Aston criticized for telling sacked workers to reapply
By Susan Hooper
Advertiser Staff Writer
The recent saga of the Aston Waikiki Beach Hotel has many twists and turns.
The players include a Japanese owner, Otaka Inc., which fell behind in its mortgage payments; a New York-based holding company, Leucadia National Corp., whose affiliate bought the hotel's mortgage in June 2000 and began foreclosure proceedings against Otaka a month later; and a local hotel management company, Aston Hotels & Resorts, that has been owned since 1998 by Mainland vacation property rental and management firm ResortQuest International Inc.
In August of last year, another player came on the scene when control of the 719-room hotel, then known as the Hawaiian Waikiki Beach Hotel, was turned over to a receiver by a state judge.
On May 1, the receiver sent notices to the hotel's 274 workers that their jobs would be terminated June 30.
In mid-May, Hawaii Ventures LLC, the Leucadia affiliate, successfully bid $80 million for the hotel at a foreclosure auction. In June, Hawaii Ventures sold the hotel to a new owner, HWB 2507 Kalakaua LLC. The new owner then hired Aston to manage the property, effective July 1.
At the end of July, Aston announced a $30 million renovation for the property, which changed its name when Aston took over.
Leucadia's purchase of the hotel fits a recent trend in which well-capitalized Mainland investment firms have acquired hotels here from highly leveraged Japanese companies like Otaka.
The purchasers generally have infused cash into remodeling, substantially reduced debt and brought in national brands to manage and market the properties more aggressively.
But the new team's treatment of the former employees is a departure from the norm for Waikiki hotels, several observers said.
Employees who wanted to continue working for the hotel were asked to reapply for their positions. Because portions of the hotel were closed for renovation and because Aston could provide some support services from its corporate offices that Otaka previously had provided at the hotel, however, fewer positions were available, Aston spokeswoman Ruth Ann Becker said.
As part of its effort to staff the hotel, Aston held a job fair that drew 1,100 applicants. In the end, Aston hired 105 people to staff the hotel. Most jobs went to former Otaka employees and Aston employees who wanted to transfer from other properties, Becker said. Aston offered positions with the hotel to 32 of its former employees, and 26 former employees accepted, she said.
Local 142 of the International Longshore and Warehouse Union represented 232 of the 274 workers laid off in June. The current employees do not have union representation, making the hotel the first major Waikiki property in recent memory to drop its labor affiliation, several union officials said.
ILWU leaders say they were appalled at Aston's decision to hold a job fair and to ask workers who had been with the property to reapply for their jobs.
"It certainly didn't make good business sense when you have a trained work force in place," said Raymond Camacho, O'ahu division director of the ILWU. "It certainly wasn't the decent thing to do, because in Hawai'i, we don't do that. That's not the spirit of aloha. We're drawing the conclusion that they didn't want to deal with a unionized work force and the ILWU."
The union and former employees also are asking for about $2 million in unpaid severance and vacation benefits. Aston officials say union and employee requests for most of the unpaid severance and vacation pay should be directed not to Aston or the current owner, but to former owner Otaka Inc.
The court-appointed receiver has been directed to pay employees for severance and vacation benefits earned during the 10 months of the receivership a sum of about $100,000, Aston officials said.
"There's no doubt these employees should be paid their severance and vacation pay," Kelvin Bloom, Aston Hotels & Resorts' chief operating officer, said in a recent commentary in The Advertiser. "But Aston is not the right target for that complaint, because these employees were never Aston employees."
Camacho said the union is pursuing legal action against Otaka for the unpaid severance and vacation benefits. This includes taking steps to bring Otaka to arbitration on a grievance the union filed shortly after the employees received their termination notices, said Rebecca Covert, a lawyer for the union. In addition, she said, the union has asked the National Labor Relations Board to investigate whether others involved in the sale of the property including the receiver and Hawaii Ventures L.L.C. fulfilled their obligations to bargain with union employees over the effects of the sale.
With respect to the hiring of employees, Aston executives say they have been acting in the best interests of their company and its employees. Selection of workers for the Aston Waikiki Beach Hotel was based on qualifications for the jobs, officials have said.
"As a 53-year-old kama'aina company, Aston understands very well how things are done in Hawai'i, and we have a lot of empathy for the Otaka employees who lost their jobs," Bloom said in a statement. "But we also have a serious responsibility to our 2,000-plus employees and their families to ensure that our company and their jobs are stable. That means, in part, promoting our own employees, as well as hiring the best people for the jobs we have available."
The Aston approach, however, does not sit well with at least one Hawai'i hotel executive, who says it is "not a normal process" for a Hawai'i hotel to shed employees when it changes hands.
"I think you have to look at a trend in Hawai'i and the history in Hawai'i, and I don't think this is the trend or the history," said Keith Vieira, senior vice president for Starwood Hotels in Hawai'i and French Polynesia, which operates 13 hotels in the state, including Sheraton and Westin properties.
"In any situation we've had with new property owners, we have put the employees and the union relationship as one of the top things you have to come to an agreement on."