Bill Davis has his fingers crossed that 2006 won't turn out like 2004.
The executive director of the American Anthropological Association moved his group's 2004 annual meeting to Atlanta just a month before it was to take place in San Francisco. The reason? His pro-union membership did not want to cross the picket lines at the San Francisco Hilton, where hotel workers in the Unite Here union were picketing. But he was able to avoid cancellation charges at the San Francisco Hilton by moving the event to the Atlanta Hilton and promising to return to San Francisco for the 2006 annual meeting.
Because of the last-minute nature of the switch, only 1,000 of the anticipated 5,000 delegates showed up in Atlanta, costing the association close to a half-million dollars in lost revenues and other costs.
Fast-forward to six months later and it's déjà vu for the the Arlington, Va.-based AAA. Hotel union contracts haven't been signed in San Francisco and picketing and boycotts continue as the AAA's November 2006 meeting approaches.
“We're caught between the unions and the hotels and we're sort of the victims of the circumstances,” he says. “I'm very apprehensive about the Hilton hotel in San Francisco in 2006.”
Planners, you may soon share his anxiety. The hotel labor woes in 2004 and 2005 could be just a preview to the real show in 2006.
John Wilhelm is president of one of the most powerful unions in the country: Unite Here, a labor union representing 450,000 hotel and restaurant workers nationwide. According to Wilhelm, Unite Here labor contracts are due to expire at more than 400 hotels next year.
These include most of the major hotels in Chicago, New York, Boston, Toronto, Honolulu, Sacramento, and Monterey, Calif. Additionally, contracts will expire at some hotels in Cincinnati and Detroit; one in Seattle; and one in San Francisco. Should the hotels and union sign a two-year contract in San Francisco and Los Angeles (as is proposed) or talks stall for another year and a half, you can add those two cities to the list.
“The volume of bargaining in 2006 is unprecedented in the history of our industry in North America,” Wilhelm says. “There's never been so much collective bargaining in one year.”
And it's not by accident that the stars have all aligned this way.
“We thought that if we line up as many contract expirations as possible in one year, hotels are going to have to pay attention,” Wilhelm says. “But that may be naive on our part. Perhaps they will continue to have the same kind of head-in-the-sand approach with workers as they are apparently exhibiting with customers,” he says, citing that many hotels are imposing stiff penalties on associations for reduced attendance or cancellation.
David Scypinski, senior vice president, industry relations, Starwood Hotels and Resorts, says the effects of widespread labor action in 2006 could be devastating. “It could be 9/11 in a different wrapper. It could create a chain of events that hurts the industry and hurts the economy,” he says, referring to the biggest worry that people in the meetings industry have about 2006 — a national hotel strike. “Obviously there is a lot of saber-rattling right now,” Scypinski says. “I don't know how far it will go. We never in our days of being in this industry have seen this happen before.”
As for a national strike, Wilhelm says that would be hard to do, considering that the contracts are up at different times in different cities, starting in January in Toronto and ending in November in Boston. The other cities are sprinkled in between. “That's certainly not our objective,” he asserts, but he adds that strikes and boycotts in any of the cities are a possibility if talks break down.
While union talks have not started yet for the 2006 contracts, Unite Here's Wilhelm says he isn't optimistic about 2006, based on what has transpired in San Francisco and Los Angeles.
In San Francisco, hotel labor and management at 14 hotels have been at odds since last September, following a worker strike and subsequent lockout. Employees went back to work in November when the two sides agreed to a 60-day cooling-off period, which ended in January. Employees are back at work, but no contracts have been signed and the picketing and boycotting continues with no end in sight. Just last month, in the most visible protest yet, 37 union members were arrested for civil disobedience while picketing in front of the San Francisco Hilton.
“In San Francisco, there aren't currently any negotiations,” says Wilhelm. “There's no reason for optimism that I've heard about.” (At press time, it was learned that the two sides were scheduled to go back to the table May 31. Further details were not available.)
Among the hotels in the labor dispute are the Hilton San Francisco, Four Seasons, Fairmont, Sheraton Palace, Omni Hotel, Grand Hyatt Union Square, and Westin St. Francis. Several large groups, including the American Anthropological Association, the Organization of American Historians, the National Council of Teachers of English, and the American Immigration Lawyers Association, have moved their meetings from the boycotted hotels.
Wilhelm is more optimistic about Los Angeles, where two major hotels — the Beverly Hilton and the Bel Air — broke ranks and recently signed two-year contracts with the union. Also, the Hyatt Regency Los Angeles, which was on the boycott list, was sold and the new owner, Sheraton, signed a two-year deal with the union. Contracts at seven hotels within the multi-employer group, including the Westin Century Plaza, Sheraton Universal, Hyatt Regency West Hollywood, Millennium Biltmore, Regent Beverly Wilshire, Westin Bonaventure, and Wilshire Grand Hotel, remain unsigned. The union estimates that 114 meetings worth $13 million have been relocated from the boycotted hotels. (The hotel group presented a new proposal in May, but no talks were scheduled at press time.)
As to whether or not he thinks the negotiations could drag out for another year and a half, Wilhelm says, “I guess that's possible, but that would be foolish in the extreme. The boycotts will continue and the business uncertainties will continue, but I can't control what the employers do so I don't want to say it's not possible.”
In San Francisco, the two sides have met about 45 times over the past nine months. “We want to get back to the table as soon as possible,” says Steve Trent, general manager, Grand Hyatt Hotel, San Francisco, and spokesman for the hotel group, which represents the 14 hotels.
One of the major stumbling blocks in the negotiations revolves around the length of contracts. The union wants a two-year contract that would expire in 2006, putting the two California cities on similar schedules as the other cities that are up for renewal in 2006. The hotel group wants a longer-term deal similar to the past two contracts, which both had five-year terms.
“We want to give the employees the security of a long-term contract,” Trent says. “In two years we'll be right back into this. We don't think that's productive and for our employees, it's not to their benefit at all.” Trent says taking care of employees, whom he called “the best in the country, if not the world,” and getting a deal signed is the top priority.
Scypinski is hopeful that the disputes in San Francisco and Los Angeles will be resolved soon, but he's not holding his breath. “We've given them a fair package,” says Scypinski. “The problem is, they just want to go ahead and play it out until next year when they have this huge amount of potential leverage and suddenly, they come to us with the hammer.”
Since the dispute began last fall, the union has been reaching out to meeting planners to inform them of the situation through phone calls and a Web site (www.hotellaboradvisor.info).
“We've tried as hard as we can to speak to issues that are important to meeting planners and to get that information out to folks quickly,” says Jason Ortiz, research analyst at Unite Here. Part of it is letting them know about cancellation clauses, giving updates on the issues and tips on how to handle labor disputes, and letting them know whether there is the potential for labor activity in the form of picketing, boycotts, or strikes, Ortiz says.
But Mary Power, president of the Convention Industry Council, says there's a fine line between informing planners about the situation and the potential of picketing, and threatening them that picketing will occur if they don't move or cancel their meeting. “They can picket the hotel — that's not a problem — but if they do anything that would threaten problems, then it becomes a secondary boycott,” says Power. Because CIC had received calls that the latter had occurred, the organization decided to issue a statement condemning the practice.
The Professional Convention Management Association, Meeting Professionals International, and the American Society of Association Executives have also spoken out against any efforts by the union to cause disruption of the meetings business.
“We were not pleased to see the direction that some of the approaches were going,” says Deborah Sexton, president and CEO of PCMA. “A lot of stories were coming out of the San Francisco marketplace with threats of disrupting the meetings, and we do not feel that that is an appropriate approach. This is a serious issue that requires people sitting at the negotiating table.”
Planners interviewed for this story had different experiences with the unions. One planner, who wished to remain anonymous, felt union calls to his conference speakers went too far and were disruptive and harrassing. Another planner who received union calls found them more informative than harassing.
Wilhelm says the notion of a “secondary boycott” is a “fairly lame effort to inject a legal concept from labor law” into a situation where it has “zero application.” He also disagrees with the idea that the union is threatening meeting planners. “If somebody is describing the fact that there are active boycott efforts in effect in these places, that's a reality that people, even if they don't like the reality, should want people to know about.”
Sexton says the hotel labor dispute is one of the chief concerns of its members and one that PCMA will raise awareness of this year through educational offerings. The plan is to have an industry forum on the topic, probably in the fall, with the goal of inviting both the union and the hotel side to speak at the forum. While discussions have not yet taken place, she thinks the union would be well served to reach out to industry groups, too. “I think they could potentially call on all of us to educate the industry on their plight.”
Joe McInerney, president of the American Hotel and Lodging Association, is optimistic that the two sides can reach an agreement in San Francisco and Los Angeles and avert further strikes in 2006. “Anything can happen, but in reality, I don't think it will. If they want to cripple the industry, so be it. But there are reasonable people on the union side, and they are trying to work for their members. They are not going to do anything on a grand basis that will affect the livelihood of their membership.”
Until this all gets sorted out, association executives like AAA's Bill Davis will be left holding the bag. “We're very concerned about what happens to us with regard to future meetings,” he says. “I am extremely apprehensive about our ability to hold meetings of the kind that our members expect under the circumstances that appear to be prevailing in major cities around the country.”
Davis may have to consider using second- or third-tier cities, having smaller meetings, or using multiple properties. As for 2006 in San Francisco, the association will make a decision one way or the other sooner rather than later. Says Davis, “I can't afford to have another meeting collapse on me.”
Strikes, threats of strikes, and even picketing are covered in force majeure clauses in hotel contracts. But there has to be a reason to exercise the clause to cancel the meeting, such as that the circumstances make convening impossible, excessively difficult, expensive, or impractical, says John Foster, partner, Foster, Jensen and Gulley, Atlanta. Keep in mind, however, that if performance is not an impossibility, the clause may be challenged by the hotel if the hotel's defense to performance is limited to “impossibility” and not commercial “impracticability.”
Meeting organizers should review contracts care-fully with counsel to insure maximum protection in the event of cancellation. Also, planners should require hoteliers to provide “a reasonable estimate of the actual damages the hotel will suffer” if the group cancels, according to the hotel workers union Unite Here, in a list of tips for planners published on its Web site.
Strikes and threats of strikes are also covered in cancellation insurance. However, coverage is not available if the buyer knows the strike is coming, says John Buttine, president, John Buttine Inc., a New York-based insurance agency.
Should there be a threat of disruption, planners are also advised to be proactive in communicating early and often with both the hotel and the union to get specific information on how the meeting might be affected. Also, they should work with the hotel to find out how they can accommodate the group if there is a disruption.
“Even if there is a labor action, we'll be able to provide them with the service they're accustomed to receiving,” says Joe McInerney, president, American Hotel and Lodging Association.
If unwanted solicitations come from union representatives, the Convention Industry Council recommends that planners take notes and get the contact information from the caller and forward the information to management or counsel.
— Dave Kovaleski