Sunday, May 12, 2002

U.S. hotels demand more
from fewer workers
to rebuild profits

To lift profit margins, hotel
companies are keeping staff low

By Jeannine DeFoe
Bloomberg News

SAN FRANCISCO >> Service suffers whenever San Francisco's Renaissance Stanford Court hosts a banquet, according to David Harlan, a cook at the 393-room hotel.

That's because the Renaissance, managed by Marriott International Inc., hasn't rehired about 100 workers Harlan said were laid off last year. The remaining 125 employees must take up the slack, and on some nights Harlan has to make desserts, set banquet tables and cook for the restaurant, he said.

"I'm doing the work of two or three people by myself," Harlan said. "We're being expected to work harder and faster. It puts employees in a very difficult situation."

Marriott, Hilton Hotels Corp. and other hotel companies saved $3.4 billion last year cutting jobs as the recession and terrorist attacks reduced travel and led to the biggest drop in room demand since 1967, according to PricewaterhouseCoopers.

Hotel companies now want to keep payrolls low in an effort to widen profit margins and boost share prices as demand recovers.

"This is a high fixed-cost industry," said Eric Holmes, an analyst for Victory Capital Management, which has $72 billion under management. "If they can keep those costs down, that gives you a lot more earnings."

Those who have hotel jobs complain the strategy results in overworked employees and risks alienating customers with bad service.

They point out that though business was down, according to PricewaterhouseCoopers, the industry still made a profit of $16.7 billion, compared with $23 billion in 2000.

"Business is coming back much quicker than anyone anticipated, and we're not seeing a proportionate rehiring," said Tom Snyder, assistant to the president of the Hotel Employees and Restaurant Employees International Union, or HERE, which represents 265,000 U.S. workers. "In D.C. we have 1,000 people still out, and that's 20 percent of our members."

Revenue per available room, a measure of hotel demand, will rise 3 percent this year, according to PricewaterhouseCoopers.

In December, it forecast a 0.2 percent decline. Last year revenue per room fell 6.8 percent, the worst drop in 34 years, the firm said.

J. Willard "Bill" Marriott, chief executive of Bethesda, Md.-based Marriott, the biggest U.S. hotel company, said it is still too soon to return staff to pre-attack levels.

Marriott reduced its work force by 8.5 percent last year, or 13,000 employees. Some of those retained are working reduced schedules.

Marriott is training front desk workers to do housecleaning and telling banquet workers to help in the kitchen, Marriott told reporters at a luncheon last month.

"We have gotten into a major analysis of everything we spend money on," Marriott said.

Starwood Hotels & Resorts Worldwide Inc., based in White Plains, N.Y., and owner of the Sheraton chain, has taken back about 2,000 of the 10,000 workers it cut, spokesman David Matheson said.

Hilton ended 2001 with 3.8 percent fewer workers, and pared 18 percent of its staffing costs through reductions in hours worked by each employee, said Hilton spokesman Marc Grossman.

"Staffing in the hotel business is very elastic, it has to be" because travel is cyclical, Grossman said.

Overwork has become an issue in Las Vegas, where contract negotiations began last month between the local union and casino companies, said Glen Arnodo, political director for the Culinary Workers Union Local 226.

"There's more ill will now among employees than I've ever seen," said Arnodo, whose local represents 50,000 casino hotel and restaurant workers. About 3,000 of those are laid off or work reduced hours, he said.

Contracts for about 45,000 of the union's members who work at casino companies, including MGM Mirage and Park Place Entertainment Corp., expire at the end of May, he said.

In San Francisco, as many as one-third of the city's 9,000 HERE union members were laid off after the attacks, said Tho Do, secretary-treasurer. About 1,400 are eligible for food donated by the union because they are working three days a week or less or collecting unemployment.

"Grievances have increased in the past few months," Do said. "People are saying, 'Look, I'm either missing my break or speeding up my work"' to compensate for the layoffs.

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