First Free Story (1 of 3)Join Skift Pro
The coronavirus pandemic devastated North American hospitality labor union Unite Here, leaving as much as 98 percent of the 300,000-member organization across the U.S. and Canada last year without a job.
The job cuts keep coming to the greater hotel industry, especially in higher-cost labor markets with a heavily unionized workforce. The U.S. hotel industry unemployment rate remains significantly out of step with the national average.
This week the rhetoric from union leaders toward the major hotel companies became even more heated as new layoffs loom, after they watched for months their members lose their livelihoods in earlier cuts.
More than 800 employees at the Marriott Marquis in New York City’s Times Square are on track to be permanently let go in March, according to a notice filed with New York State’s Department of Labor. One of Boston’s largest hotels, the Marriott Boston Copley, laid off about half its staff late last year. Wynn Resorts in Las Vegas could announce layoffs early next week.
Hotel companies argue it is simply too expensive to keep a full staff during a global health crisis that has tanked demand, occupancy, and revenues. U.S. revenue per available room — the hotel industry’s key performance metric — was down more than 52 percent the last full week of December, according to STR.
Unite Here doesn’t buy the industry argument.
“Hotels have made record profits in the last 10 years while workers, overwhelmingly people of color, have often had to work two or three jobs just to make ends meet,” said Anand Singh, president of San Francisco-based Unite Here Local 2. “Even during the unprecedented Covid-19 crisis, industry leaders including Marriott, Hilton, and Hyatt hold billions in cash on hand while furloughed workers struggle to make rent and feed their families.”
Wynn Resorts is the latest hospitality company threatening employee layoffs. The Las Vegas-based gaming resort company could announce permanent layoffs for unionized bartenders and culinary workers at its Nevada resorts as early as next Monday. While it is unclear how many workers would be impacted, about 5,000 members of the Unite Here-affiliated Culinary Workers Union Local 226 work at Wynn’s Vegas casino resorts.
Wynn Resorts blames the threat of layoffs on stalled labor negotiations. The company, in a letter to staffers last month, outlined its pandemic employment philosophy as one where it would keep as many workers on the payroll as possible but at reduced hours. Wynn Resorts noted it paid all employees their full salaries during a 75-day shutdown earlier last year in what was then the worst of the pandemic.
But the resort company said Unite Here’s recent demand for full 40-hour workweeks for full-time employees is driving it toward layoffs.
“Other companies refer to their work group as a team, but we’ve always thought of each other as a family, one in which we would all sacrifice a little bit for the benefit of the entire group,” was part of the company statement to employees.
Unite Here notes it has an agreement with Wynn competitors like MGM Resorts and Caesars Entertainment at 23 Las Vegas Strip resorts where union workers agreed to reduced hours in exchange for a four-month extension of healthcare benefits.
Wynn Resorts did not respond to a request for comment in time for publication, but the letter to staffers noted the gaming resort company disagreed with some of its competitors’ policies.
Spats and Survival
The labor sector balked at widespread layoffs in the hotel industry while publicly traded companies like Marriott and Wynn Resorts each held more than $1 billion in cash reserves at the end of the third quarter of last year, according to most recently available financial data. Marriott even posted a $100 million profit in the third quarter.
The major hotel companies argue cash reserves are necessary to pay unwavering fixed costs during an uncertain time in travel when hotels continue to burn through cash without normally reliable revenue streams like conventions and business travel.
But labor groups like Unite Here say hotel workers are doing far more in the current travel climate than their normal job description.
“Hotel workers are essential frontline workers ranging from those who cook and serve food to those who ensure that accommodations are safely cleaned during COVID-19, and any suggestion that they are paid too much is shocking,” Singh said.
While Unite Here’s criticism has largely focused on publicly traded companies, the union also accused the privately held Omni Hotels & Resorts in late December of accepting $76 million in Paycheck Protection Program small business loans and not rehiring furloughed staffers like the program calls for.
A PPP loan, as part of a $2 trillion coronavirus relief measure passed last March, requires companies to use most of the loan to keep employees on staff.
Omni vehemently denied Unite Here’s claims this week in a statement to Skift.
The company temporarily suspended operations at 90 percent of its hotels due to the pandemic. While that move negatively impacted Omni’s 22,000-person workforce, the company maintains it properly distributed its PPP funds as well as more than $3 million through its Omni Circle charitable foundation to pay staff. About 20 percent of Omni’s hotels remain temporarily closed in light of low demand.
“As a privately-held company, we generally do not disclose financial information; however, we must correct misleading information recently shared regarding Omni’s use of PPP loans,” said Omni President Peter Strebel. “All PPP funds have been used for approved expenses as outlined in the legislation, and more than $51 million, the vast majority of the loans, have been paid out as payroll and benefits to thousands of associates. Any contention to the contrary is false and defamatory.”