In the year-long game of poker between unionized hotel workers and owners of large hotels in Los Angeles, the owners appear to hold the weaker hand.
An aggressive boycott campaign has cost the hotels millions of dollars in lost business. Two of the nine hotels have dropped out of the Los Angeles Hotel Employer's Council (both were sold; the new owner of the Hyatt Regency Los Angeles cut its own deal with the union and the St. Regis hotel will be converted to condominiums). And a third hotel manager is urging accession to Unite HERE Local 11's demand for a contract that would expire in 2006, to line up with expiration dates in other large cities.
"Local 11 has outmaneuvered us," said John Stoddard, general manager of the Wilshire Grand hotel. "What I'm saying is stop fighting them and give them the '06 agreement."
When the previous contract expired more than a year ago, there appeared little hope that Unite HERE Local 11 could prevail. The larger and deeper-pocketed grocery workers' union had just lost a bruising battle with supermarket chains, and the contests had similar parallels.
Both unions represented lower-skill workers in industries where employers were aggressively seeking to cut costs. Both were at a disadvantage as a regional union fighting owners with nationwide, and in the case of the hotel owners, worldwide resources.
Knowing that it couldn't afford to strike, the union launched a boycott of the hotels, even though a successful boycott was sure to cost workers in the form of lost hours. And it pressed on with a tactic of delaying negotiations, showing a willingness to work without a contract until 2006 if need be.
One fateful mistake, Stoddard now says, was the council's decision not to lock out workers in response to the boycott. Knowing that housekeepers, bellhops, food servers, bartenders and other employees lived mostly paycheck to paycheck, hotel managers were confident they could outlast workers in a work stoppage.
But when the picket lines began last July, the hotels' only response was to begin charging workers $40 per month for the family health coverage they had been receiving for free. "The council was too worried about our public image, employee relations and the political fallout," Stoddard said.
Instead of weakening the union's resolve, the health premium hike only strengthened it. The fees were rescinded in February by hotel owners in hopes of restarting negotiations, which the union hasn't done.
Meanwhile, the union began reaching out to politicians and to convention groups that planned to use the hotels for rooms or banquet facilities. By union estimates, the boycott has cost hotels $10 million to $13 million, with the canceling of room nights, conventions, corporate meetings and banquets by 114 confirmed clients.
Local 11 estimated that the Wilshire Grand lost $2.1 million through mid-April a figure Stoddard called "probably very conservative." He said his 900-room hotel lost about $1 million alone from an estimated 44,000 room nights that vanished when the AFL-CIO canceled reservations before a convention in February.
On May 12, Stoddard met privately with the union in hopes of easing the burden on his hotel. He also wrote the council a letter urging it to cave in to the union's demands.
Union negotiators told him they would stop urging the Wilshire Grand's clients to honor the boycott but would not take the hotel off the union's boycott list if Stoddard agreed to advocate a two-year agreement (retroactive to the April 15, 2004 expiration of the last deal) to the council.
But remaining hotel owners say they aren't ready to budge. They say the boycott's effectiveness exemplifies why they should not settle for an agreement that expires next year.
Hotels book reservations for large conventions and other events months, if not years, in advance. The last thing they want is to have to start the whole negotiation process over again in less than a year.
"If we were to accept a 2006 expiration, our buyers and clients who book groups many years in advance would still be uncertain whether Los Angeles was going to be a troubled area for them," said Brian Fitzgerald, general manager of the Millennium Biltmore Hotel and president of the council.
Remaining in the council are the Global Hyatt Corp. and Starwood Hotels & Resorts Worldwide Inc. chains that have an easier time absorbing local losses. The Wilshire Grand is an independent hotel owned by Hanjin International Corp.
"The boycott has definitely cost us business," said Fred Muir, a consultant to the hotels. "The flip side of it, of course, is that it has cost the employees quite a bit. The employees are paying a very heavy price for this union tactic. And they are sending business to non-union hotels. What sense does that make?"
Union officials hope Stoddard will have some influence on his colleagues. "Mr. Stoddard is an eloquent and persuasive proponent of his position," said David Koff, research analyst for Local 11. "I would imagine that he will be making the most persuasive argument that he can, that it is in their best interests to settle with the union on a two-year agreement."
Stoddard said that when the Wilshire Grand agreed to join the council, the union's strategy of lining up nationwide expiration dates in 2006 wasn't clear. Once it became apparent, local hotel managers of larger hotel chains were stripped of their authority.
"All of the shots are being called by the corporate offices," said Stoddard. "I feel confident that as an independent hotel, I could negotiate a fair and equitable agreement with Local 11."
Six hotels that never joined the council and instead bargained independently with the union have all reached deals expiring in 2006.
The council voted 7-to-1 on May 12 to hold firm on its demand for a multi-year contract Stoddard was the lone dissenter but it softened its stance in other areas in a proposal submitted four days later.
Raises of $2.50 per hour for non-tipped workers and 40 cents for tipped workers over the life of the contract, as well as pension increases and full maintenance of employer-paid health benefits are now on the table.
"We are hoping that Local 11 will see the value in this proposal made," said Muir.
Said Koff: "(June 3) is the point when the union will respond to employers and not before."
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