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Posts Tagged “Hotel compensation”

Hoteliers Face Complex Union Negotiations

(This column recently appeared in Hotel News Now where Randall Pullen is a columnist for their on-line publication)

I attended the annual Hospitality Law Conference recently concluded at the Houston Omni Hotel.  Besides meeting with many of the leading labor attorneys across the country, it is an opportunity to learn about the latest legal issues and rulings that are affecting hotel human resources and labor markets.  This year was no different; there are a lot of new developments that are or will impact the hospitality industry now and in the near future.

It would take several columns to just deal with the many unknowns of the Patient Protection and Affordable Care Act also known as Obama Care, or the proposed changes to the immigration laws that are now being discussed in Congress, or with the many labor union contract negotiations scheduled to occur in 2013. While all three of these issues are very important to the Hospitality industry, I am going to focus on the upcoming negotiations between hotel companies and the labor union, UNITE HERE. There is much that can be learned from the last round of negotiations to prepare for this new round of union contract negotiations.

UNITE HERE represents the most hotel workers of any union with over 100,000 hotel workers in almost 1,000 hotels across the country.  The union currently has contracts with several of the major hotel companies that expire later this year.  The negotiations for the current contracts started in 2009 when the prior contracts expired, and were not signed until last year. The negotiations were contentious and drawn out due to many of the contracts expiring during the great recession. Management companies were looking for wage freezes, longer work hours as well as employees picking up a portion of the healthcare premium costs. Now, a year later the process will start all over.

In the prior negotiations, UNITE HERE made several changes in the tactics it used. The most notable was negotiating on a regional or national level with individual hotel companies instead of using the multi-employer model market by market previously used.  Once they achieved a concession from one employer, they would use it in negotiations with the other companies to accept a similar concession. Although carrying on multiple negotiations at one time made it more complex, the tactic appeared to work as they played management companies off against each other as well as in individual markets.

Also notable in several current contracts is the requirement that a successor company purchasing the hotel must honor the existing contract with the union.  This clause was added due to the many sales of hotels over the last 5 years where the contracts with the unions were ended and employees were rehired without a contract.  This expanded interpretation of succession was approved by the NLRB, which is quite different to how succession is typically determined. There have already been a number of hotel sales that have been cancelled due to this requirement.

Going forward this year, we will see a number of new tactics as well as some that were tried in the last round and will likely be front and center this time. Management companies successfully used poor financial performance as a tactic, which will not be available this time.  The strong recovery of the hotel industry with record occupancies and continued strong financial performance forecasted for 2013 and 2014 generally will preclude such a defense, even though RevPAR still lags.  For those markets not recovering as quickly as the major markets, hotel companies that make this argument will likely have to produce financial statements for all affiliated companies to prove there is a financial hardship.

We have already begun to see the counter arguments being made by the unions.  They are claiming that hotel companies have recovered and are making record profits.  The only ones left out of the recovery are the workers. A good example of this tactic is what occurred in Seattle last April.  In a report issued by SAGE (a union supported non-profit), Seattle Hotels Do Not Pay a Living Wage, they claimed that many hotel workers in downtown Seattle did not earn a living wage, had no benefits and a housekeeper’s job was more dangerous than working in a coal mine. Of course none of these claims were true, but it became a national news story. The AH&LA, with the help of WageWatch, was able to refute all of these claims.  No doubt, we will see this played out again and again this year and next as negotiations drag on into 2014.

UNITE HERE will intensify its efforts to negotiate one-on-one with management companies. The example they have made of Hyatt Hotels over the past 2 years is what awaits other management companies who refuse a union contract for all their hotels.  Flash mobs (Lady Gaga Flash Mob), boycotts (Hyatt Hurts) and employee lawsuits brought against individual hotels (Hyatt Settles Complaint) with the backing of the NLRB await those who don’t play ball.

Labor lawyers also believe a number of other provisions will become more mainstream in negotiations including: expanded successor language to require new owners to honor existing union contracts; more limitations on subcontracting of services including such things as prepackaged food, wedding cakes, arguing that such purchases equate to subcontracting culinary services; extended length of contract to 7 years; and significant wage increases to “catch-up” with wage freezes implemented during the recession.

Looking ahead, hotel companies will face an entirely new bargaining landscape in union negotiations this time around. Some of the lessons learned from the prior contract negotiations will likely shape the new negotiations, bargaining goals, concessions, and tactics employed. As more unions move toward the UNITE HERE model of nationally-focused bargaining strategies, employers that operate in multiple markets will be forced to take a “big picture” approach to their negotiations as well as to unique circumstances in individual markets. Smaller hotel companies that operate in a few markets or in a single market will be forced into accepting provisions negotiated with the major hotel companies or face the consequences.


Randall Pullen is President and CEO of WageWatch, Inc., which he founded in 1999 to design and implement Web-based wage and benefit surveys. Mr. Pullen’s work experience includes over 30 years of software development and consulting to the hotel industry. Mr. Pullen is a certified public accountant and a member of the AICPA. He earned a Bachelor’s Degree in mathematics and an MBA from Arizona State University. He serves on the boards of a number of companies and associations, and is currently the Treasurer of the Arizona Housing Finance Authority.

The opinions expressed in this column do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, STR and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

Copyright © 2004-2011 Smith Travel Research /DBA HotelNewsNow.com (HNN). All Rights Reserved.

Lodging Industry 2012 Wage Increases- Part 1

The year 2012 will be remembered as the comeback year for hourly wage and salary increases for the employees of the lodging industry. The industry had across the board wage increases for both hourly and salaried employees as reported by over 5,000 hotels in the WageWatch hospitality compensation survey for 2012. Overall, wage and salary increases were reported as 2.6% for the year, which was almost double last year’s increase of 1.4% reported by WageWatch in its PeerMark™ Wage Survey for 2011 and follows a period of wage stagnation reported in the industry from 2008 to 2010.

This past January, WageWatch surveyed over 3,400 hotels and disclosed in its 2012 wage forecast budgeted pay raises averaging 3% for exempt and nonexempt employees in the lodging industry. The median and mode were also 3%. There was also very little difference between full service hotels and limited or select service hotels, with the later budgeting 2.9%.

Compensation increases reported in the WageWatch wage survey for the lodging industry as of October 23, 2012 shows little difference between the percentage wage increases for full service hotels and limited or select service hotels for similar positions. This is the first year since 2008 that limited/select service properties have kept pace with their full service brethren.

Pay raises for 2012 came in the face of slower than expect economic growth in the U.S. The consensus economic forecast last December was for economic growth in the range of 2.0 and 2.5 percent for 2012. Through the third quarter of 2012, economic growth is estimated to be mired at 1.7%. In spite of this lackluster economic performance, the lodging industry continues to strengthen.

The President of WageWatch, Randy Pullen, stated earlier this year that he expected strong wage increases, as well the as the WageWatch forecast for an increase in lodging employment of an additional 25,000 jobs, to come to fruition as the lodging industry continues its post-recession improvement in both occupancy and rate.

Interestingly, if the lodging pay raises are examined at a more detail level, several “hot jobs” or hard-to-fills jobs can be identified nationally as well as in several city markets. We will focus on a few of the hourly jobs for the lodging industry this week and take a close look at salaried jobs in next week’s Blog.

Front of the house and back of the house wage increases were essentially the same, with front desk agents receiving on average 1.8% increases, while housekeepers and house persons received 2.4% and 2.1% increases. The relatively smaller increases for these positions when compared to the lodging industry average is not unusual as they are entry level positions with higher turnover, which results in the starting wage rate having more impact and are tipped positions In the hotel kitchens, bakers and cooks received 3.2% and 2.1% pay raises. Again, cook is an entry level position and more dependent on the starting rates, which changed very little from year to year.

The biggest increases for hourly workers went to the maintenance department with maintenance technicians I and II receiving on average 5.5% pay increases. Qualified maintenance technicians are hard to find due to multi-industry demand on this skill set and are considered to be hot jobs.

At the supervisor level, housekeeping supervisors received on average a 2.3% increase while front desk shift supervisors received 2.9% increases and night auditors receiving 3.7% increases. In the kitchens, sous chefs received on average 2.9%.

Next week, we will review the salary survey increases in our blog. Needless to say, the maintenance department does well with chief engineers receiving on average 17.6% increases … more next week.

WageWatch, Inc. is the leading compensation survey provider for the lodging industry with over 5,000 hotels participating in its PeerMark™ Wage survey. The PeerMark™ Wage Survey is the only Web-based custom survey tool that allows individual survey participants to select their competitive set for comparison purposes.