Posted on: Thursday, September 6, 2001

Island Voices
Aston Hotels isn't the bad guy

By Kelvin Bloom
Chief operating officer, Aston Hotels & Resorts

Aston Hotels & Resorts, a kama'aina company founded and headquartered in Hawai'i, has great aloha for our employees; and all 2,000-plus of us have great empathy for the workers who lost their jobs due to a lender's foreclosure on the Hawaiian Waikiki Beach Hotel's previous owner, Otaka Inc.

In a tight-knit community such as ours, a business failure that impacts the livelihood of almost 300 people, many with multiple years of loyal service, is a sad event.

Lately, however, Aston has been the target of a disinformation campaign related to this unfortunate situation. The campaign is being orchestrated by the leadership of the ILWU, the union that once represented the former Otaka employees. Recent picketing, rallies and letters to the editor are examples of the ILWU's efforts to mislead. 

These efforts are disrespectful to our employees, many of whom are former Otaka workers. What's more, the "information" presented by the ILWU is inaccurate, if not blatantly false, and does not assign responsibility where it correctly belongs. It is important for judgment and evaluation to be based on facts, not rhetoric. Here are the facts:

In August 2000, Otaka was foreclosed on due to nonpayment of its mortgage on the Hawaiian Waikiki Beach Hotel. The hotel sat in receivership from Aug. 24, 2000, until June 30, 2001. During that time, it was purchased at auction by an affiliate of Leucadia National Corp. As required by state and federal law, the court-appointed receiver gave all employees at the property 60 days advance notice that their employment would terminate on June 30.

In the meantime, the new owner contracted Aston Hotels & Resorts to manage the property beginning July 1. When Aston assumed management on July 1, there were no employees at the hotel, and none of the contracts that existed with Otaka or the receiver carried over. That included the prior labor contract between Otaka and its management-affiliate and the ILWU.

It would have been unlawful for Aston to have recognized the ILWU on July 1, and it would have been unlawful for Aston to hire employees based solely on their ILWU affiliation. Aston would be starting from scratch.

The only certainty was the new owner's commitment to renovate the property, which would now be called the Aston Waikiki Beach Hotel.

The ILWU now claims that the former employees of the hotel and Otaka are due severance and vacation pay, and that Aston should hire all 274 who were terminated through the legal process.

There's no doubt these employees should be paid their severance and vacation pay. But Aston is not the right target for that complaint, because these employees were never Aston employees. In fact, Hawai'i Circuit Court Judge Karen Blondin recently ruled that the receiver must pay the employees for severance and vacation benefits earned during the 10 months the hotel was in receivership (approximately $100,000 total).

She concluded that the receiver was not responsible for paying benefits earned before the hotel was placed in receivership. In other words, the lion's share of the $2 million total in severance and vacation pay owed is an Otaka obligation and no one else's. The ILWU leadership knows that was the decision.

As for hiring those who were terminated: Aston notified the former Otaka employees, our own employees and the public that we would hold a job fair for 100 available positions. No guarantees were made to anyone, yet all were welcome to apply. More than 1,100 applicants were interviewed at the fair. More than 30 former Otaka employees were offered positions and more than 25 accepted the offers.

In fact, most of the 100 positions are filled by former Otaka employees and Aston employees who transferred from other properties.

The renovation is now under way, providing revenues for a variety of companies and work for hundreds of people. Because portions of the hotel are closed, such as the main restaurant and 35 percent of the hotel rooms, fewer employees were hired than when the hotel was fully operational. And whereas Otaka had staff for accounting, sales and marketing and other functions on-site, Aston handles such functions through its corporate staff. This too means fewer employees on-site, but it also is a more cost-efficient way to operate a long-struggling hotel.