Hotels reap billions in savings through layoffs
By Jeannine DeFoe
Bloomberg News Service
SAN FRANCISCO — Marriott International Inc., Hilton Hotels Corp. and other hotel companies saved $3.4 billion last year cutting jobs as the recession and terrorist attacks reduced travel and led to the biggest drop in room demand since 1967, according to PricewaterhouseCoopers.
Richard Ambo • The Honolulu Advertiser
Hotel companies now want to keep payrolls low in an effort to widen profit margins as demand recovers.
Lilia Arca, a housekeeper at the Outrigger Reef on the Beach, has found her workload increased since layoffs that followed the Sept. 11 attacks.
"This is a high fixed-cost industry," said Eric Holmes, an analyst for Victory Capital Management. "If they can keep those costs down, that gives you a lot more earnings."
Those who have hotel jobs complain that the strategy results in overworked employees and risks alienating customers with bad service. They point out that though business was down, according to PricewaterhouseCoopers, the industry still made a profit of $16.7 billion, compared with $23 billion in 2000.
"Business is coming back much quicker than anyone anticipated, and we're not seeing a proportionate rehiring," said Tom Snyder, assistant to the president of the Hotel Employees and Restaurant Employees International Union, which represents 265,000 U.S. workers. "In D.C. we have 1,000 people still out, and that's 20 percent of our members."
In Hawai'i, Eric Gill, financial secretary-treasurer of Local 5 of the Hotel Employees and Restaurant Employees Union which represents workers at several major Waikiki hotels, said the reluctance to bring back staff and the pressure placed on those who remain is a strategy by hotel chains to increase profits by taking unfair advantage of workers during a national crisis.
"The companies are attempting to lock in what they term efficiencies and what we consider understaffing on a long-term basis," said Gill, whose local has just under 11,000 members statewide, including about 9,000 hotel workers.
Of the approximately 1,350 Local 5 members laid off after Sept. 11, about 720 still have not returned to work, the local said. Those numbers do not reflect workers who had hours cut but were not laid off.
"As the business recovered, the people were not brought back to work," said Gill, who is in contract negotiations with properties including the Sheraton Waikiki hotels, Hilton Hawaiian Village and the Hyatt Regency Waikiki.
"So it's very clear to us that they're taking advantage of people's willingness to sacrifice and work hard and accept combinations of jobs and shorting of shifts to help the company and the government through a tight space. Now (employees) feel their patriotism has been abused and exploited and their willingness to help the company has been taken advantage of."
Nationally, revenue per available room, a measure of hotel demand, will rise 3 percent this year, according to PricewaterhouseCoopers. In December, it had forecast a 0.2 percent decline. Last year revenue per room fell 6.8 percent, the worst drop in 34 years, the firm said.
J. Willard "Bill" Marriott, chief executive of Bethesda, Md.-based Marriott, the biggest U.S. hotel company, said it is still too soon to return staff to levels before Sept. 11.
Marriott reduced its work force last year by 8.5 percent, or 13,000 employees. Some of those retained are working reduced schedules. Marriott is training front-desk workers to do housecleaning and telling banquet workers to help in the kitchen, chief executive Marriott told reporters at a luncheon last month.
"We have gotten into a major analysis of everything we spend money on," Marriott said.
Starwood Hotels & Resorts Worldwide Inc., based in White Plains, N.Y., and owner of the Sheraton chain, has taken back about 2,000 of the 10,000 workers it laid off, spokesman David Matheson said.
Hilton ended 2001 with 3.8 percent fewer workers, and pared 18 percent of its staffing costs through reductions in hours worked by each employee, said Hilton spokesman Marc Grossman.
"Staffing in the hotel business is very elastic," said Grossman, who finds such flexibility to be necessary because travel is cyclical.
At least one Hawai'i hotel operator takes issue with the charge that hotels are understaffing.
"Basically, since 9/11 our revenue has been down versus the prior year more than our manpower hours," said Keith Vieira, senior vice president and director of operations, Hawai'i & French Polynesia, for Starwood Hotels & Resorts Worldwide, which has 13 Hawai'i hotels, including the four Waikiki Sheraton hotels negotiating with Local 5.
"In some cases we have some restaurants that probably should be not operating during this time until things get much busier, but in order to both ensure a rounded guest experience and bring back as many workers as possible, we have reopened restaurants that traditionally occupancy doesn't call for," Vieira said.
"So any claims that we are not bringing back workers is not true. We are making every attempt possible to bring back as many as we can."
In New York, 8 percent, or 2,000, of the 25,000 workers covered by the hotel employees' union, are still laid off, down from as many as 5,500 after the attacks. Members are waiting for further improvement in room rates and occupancies before pressing managers to rehire employees, said John Tucciano, spokesman for the New York chapter of the Hotel Employees and Restaurant Employees International Union.
"We have to be realists here," Tucciano said. "Business is down."
Advertiser staff writer Susan Hooper contributed to this report.
