Their union says the complex ownership of properties will make agreements difficult
POSTED: 1:30 a.m. HST, Jul 2, 2010
LAST UPDATED: 12:59 a.m. HST, Jul 10, 2010
Unite Here Local 5 hotel workers are gearing up for their first round of bargaining next week with the large, mainland hotel owners who expanded their presence in Hawaii during tourism's most recent downturn.
AT THE BARGAINING TABLEUnite Here Local 5 and Hawaii hoteliers will begin contract talks next week:
» In Hawaii: Unite Here Local 5 will seek three-year contracts that defend wages and benefits and preserve pensions. The union will also oppose a proposal to make employee credit checks part of the hiring process.
SEEKING NEW CONTRACTUnite Here Local 5 represents workers at these hotels:
» Hilton Hawaiian Village Beach Resort & Spa
While the start of contract talks typically puts pressure on both workers and management, the greater presence of global corporations among hotel owners here is expected to bring dramatic changes to the bargaining table, said Eric Gill, financial secretary-treasurer of Unite Here Local 5, the hotel and restaurant workers union.
Bargaining will continue to take place largely with hotel operators; however, the emergence of more highly leveraged global owners will bring new emphasis to the bottom line.
"Wall Street will have a great deal of influence in these talks," Gill said.
Keith Vieira, senior vice president and director of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia, said he expected "local-style" negotiations would continue despite the ownership changes.
"There's a lot of posturing and concerns, but both sides want the hotel industry to be stable and to maintain jobs," Vieira said.
Gill said the union had difficulty negotiating with different owner-operators during the 2006 contract talks.
He pointed to Sheraton as an example. Sheraton hotels in Hawaii are owned, in part, by Kyo-ya Hotels & Resorts LLP and managed by Starwood Hotels & Resorts. Cerberus Partners LP, a New York investment group, acquired the majority stake in Kyo-ya in 2004. While Starwood sat at the bargaining table in 2006, Cerberus affected the outcome, Gill said.
The 2007 purchase of Hilton by Blackstone Group, one of the nation's largest private equity firms, could further complicate negotiation of the latest contract at the Hilton Hawaiian Village, Gill said, adding that the pattern could be repeated at Hyatt Regency Waikiki and the Waikiki Marriott, both owned by subsidiaries of Goldman Sachs.
"While these guys have been buying for a while, this time we have the credit crunch and the devaluation of asset," Gill said. "There's a shake-up in private equity coming, and some of these guys won't be able to make their loans or their flips."
Vieira said he did not want to negotiate contract proposals in the media, but he said workers are coming off pretty lucrative contracts and that rising health care costs would be a concern.
Local 5 and the hotel owners agreed to a four-year contract in 2006 that included wage increases of up to $2.40 an hour for nontipped employees, as well as improved housekeeping workload standards and continued family medical benefits.
Going into this round of talks, Hawaii hoteliers say they have not fully rebounded from the steep drops of the last few years and that profitability could still be years out.
"Arrivals have increased in Waikiki, and that is certainly a good first sign, but our numbers are a good five or six years back from where they still need to be," said Vieira.
Costs have continued to rise rapidly, yet room rates continue to be anemic, said Jerry Gibson, area vice president Hilton Worldwide and managing director Hilton Hawaiian Village.
"We are currently operating at rate levels that we saw more than five years ago," Gibson said. "However, it is our goal to reach a mutually beneficial agreement for our employees and for the Hilton Hawaiian Village. We appreciate our team members and all that they do to keep our hotel operations running smoothly."
Hyatt declined to comment on the impending negotiations, and Marriott officials were out of town and could not be reached.
Union leaders outside of Hawaii said they are also concerned the expansion of large corporate owners at a time when the visitor industry is just coming back from a severe downturn will make negotiations difficult.
That's already happened to hotel workers whose contracts expired last year in Chicago, San Francisco and Los Angeles, said Annemarie Strassel, communications coordinator for Hotel Workers Rising, which links about 46,000 unionized hotel workers nationwide.
"We began bargaining in the summer of 2009 and have yet to achieve new contracts," Strassel said. "Workers are frustrated at what their lives have looked like in the recession against the balance sheets of these companies," she said.
"They aren't responsible for the bad decisions, and yet they are being asked to bail them out."
Joseph Toy, president and chief executive officer of the hotel consultancy Hospitality Advisors LLC, said while hotels have recovered lost demand, he does not expect them to be profitable until at least 2014.
"Right now it's a profitless recovery," said Toy.