STAR-BULLETIN / APRIL 2002 Several hotels in Waikiki are currently bargaining with members of the Hotel Employees and Restaurant Employees Local 5. A hotel representative says union accusations that chains used Sept. 11 to cut costs are a bargaining tactic.

Hotel employment
still down

Workers have not been
rehired even as tourists
returned, a union claims

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By Tim Ruel
truel@starbulletin.com

Hotel occupancy in Hawaii is nearly back where it was before Sept. 11, but hotel jobs and staff working hours are still down, prompting union accusations that the major hotel chains are using the terrorist attacks to cut costs.

But room revenues have not recovered, and one hotel representative accused union leadership of making the accusations as a bargaining tactic.

Statewide occupancy in April stood at 64.8 percent, compared with 69.4 percent in April 2001, according to consulting firm Hospitality Advisors LLC. Of Hawaii's total 72,204 rooms, approximately 46,788 rooms were occupied in April, down 6.6 percent from 50,110 occupied rooms in the same month a year earlier.

But total hours worked by hotel employees in Hawaii's Local 5 union were down about 10 percent in April from the year before, the union said.

Local 5 hotel workers put in a total of 1.039 million hours on the job in April, down from 1.147 million hours in April 2001, according to data provided by Local 5.

When total hours are down but the workload is basically the same, the people who are on the job pick up the slack and don't get paid for it, said Eric Gill, financial secretary-treasurer of the Hotel Employees and Restaurant Employees' Local 5.

Hotel union membership is also down from last year, Local 5 says. The total number of Local 5's dues-paying hotel workers -- 9,000 before Sept. 11 -- fell 15 percent in the month immediately after the attacks. Current membership is still down 7 percent to 8 percent, according to Local 5.

State government data confirms a decrease in jobs. The total hotel job count in Hawaii dropped 6.5 percent to 36,750 in April from 39,300 in April 2001, according to the Department of Labor and Industrial Relations.

"Sept. 11 offered the companies the opportunity to cut staff back much deeper" because of an initial steep drop in occupancy, Gill said. "It's been difficult to get them to bring the employment back."

That's untrue, said Keith Vieira, vice president and director of Hawaii operations for Starwood Hotels & Resorts Worldwide Inc.

"Our working hours are down a less percentage than our revenue," Vieira said. The firm's Sheraton properties have been particularly hit by drops in Japanese spending, he said. Sheraton's occupancy has been climbing back, but hasn't fully recovered.

Trends in working hours tend to lag occupancy movement, according to Robert Katz, a Honolulu attorney who negotiates with Local 5 on behalf of major hotel owners, including Hilton and Starwood. Hawaii hotels are cautious about rehiring because 2001 was a down year for tourism even before Sept. 11, and the hotels want to see a firm recovery. Occupancy is still way down from the banner tourism year set in 2000, Katz said.

"If Hawaii's tourism recovers, so will the work hours," Katz said.

Said Vieira: "We've been doing this a lot longer than Eric Gill has. ... We're fully committed to bringing back the workers."

Starwood has reopened the Ship's Tavern Restaurant at the Sheraton Moana Surfrider hotel, even though the current occupancy doesn't justify it, Vieira said.

Gill is using a union negotiation tactic, Vieira said. The hotel workers union is bargaining for new contracts covering Hilton Hawaiian Village, Sheraton's four properties, the Ala Moana Hotel, Hyatt Regency Waikiki and the Renaissance Ilikai.

"I think it's pretty obvious that it's a tactic developed by the national union as part of a national program that they started in Boston," Katz said.

Working hours have rebounded slightly from earlier this year, union statistics show. Total working hours were down 16.5 percent in the first quarter from last year, according to Local 5. Gill attributed the April improvement to union pressure on the hotels. "The guests drive some of this as well," Gill said.

"Hilton in particular, we've seen almost a 10 percent reduction in work force from pre-Sept. 11 levels," Gill said. Rather than hiring back all the workers, Hilton has been imposing mandatory overtime on employees, Gill said. A Hilton spokeswoman had no immediate comment last night.

State figures show that the hotel job cutback on Oahu stretches back over a decade, long before Sept. 11. In April 1990, the hotel job count on the island was 19,550, according to the state labor department. In April 2002, the count was 14,950, a 24 percent plunge.

Hotels said they must look out for the bottom line. Hawaii's revenue per available room, a key measure of demand, is still down from last year, more so than occupancy. Room revenue statewide fell 11 percent to $93.22 from $104.90 in April, according to Hospitality Advisors.

Gill attributes the drop to a price-cutting battle for market share among the hotel owners. "It's pretty clear that it's being driven by corporate policy," Gill said.

Starwood's Vieira disputed this. Customers, particularly the Japanese, are buying cheaper packages, he said. "'We haven't actually dropped any prices," Vieira said. "I don't know what (Gill's) talking about."

Hilton Hotels Corp. reported net profit of $34 million in the first quarter, a drop of 38 percent from a $55 million profit a year earlier. Starwood had a 48 percent profit decline in the first quarter, to $32 million from $62 million.

"We understand that this particular moment in time is not the hotel industry's most profitable hour," Gill said. But the hotel union has to look out for workers, and Gill said he doesn't feel sorry for hotel management or owners.

Profits for U.S. hotels are expect to rise 3 percent this year, to $17.2 billion from $16.7 billion, according to a report released last week by accounting firm PricewaterhouseCoopers. The No. 1 reason: cost cutting, including firing workers. Without the cost cuts, the industry would have had a profit decrease of 7.8 percent, the report said. The report noted that profits are still down from a record $23 billion in 2000.

Hotel companies saved $3.4 billion last year cutting jobs, according to an earlier report by PricewaterhouseCoopers. Hilton cut 18 percent of its staffing costs through reductions in hours worked by each employee, according to a Hilton spokesman quoted by Bloomberg News.

The stock prices of Hilton and Starwood have jumped since the immediate lows that followed Sept. 11. Hilton's stock had risen to $13.83 today from $6.15 a share on Sept. 21, while Starwood's stock increased to $35.10 from $17.10 over the same period.

"These big chains that are wrapping themselves in the flag and crying poor," Gill said, "they don't get any sympathy from us."