NEW YORK >> About 7,000 Chicago hotel workers may go on strike this weekend and 4,000 workers in Hawaii have authorized a walkout, potentially cutting profits for Hilton Hotels Corp. and Starwood Hotels & Resorts Worldwide Inc. Hawaii, Chicago labor
disputes may sting HiltonChicago hotel employees
could strike this weekendBy Jeannine DeFoe
Bloomberg NewsWorkers in Chicago's Hotel Employees & Restaurant Employees Local 1, who said they are paid less than those in other cities, voted this month to authorize a strike when their contracts at 26 hotels expire Saturday. In Hawaii, the 4,000 members of Local 5 approved a strike at Waikiki hotels because they have been working since February without a long-term contract, labor leaders said.
Hilton, the No. 3 U.S. hotel company, has three of its eight largest and most profitable hotels in Chicago and Hawaii, including the Hilton Hawaiian Village. Starwood, the world's biggest lodging company, owns two W hotels in Chicago and manages four Sheratons in Waikiki. Hotels in both markets have contingency plans in case housekeepers, bellhops and cooks walk out.
"A strike is appearing imminent at this point. We think it's very likely," said Lars Negstadt, research director for the Chicago union. "They don't seem to understand how angry the workers are."
Hilton and closely held Hyatt Hotels Corp. -- which has the greatest exposure in the Chicago market, according to analysts -- referred questions on the strike to the Hotel Employers Labor Relations Association, which said it is trying to negotiate a settlement. Starwood representatives didn't return phone calls.
Mass layoffs after the terrorist attacks created resentment among hotel workers around the United States, labor leaders said. "There's been a long-term trend of squeezing more work out of fewer workers, and that's been exacerbated by Sept. 11," said Jason Ward, a researcher for the Hawaii union.
Salaries are the biggest expense for a typical full service hotel, equal to about 35 percent of revenue, according to PricewaterhouseCoopers. Agreeing to pay workers $5 more an hour in Chicago would increase annual hotel payroll costs by about $50 million citywide, according to Bear Stearns Cos.
U.S. hotels are still suffering after the worst drop in demand in 34 years last year. If the strikes drag on, hotels face the possibility of conventions being canceled or postponed, Bear Stearns analyst Jason Ader said in a report. In Chicago, the strike would come just as the International Manufacturing Technology Show and its 122,000 attendees visit the city. A strike may cost the city $3 million a week in lost tax revenue, according to the hotel labor relations association.
Chicago hotel workers said housekeepers in the city are paid an average of $8.83 an hour, versus $18.15 in New York and $10.32 in Los Angeles. Hotel representatives offered union members raises including a pay increase to $10 an hour for housekeepers in the first year of the contract.
"This is at the same time the hotel revenue is going down pretty dramatically in view of the decline in business travel," said Steven Adelman, a lawyer for the hotels' labor relations group.
In Hawaii, room rates are still down from a year ago, as tourists remain reluctant to fly. Union members said they are overworked, with two-thirds of housekeepers skipping lunch breaks to get their work done.
About 15 percent of Hawaii's hotel workers were laid off after the attacks, and about half of those workers are still off the job even as tourism starts to pick up. Moody's Investors Service earlier this week cited a rebound in tourist visits as it maintained its credit rating on $3.4 billion in state bonds.
The Hawaii union is meeting with hotel representatives again next week. If talks aren't productive, a strike deadline will be set, Ward said.