Labor Pains

Just when North American hotels began seeing black instead of the red that poured from their ledgers during the post-9/11 economic downturn, a new and potentially powerful threat to the bottom line is rearing its unwelcome head across the U.S. and Canada—labor unrest. Meetings are at risk, too, and groups can get caught in the middle of the rage.

San Francisco hotels have dealt with expired contracts, boycotts, lockouts, and a stalled bargaining effort since August 2004. Though the San Francisco CVB (SFCVB) has worked hard to minimize disruptions and conducted successful damage control, SFCVB Vice President of Conventions Mark Theis says quantifiable losses are around $50 million.

The fact that hotel workers in some properties lack a contract worries some groups because they must consider the possibility of picket lines until a contract gets signed. Many groups with members who will not cross picket lines have made the decision to move on, and some who have relocated their conventions from San Francisco—a jewel among meetings destinations—have experienced dramatic revenue and attendance drop-offs.

The situation in the City by the Bay is a scenario that is being played out in other big-ticket destinations as hotel workers fight for what they see as their piece of the pie—or at least a larger slice of it in the future—as the hospitality industry is enjoying record earnings.

"San Francisco is doing very well right now," Theis says. "Hotel occupancies are up and rates are climbing. We've been the pawn for a much larger national agenda that will probably shift this summer to Chicago and other cities."

More hotel worker contracts are expiring or have already expired this year in New York (July 1), Toronto (Jan. 31), Chicago (Aug. 31), Los Angeles (Nov. 30), Boston (Nov. 30), and Honolulu (July 1). Recently, the Unite Here union, which represents about 90,000 hotel workers in the U.S., has organized several local worker rallies headlined by celebrities such as Danny Glover and former senator and vice presidential candidate John Edwards. Dubbed Hotel Workers Rising, campaign organizers say its intent is to improve wages, benefits and working conditions.

Hourly wages for hotel workers are at poverty level in many cities, the union contends, and some working conditions and benefits are onerous or deficient while global hotel companies rake in profits. A hotel housekeeper's average hourly wage nationwide is $8.67—which totals $17,340 annually. Unionized workers make more than that, roughly $26,000 a year, with wage levels largely determined by the level of unionization in each city.

In New York and San Francisco, where most full-service hotel workers are unionized, housekeepers make about $19 an hour. In Los Angeles, where about half the hotels are organized, housekeepers at union hotels make about $12 an hour. In other cities like Phoenix, where there's no union presence, housekeepers bring in about $7 an hour. Besides wage discrepancies, housekeepers and other hotel workers say they have heavier workloads and even health problems resulting from the need to grapple with heavy bed linen, multiple pillows and other room furnishings associated with "amenity creep."

Industry managers say they value employees and want to negotiate compensation packages that are fair to all concerned. The union is just out to grow membership and achieve a critical mass for nationwide bargaining, they contend, and labor disruptions actually take wages and gratuities away from buffet servers, housekeepers and bellmen in both the immediate aftermath of disturbances and over the longer term.

"If unions feel convention losses can be recouped, they are wrong," Theis says. "As groups continue not to meet in a city, that directly impacts 'Sally Jones,' who makes $17 an hour."

At Issue: Wages or Union Growth?

Neal Kwatra, a Unite Here coordinator for strategic affairs in Washington, D.C., says each city involved in the current bargaining effort has different issues, and that his organization is not seeking national parity on wages. He says that fair wages in every market, however, is an issue for all locales.

"We are now dealing with global hotel corporations that are reaping enormous success right now and for the coming years," Kwatra says. "Unite Here believes the folks who are delivering those profits—those who cook and serve the food, clean the rooms and help with luggage—deserve better. So many of these people are unable to make ends meet, even as they work two or three jobs."

Most hoteliers, like David Scypinski, vice president of industry relations for Starwood Hotels, say the union's main objective is not employee wages and benefits, but growth of union membership.

"The deal breaker and single defining issue in all the cities concerned is the card check neutrality issue, which gives union reps the right to go on property to sign up employees instead of deciding on unionization by secret ballot," Scypinski says. "The union is now in a grow or die place, and they want to get this critical mass in properties that aren't already union. This is so frustrating because we are offering lucrative proposals. But the union wants to grow and grow quickly, so they must be aggressive."

Joe McInerney, president of the American Hotel and Lodging Association, says the union wants to eliminate elections and employee privacy.

"A major reason that less than 8 percent of the private U.S. workforce is unionized is labor's inability to win secret ballot elections conducted by the National Labor Relations Board," McInerney contends. "Many labor leaders have decided they want to eliminate secret ballot elections altogether. Instead, they want the card check system, which allows a union to win representation at a workplace as soon as a majority of employees simply sign a card stating their intention to join the union."

Unite Here's Kwatra counters that management's complaint that organizers want to deny employees a card check is a "red herring."

"This is something management has brought up despite the fact that we've negotiated labor peace agreements for hotels within all the major chains," he says. "These agreements establish ground rules for conduct by both union representatives and employers during an organizing campaign on-property."

McInerney acknowledges that such agreements were instated during some negotiations.

"There are some such agreements in cities like New York with a large union presence," he says. "Even though we gave it up in some cities during negotiations, we don't want it because we feel it takes away from employees' rights to have a free and secret election."

Supporting management's charges against Unite Here's organizing tactics is The Center for Union Facts, a nonprofit organization whose website says it is supported by foundations, businesses, union members, and the general public. That organization is spending millions of dollars on full-page ads in media outlets such as The New York Times, The Washington Post and The Wall Street Journal slamming the union's approach. The ad depicts North Korean president Kim Jong Il, Cuban president Fidel Castro and Unite Here president Bruce Raynor beneath the headline, "There's no reason to subject the workers to an election." The copy continues with the question, "Who Said It?" The answer is Raynor, the ad continues. Raynor made the statement to The New York Times in May 2003, and has subsequently led the effort to do away with traditional secret ballot union elections.

Advice to Planners

Meanwhile, some hospitality industry people complain the union is pressuring meeting planners to boycott hotels in the affected cities and to move meetings already booked.

Mary Power, president of the Convention Industry Council (CIC), pleads for planners to evade hysteria in favor of a measured approach to the labor situation.

"It is unfair to a city not to choose it because there might be a strike. Meetings are valuable to cities, and they are eager to work with groups to minimize or avoid any disruption," Power says. "A number of other things can happen to disrupt a meeting—not just pickets and strikes—so everyone needs to just use common sense. Strikes aren't new. If meeting in a particular city can help you reach goals, then go with it.

"Planners need to take the time to be informed on the issues and not react to quick rhetoric," she continues. "If, for example, a picket line is a major problem, there are things that can be done to get people in and out of hotels. I say know your people and their tolerance levels and priorities. Keep in mind the strategic meeting goals, and if they include meeting in this or that city, then meet there."

To planners and top management who may decide to move or cancel a meeting already booked, there are significant legal considerations, according to both hoteliers and attorneys.

"Don't do the knee-jerk approach," Scypinski says. "Tell your board to do research and check your contracts as to whether you can get out of a commitment. The hotel world is not looking kindly at people who cancel just because of a threat. But research it carefully before you knee jerk yourself into a lawsuit. Most parties who sign contracts don't understand what they are signing—and then they get a surprise. Customers don't have the right to cancel without paying damages or at least talking to the hotels. In San Francisco, we have taken a few groups to task and have won or settled. But in most cases, we are unwilling to just walk away."

Scypinski also offers a warning for groups who are tempted to cancel because they are sympathetic to union issues.

"Some organizations—maybe even unions themselves—may be tempted to walk from a contract," he says. "What they need to understand is that if unions get everything they want, guess who pays ultimately."

Potential labor unrest can be addressed in contracts, says attorney Sam J. Erkonen, a partner with Howe & Hutton, Ltd., in Chicago.

"Many planners don't address this in contracts—only about 30 percent of hospitality contracts do," Erkonen says. "You must have a provision which allows you to get out of a contract in the event of a strike or threatened strike. The key word here is threatened, because hoteliers will adhere to a clause which says 'in the event of a strike.' So if there is no strike, they will say they look forward to the group showing up."

Erkonen says that scenario happened to one client who was contracted with a San Francisco hotel. Prior to the meeting dates, they began getting faxes and mail from Unite Here. The hotel kept telling them they shouldn't worry, that they were confident the dispute wouldn't be on the map by the time they showed up.

"I tried to demand a document of written assurance about that and the hotel wouldn't sign it," he says. "The client was out of time to move the meeting, so they rolled the dice, went with it, and it turned out to be a nightmare—people yelling at attendees with bullhorns as they came and went from the building, and so on. The client told the hotel they would never come back, especially after one key sponsor threatened to pull out in the future. The client had a second contract there for six months later and they canceled it. The hotel never came back on it."

The best practice against labor unrest, Erkonen says, is to mention 'strike' in the contract. If the group has a lot of business buying power, the hotel will be more flexible, even in the prevailing sellers' market.

If Someone Contacts You

The CIC recommends that meeting, convention and exhibition industry planners and sponsors who are contacted regarding disputes between labor unions and hotels take the following steps:

Take notes of the conversation, identifying:

• Time and date of the telephone call
  
  
• Name of the individual
  
  
• The organization he or she said they represent
  
  
• The telephone and fax number of the individual
  
  
• Any statement made by the caller
  
  
• Any other pertinent information.

Under no circumstances should you record the conversation without first checking with legal counsel. Many states prohibit the recording of telephone or other conversations without the consent of all the parties involved.

Contact your management and your legal counsel as to what, if any, action you should take with regard to the information you gathered.

If permitted by your management and your legal counsel, send by facsimile a copy of the information to the individual who contacted you, stating you are verifying your conversation.

If permitted by your management and your legal counsel, send by facsimile a copy of the information to your sales representative at the hotel.