Labor Battle Looms at Hotels
Negotiations May Hinge On Medical Benefits, Pay

Staff Reporter

With contracts covering nearly 5,000 workers at 17 of L.A.'s largest hotels set to expire in April, hotel operators and the union representing their workers are preparing for the possibility of contentious talks hinging on health care and wages.

Like bus mechanics who struck last year and grocery workers still embroiled in a three-month job action, hotel workers don't contribute to their medical insurance, and union officials believe that employers may demand concessions in that area as a key part of the negotiations.

Coleen Kareti, president of the L.A. Hotel Council, a coalition of nine hotels that will represent management in the talks, said the group hasn't formulated its proposal.

"The hotels haven't said anything publicly about benefits or the contract," said Kareti, general manager of the Hyatt Regency Los Angeles. "There haven't been any talks about taking back benefits."

Even so, some operators said ongoing weakness in the industry would require cutting expenses, including labor costs.

"I think hotels have to look at all our expenses," said John Stoddard, general manager of the Wilshire Grand. "When you have revenues dropping as dramatically as we have in the last couple years I think we have to analyze and look at everything. And for us in downtown L.A., unfortunately there's no light at the end of the tunnel."

More broadly, the prospect of another labor dispute this time involving housekeepers, bellhops and kitchen staff again highlights the growing rift over escalating health care costs as it affects lower-wage workers. Once thrown into the benefit package as a way of holding onto workers, especially those from two-income families who might not otherwise have access to coverage, health care is now so costly that companies maintain they are no longer able to foot the entire bill.

In the supermarket strike, the proposed costs to be passed along to workers are relatively modest, but union officials claim that they represent a hardship for those earning as little as $6.75 an hour. If the hotel contract talks result in an impasse, the arguments on both sides could be similar.

Bad business

Anticipating a hard line on the part of management, members of the Hotel Employees and Restaurant Employees Local 11 voted in October to approve the creation of its first permanent strike fund. Before, HERE had set up only temporary funds for specific groups of workers in contract negotiations.

"We are not looking for a fight," said Maria Elena Durazo, president of the local. "But we are going to be ready if employers want one."

When the union and the hotels last negotiated a contract, in 1998, Los Angeles hotels were thriving from a rapidly expanding national economy and a healthy citywide convention business.

But in the two years after the Sept. 11, 2001 terrorist attacks, L.A.'s hospitality industry has been in the doldrums. The city's convention business is at a third of the level of six years ago and foreign tourism especially from Japan is far below 1998 levels.

L.A. County's average occupancy rate in 2003 was estimated to be 68.5 percent and the average nightly room rate was $113, according to PKF Consulting. In 1998, the last time contract talks took place, occupancy levels stood at 74 percent and nightly room rates $104.80.

Only in the last three months have conditions shown signs of improving as corporate travel has begun to increase modestly, though business is still far from the industry's peak in 2000.

Kareti would not concede that the weak performance of the last two years was an indicator of management's stance in the upcoming negotiations. "Business hasn't been good for us for the past few years," she said, "but I think I can speak for all the general managers and hotel companies and say we are committed to taking care of our employees."

The Hotel Council includes the Regent Beverly Wilshire, Westin Bonaventure, Wilshire Grand, Millennium Biltmore, Hyatt Regency Los Angeles, Park Hyatt Los Angeles at Century City, Sheraton Universal, St. Regis and Century Plaza hotels. Eight other hotels have a "me-too" agreement with the union, and will honor the terms negotiated by the Hotel Council, Kareti said.

The union has not determined whether "me-too" hotels would be affected by any labor actions. HERE and the L.A. Hotel Council have no time frame for negotiations to begin.

Stoddard said the poor economic conditions of the hotel industry already would set a somber tone for the upcoming talks.

"Certainly, all the employees know the condition of the business they feel it in their pocketbooks right now by the hours they get and the tips they receive," he said. "If I was a union representative or in the union leadership I would be depressed going into these negotiations when the economic climate is so anemic."

Mixed views

Not everyone paints so bleak a picture.

Kent Wong, director of UCLA's Center for Labor Research and Education, said L.A.'s hotel industry has recovered enough from the effects of 9/11 that it would be hard for the Hotel Council to use it as a bargaining tool. "Clearly it's not the same economic environment it was six years ago but it's also nowhere near where it was after 9/11," he said. "We have rebounded greatly since then."

Besides, said Durazo, hotel workers made sacrifices in the months after terrorist attacks when hours were slashed and upwards of 2,000 were laid off. "Workers have already paid a very high price for the drop in the business," she said. "And they shouldn't have to pay again."

Average HERE housekeepers and dishwashers make about $11 an hour, cooks about $13 an hour and tipped employees about $7 an hour, according to Durazo.

"Hotel workers have given up wage increases in lieu of winning health care coverage for their families and then holding onto it," Durazo said. "It's been a priority over the years to make sure we don't lose family health care coverage."

Union officials called the potential for a hotel strike vote in Los Angeles very real, pointing to HERE locals in Boston and Chicago that passed strike authorization votes in recent contract negotiations, though settlements were reached in both cities.

HERE may also want to take a hard line in L.A. because its contract will steer negotiations in San Francisco, where contracts are set to expire in August.

Common complaints

The talks will take place against the backdrop of the supermarket tussle. Members of the United Commercial and Food Workers union have been striking at Safeway Inc.'s Vons and Pavilions and have been locked out of Kroger Co.'s Ralphs and Albertsons Inc. stores since Oct. 11.

While a win for the supermarket chains would provide a boost to hotel management, as a win for supermarket workers would be a boon to HERE, the union and the hotels don't relish a similar battle.

"Both sides want to avoid what has happened with the supermarket strike, where each side is taking hits in an impasse with no end in sight," Wong said. "I don't think the hotel management or union wants that type of fight."

It could still happen.

HERE is known for its aggressive tactics, including massive demonstrations and the coordination of travel boycotts, and it and has already shown a willingness to flex its muscles.

"The hotel industry is quite vulnerable in this sense," he said. "People do have other options when it comes to selecting hotels and they have options in terms of other cities. If the word gets out that hotels are paralyzed with work stoppages it could have a tremendous impact on the overall economy, not just hotels."

Still, some say the talks will go relatively smoothly.

"I don't expect it to be contentious," said Councilwoman Jan Perry, whose 9th District includes many of the downtown hotels with contracts expiring. "There doesn't seem to be a lot of rhetoric on either side and both sides seem willing to work things out."

Wayne Williams, president of Williams & Associates, a hotel management firm working with properties whose contracts are set to expire, believes cooler heads will prevail.

"I think so far every one seems to be fairly levelheaded in their thinking," he said. "It won't be a smooth sail but I don't see it as note-worthy or having any protracted problems or issues."

There has never been a citywide hotel strike, though HERE workers at the Luxe Rodeo Hotel walked off the job for one week in 1998. The Luxe Rodeo, owned by Luxe Worldwide Hotels LLC, was the last hotel to hold out against the contract negotiated by the L.A. Hotel Council six years ago.

For reprint and licensing requests for this article, CLICK HERE.