Hot-Topic Debate
Heavyweights square off on key issues facing today’s hotelier. This feature presents two articles and two points of view written by select hospitality experts. Hot-Topic Debate is a premium Insider feature.

Who’s Got the Power?
November 15, 2004

The Sum of Their Parts Will Strengthen Unions

By David W. Heath

Think hotel unions don't have the teeth they used to? Think advances in human resources and management training have pushed the hotel unions to the brink of obsolescence? Think again.

By the late 1990s hotel unions seemed headed into the annals of history. Hotel companies appeared to have smartened up. Human resource improvements and stronger efforts at employee relations appeared to have made hospitality unions almost obsolete. Unions in most cities were almost benevolent seemingly headed toward irrelevancy.

Like so many aspects of our America life, 9/11 profoundly impacted the hospitality industry. Lodging companies that had never had layoffs were forced into massive workforce reductions. The continued threat of terrorism hung over the industry like a dark cloud. The perceived threat of additional layoffs increased worker anxiety. Union promises of job security have become increasingly appealing to anxious workers.

At the same time some hotel companies seemed lulled into a state of complacency. One Los Angeles area hotel with which I am familiar had assured its owners that the union really didn't have much to offer employees. Existing wages and benefits were said to be at parity with union hotels in the area. When it was discovered that a majority of employees had signed cards to join the union, the owners were surprised to learn that the employees disagreed with management's view of union affiliation. Union membership would mean a shorter workday (due to paid meal breaks) and a more extensive healthcare package, significant improvements in the eyes of workers (and a significant incremental expense to the owners).

Hotel labor unions are smarter and better organized than ever before. The word on the street is that Local 6 in New York is recruiting the best and brightest from area law school as Business Agents responsible for negotiating day-to-day grievances with management. Imagine being the Human Resource Director at a small city hotel and having to match wits on a daily basis with a young whippersnapper fresh out of Columbia Law School.

I recently attended a staff meeting at a Florida hotel where the general manager warned the catering sales team to vet clients carefully for possible union activity. Its difficult to imagine a hotel turning away meeting business, but apparently organizers from one of the local unions had booked space in a neighboring hotel and had attempted to recruit workers from the very same property.

The labor strikes against hotel companies in major US markets have made it clear: Hospitality unions wield considerable clout. And they will only grow stronger. Consider the key issue in the current rift between hotels and their workers: The various unions have been trying to build muscle by lining up uniform dates on which their various contracts end. Over the long run, possibly by this decade's end, a national hotel workers union seems all but inevitable.

Last month, negotiators for Atlantic City casinos and Local 54 of the Hotel Employees and Restaurant Employees agreed to a five-year contract that includes a total pay raise of 28 percent and continues to have the casino companies pay for health insurance. In the settlement, the union appeared to give in on the key contract length issue, dropping its demand for a three-year deal that would have aligned its negotiating schedule with those of workers in Las Vegas and elsewhere. The union in Atlantic City may have lost this battle, but their struggle is by no means over. This was just one of many confrontations likely to take place over a long time.

Last month some San Francisco hotels enduring labor strikes are said to have performed as well as their nonunion counterparts. For the time being, hotels are enjoying economic recovery and the pressure is on the striking worker lacking a paycheck.

These seeming small victories in Atlantic City and San Francisco should not make hotel companies complacent. In the long run, a single national hotel union seems inevitable. And the sum of its parts will be more powerful.

David W. Heath is principal at Heath & Company, Hospitality Advisors Inc. in Roswell, Ga.

Declining Membership is Unions’ Achilles Heel

By Ben Goldman

This month, the labor union representing Atlantic City casino workers agreed to a five-year contract and conceded the three-year deal it sought. The union lost a major battle; a three-year contract could have strengthened hospitality unions around the country by expiring at the same time as contracts held by hotel workers elsewhere. The hotel unions’ struggle to coordinate contract expiration dates will only become more difficult.

A common expiration date brings to mind the might of the Teamsters and its hold over numerous shipping and freight companies. For hospitality unions, however, such contracts have been elusive. About 30 years ago, I represented hotels in Washington, D.C., where the very same labor union similarly sought common contract expirations, with local unions in New York and Boston. As today, they would have been able to shut down a sizable segment of the industry and had more leverage in negotiations. But the unions were unsuccessful.

After the resolution of the Atlantic City dispute, settlements in other cities also are likely to favor the hotels. By settling on a five-year contract in Atlantic City, hotels emerged victorious on two fronts. First, the hotels fixed labor costs for the duration of the relatively long-term contract. Second, by dropping its bid for what would have been a uniform expiration date, the union has one less tool to recruit new members.

It’s a big setback that weakens the already struggling unions. Union membership, dropping steadily over the years, accounted for roughly 30 percent of the U.S. private sector workforce 30 years ago and roughly 8 percent today. Declining union membership is a factor that sparked the effort to secure uniformly expiring contracts in the first place.

The better terms that the unions might have been able to win had they successfully negotiated a common expiration date would have helped them organize non-union hotels and grow their membership numbers. But without that growth, convincing hotels to go along with a common expiration date becomes even more difficult the next time the issue arises. The unionized hotels will stand firmer in negotiations because they will have to continue to keep labor costs under control in order to compete for guests with lower-rate hotels that remain non-union.

In effect, the union demands will force hotels—not the unions—to become more unified and to take a more aggressive stance. Witness the worker lockout in San Francisco. Locked-out San Francisco hotel workers flew to Hawaii to show unity with hotel workers there. The move aimed to pressure the San Francisco hotels to capitulate, but was ineffective.

Success breeds success. When the next negotiations come up, the hotels will know that a united posture will likely win them favorable terms.

Ben Goldman, a labor relations lawyer in the Los Angeles office of Squire, Sanders & Dempsey LLP, heads the firm's labor practice.

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