Hospitality workers union Unite Here is escalating its battle with Hyatt Hotels Corp. over wages and health insurance, and one of the chain’s L.A. hotels has already been hit by event cancellations related to picket threats.

The mounting conflict comes as L.A.’s tourism-sensitive hospitality industry is on the verge of recovery after steep declines in room prices and occupancy rates.

Century City’s Hyatt Regency Century Plaza was set to stage two events – annual awards ceremonies for the Jewish Labor Committee and Equality California – but the organizations canceled in support of the union and moved their galas to other venues.

As a result, Hyatt Regency lost more than $100,000 in business, plus any additional money that eventgoers would’ve spent at the hotel’s bar, restaurants and for room bookings. What’s more, it’s unlikely that Hyatt Regency will be able to substitute income because it typically takes a year to book such large events: about 1,300 people were expected to attend both affairs.

“It’s a huge impact on our business,” said Erika Garcia-Lavyne, director of public relations for Hyatt Regency. “And it’s difficult to replace that kind of catering business.”

Jewish Labor Committee moved its event to CBS Studio Center in Studio City; Equality California moved its affair to the new Ritz-Carlton in downtown Los Angeles.

Unite Here alleges the Hyatt chain is pushing for “recession contracts” that would roll back health benefits and freeze wages, while opposing organizing campaigns at nonunion hotels.

Hyatt disputes Unite Here’s claims, and said in a statement that its employees deserve “competitive compensation, comprehensive benefits and an excellent work environment.”

Since contracts with the Century Plaza and the Hyatt Andaz West Hollywood hotels – among other Hyatts nationwide – expired in 2009, Unite Here Local 11, which represents Southern California’s unionized hotel workers, has been negotiating new terms for the more than 700 workers at both hotels.

The four other L.A.-area Hyatts – in Westlake Village, El Segundo, Valencia and Long Beach – are not unionized. However, Unite Here Local 11 has been trying to organize the Hyatt Regency Long Beach and recently stepped up those efforts with protests and other demonstrations.

Protests and arrests

The union turned up the heat against Hyatt with nationwide demonstrations July 22. In Los Angeles, hundreds of hotel workers protested at the Sunset Strip’s trendy Hyatt Andaz, formerly known as the “Riot Hyatt” from the days when rock stars stayed there and trashed the rooms. Sheriff’s deputies arrested 63 people at the Hyatt Andaz protests.

“What’s going to convince Hyatt to change their positions is for them to see we are determined, strong and willing to do this for as along as it takes,” said Tom Walsh, president of Unite Here Local 11. “And we expect to continue to have more actions that send that message to Hyatt.”

Walsh said the main issue for the union is health benefits. Hyatt Regency and Hyatt Andaz are currently contributing $4.21 per hour per worker to the union’s health care fund and the union is seeking a 60 cent-per-hour increase to $4.81 during the first year and annual increases of about 10 percent after that.

It’s a strong demand to make as L.A.’s hotel industry tries to stagger out of its recessionary declines. According to Atlanta-based PKF Consulting Corp., the average occupancy rate for L.A. County hotels was 70 percent in April, compared with 77 percent for the same month in 2008. The average room rate was about $140.50 in April, compared with $166 for the same month in 2008.

“Hotels have struggled and continue to struggle and the recovery is barely noticeable,” said Wayne Williams, a partner in the Century City office of hospitality consulting firm Warnick + Co. “And there’s certainly a long way to come before it gets anywhere near where it was.”

Meanwhile, there could be more conflicts to come. There are 22 additional L.A. hotels that have been operating under expired contracts, including the recently opened JW Marriott and Ritz-Carlton in downtown Los Angeles; their workers voted to join the union in April. Unite Here Local 11 has started negotiations with some of the hotels, but not all.

Those hotels employ about 4,000 workers, and Williams said hospitality executives are likely following the back-and-forth with great interest.

“I think everybody is just on guard and watching closely what will happen,” he said.

Easy target

For now, Unite Here is zeroing in on Hyatt. One industry expert said Hyatt is a tempting target for a negative public relations campaign than other major hotel chains for two reasons: The company went public in November and a Hyatt hotel in Boston drew criticism in 2009 after firing 98 union housekeepers who were replaced by nonunion workers.

“Not only does Hyatt have the vulnerability and embarrassment of Boston,” said Jim Butler, a partner in the hospitality practice at Century City law firm Jeffer Mangels Butler & Marmaro LLP, “but now it’s a public company in a fishbowl.”

If Unite Here continues its anti-Hyatt campaign and brings it to other hotels, the industry’s recovery could be hampered, especially since tourism is one of the top job generators in the county. According to the Los Angeles Economic Development Corp., about 384,000 were employed by L.A.’s leisure and hospitality sector in 2009, compared with 402,000 in health care and social assistance, and 389,000 in manufacturing for the same period.

“The economy is just turning around from an extremely deep recession and it is the case that tourism is one of the sectors that’s just beginning to turn, but there aren’t many of those,” said Nancy Sidhu, chief economist at the Kyser Center for Economic Research at the Los Angeles Economic Development Corp. “So it would be a shame to have problems in such a big sector from the standpoint of trying to move the economy up and out from hard times.”

Even though the Hyatt Andaz has yet to receive any event cancellations because of the hotel’s labor negotiations, it’s still feeling the impact of a weak economy. The hotel depends less on large group affairs such as awards and conferences, and instead draws much of its business from tourists, locals and the entertainment industry.

“We are still in a very fragile economic condition,” said Kim Okeson, director of marketing and communications at Hyatt Andaz. “We are struggling every day from a business standpoint to see where our numbers are and if they will be growing at all.”

Walsh of United Here said that raising wages for hotel workers and providing them with good benefits will boost an economic recovery.

“If people who work in the tourism industry are living in poverty, then our whole economy is hurt,” Walsh said. “But if we turn these jobs into good middle-class jobs, then the whole economy benefits as a result. They will be able to spend money and put it back into the economy.”

Still, Unite Here’s campaign took business from Hyatt Regency, and in turn hurt workers there as well.

“They don’t get their hours when groups cancel,” Hyatt Regency’s Garcia-Lavyne said.

The hotel was the subject of headlines in 2008 after owner Michael Rosenfeld announced plans to raze the landmark structure. However, Rosenfeld cut a deal with opponents earlier this year that will preserve the curved-façade hotel and limit renovations, some of which were completed in late April.

Planning to picket

Jewish Labor Committee moved its annual awards fundraiser, which typically draws 500 attendees, after learning that Unite Here was planning to stage protests at the Century City hotel – although the union has yet to demonstrate there.

Leslie Gersicoff, executive director for Jewish Labor Committee’s western region, said those planning to attend the fundraiser, which was originally scheduled for July 25 and is now set for Aug. 22, wouldn’t cross any picket lines.

“We knew that Unite Here was planning to picket,” Gersicoff said. “And most of our guests are from labor unions, social activist groups, politicians and faith-based groups, and we couldn’t cross the picket line and knew that they couldn’t cross the picket line.”

Vaishalee Raja, communications director at Equality California, a San Francisco non-profit that advocates for lesbian, gay, bisexual and transgender people, said the L.A. awards event was moved because the organization supports labor unions. She added that more than 800 people are expected to attend the awards gala in downtown L.A. on Aug. 14.

“We tend to partner with lots of different people in labor, and if they reach out to us and tell us they are having contract negotiations, then we support them,” Raja said.

Hyatt Regency didn’t charge cancellation fees so that the groups would consider coming back in the future.

“The hotel didn’t want to damage the relationship,” Garcia-Lavyne said. “It’s an unfortunate situation for everyone involved and there are personal relationships between hotel staff and the clients, and we are acting in good faith knowing that they want to come back.”

Hyatt Regency and Hyatt Andaz are likely to face more pressure from Unite Here.

“We are prepared to take a strike vote because that is another sign to Hyatt that we are serious and we are determined and we are willing to do whatever it takes,” said Unite Here’s Walsh.