business, where the rank and file are overwhelmingly minorities and quality service is an occupational necessity, some of the issues become more difficult to resolve.
    " Affordable health care. In San Francisco, the hotels initially proposed raising their employees’ monthly out-of-pocket health-care expense from $10 to $273 over five years  (see “Hotels: Help Us Contain Costs” on page 65). “Do you know what a housekeeper or a bellman makes?” asks Unite Here’s John Wilhelm. “They can’t possibly afford that.” At press time, the hotels came back with a plan that would cost single employees a maximum of just $40 per month, with larger hikes for workers with dependents; the union had yet to respond.
    Meanwhile, Wilhelm has proposed a plan that would aggregate all the hotel workers nationally and approach the health-care industry with a demand for quality care at a reasonable price. “We would have the market share to enforce such a request, but the hotels have been opposed to considering it,” says Wilhelm.  
    Hotel representatives have been reluctant to talk to the press about such matters. For example, “Hilton has a longstanding policy of not commenting on labor issues, especially now, with pending strikes and lockouts,” says Kathy Shephard, spokesperson for the Beverly Hills, Calif.-based Hilton Hotels Corp.
    " Fair representation. While the numbers of workers for whom English is a second language has increased significantly in the past decade, the number of those in a management role has not, says John Boardman. And that, he adds, creates an unfair situation, because some workers are unable to fully comprehend what management is trying to tell them.
    “We have asked that people’s language be acknowledged, and that when an employee is being disciplined, a translator be made available,” says Boardman. “We do not think that is an unreasonable request, but the hotels say no.”
    " Working conditions. The industry has bounced back, occupancy levels are up, but hotels have not ramped up staffing levels to meet demand, charges Unite Here. “The hotels have made profits on the backs of their workers,” says Wilhelm. “They have not hired commensurate with the rebound in business. Instead, they have forced workers to increase their workload.”
    In Washington, D.C., the half-hour unpaid lunch break has become another flash point. The union is insisting that, especially in the absence of payment, workers have the right to an uninterrupted break.
    “When you have a few minutes at lunch, maybe to think about your kids
or a problem at home, you don’t want somebody coming up to you to tell you that as soon as you are finished eating,  you need to help set up three more tables in the banquet room,” says Boardman.
    And if employees must work during their half-hour break, the union says they should be paid for it. (See “Workers: Eliminate Unpaid Work.”)
    On the other hand, says McInerney in response to this and other complaints, “Look, in D.C. at the Marriott Wardman Park, 55 percent of the employees have been there 10 years or longer. At the Mayflower, 85 percent have been there 10 years or longer. If work conditions are so bad, would they still be there?”
    At least one labor dispute seemed to be resolved at press time, as striking workers at 12 Atlantic City casinos reached a tentative agreement with management. While union leaders had hoped for a three-year contract, they accepted a five-year deal that grants a combined 28.3 percent increase in salary, medical benefits and pension contributions over five years and limits how many new nonunion restaurants can open at the gaming properties, among other provisions.

Planners in the middle
This year, along with more aggressive negotiating tactics, Unite Here tried a new strategy by taking its fight directly to meeting planners. In September, after purchasing the mailing list of Dallas-based Meeting Professionals International, the union sent all of the association’s planner members a copy of its newly created Hotel Labor Advisor Newsletter for Meeting Planners.
    The twice-weekly newsletter provides details on upcoming employee contract expirations at cities around the country, a list of the hotels involved and the status of negotiations. In addition, the publication offers planners a sample of force majeure language to include in contracts with hotels and directs them to an online version of the newsletter at www.hotellaboradvisor.info/meetings.asp.
    While it remains to be seen whether Unite Here can effectively get planners to take labor issues into consideration when placing their business, at least one major piece of business already has been lost due to the troubles in San Francisco. The American Anthropological Society decided to move its annual conference from that city to Atlanta, a move that will cost San Francisco an estimated $3.2 million.
    Indeed, tourism and convention-industry business is no trifling matter, totaling an estimated $6 billion in San Francisco in 2003 alone, including about $138 million generated by hotel taxes. (“We understand that the situation is leading some planners to reconsider bringing their business here,” says Matthew Adams, vice president of the hotels’ SFMEG. “This is why we need a contract agreement that provides a long-term solution.”)  
For John Stephens, executive director of the Washington, D.C.-based American Studies Association, labor issues have set off alarms. The board of the 6,000-member association consults the NAACP’s lodging industry report card, which rates hotels based on several criteria, including supplier and employee diversity. Now, says Stephens, the board also will select hotels based on the information supplied by Unite Here, a move that will help place an annual convention that brings $800,000 to a host city.
    “My organization is deeply concerned,” Stephens notes. “Our members will not cross the picket line. Many of them are the children of union members and were able to go to college because of the benefits their parents attained from union membership.   
    “How negotiations are handled will have a definite effect on where our members choose to do business,” adds Stephens. “They will take into account what kinds of contracts workers get and use that in determining where to go when they plan their own meetings.”
    Amy Stark, director of meetings and events for the Bloomington, Ind.-based Organization of American Historians, says she too is concerned. Her board has mandated the group select only unionized hotels for meetings. The OAH is slated to hold its annual meeting, which typically draws 3,000, at the Hilton San Francisco next March. “Our members will support the union, and we have been very honest with the hotel about this,” says Stark, who added that at press time the association was drafting a letter to Hilton executives advising them of OAH’s support for the union cause.
    “We haven’t come to the point of having to pull a meeting and deal with the issue of possible attrition liability,” Stark notes. “But for the next four years we are giving them our business, which is valued at $300,000 a year.”
    Other planners, like Karen Fricke, conference coordinator for the Ann Arbor, Mich.-based Association for Asian Studies, say that while the idea of meeting at a hotel under picket is worrisome, her group will proceed rather than incur attrition costs. “We do not have any formal policy on handling a strike,” says Fricke, whose 2006 annual meeting is slated for San Francisco that April. “And we already have signed a contract, so we are going to be forced to go.”
    Planners who assume they can apply a force majeure clause to protect themselves if they pull a meeting due to labor issues are misguided and headed for trouble, warns David Scypinski, senior vice president of industry relations for White Plains, N.Y.-based Starwood Hotels & Resorts Worldwide Inc.
    “You can’t just sit there and say people won’t cross the picket lines, so we can’t come,” says Scypinski. “Unless it is impossible to get to the hotel or for the hotel to perform, both parties must abide by the contract.”