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 Orange County California Hotels See Little Impact — Good or Bad —
from Labor Turmoil in Los Angeles, San Francisco
and Atlantic City, N.J.

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By Sandi Cain

Orange County hotels have seen little impact—good or bad—from labor turmoil in Los Angeles, San Francisco and Atlantic City, N.J.

Contracts at the county’s unionized hotels at and around the Disneyland Resort in Anaheim aren’t set to expire until 2006 at the earliest. Even then, there aren’t signs of discord found in other areas.

“We don’t anticipate any (strike) activity at this time,” said Martin Lopez, an assistant to the president of hotel union Unite Here’s Local 681, representing about 5,000 local hotel workers. “We have great contracts.”

The first one set to expire here is with Coast Anaheim in 2006, according to a union representative. The contract at the Hilton Anaheim, OC’s largest hotel, runs until 2007. Walt Disney Co.’s pact for its hotels— Disneyland Hotel, Paradise Pier and Grand Californian—runs until 2008. It was signed in February.

The situation is a contrast to Los Angeles, where Unite Here’s Local 11 has about 2,800 workers in the downtown area who’ve voted to strike nine convention hotels. Talks are ongoing.

But Los Angeles’ troubles haven’t been OC’s gain. So far, no conventions or meetings have moved south because of the labor woes. Hoteliers said they’ve had few, if any, inquiries from groups wanting to avoid the controversy.

“Hopefully we’ll get some additional business,” said Edd Karlan, director of sales and marketing for the 1,500-room Hilton Anaheim.

Karlan said he’d been in discussions with a couple of groups that considered moving. The groups ended up canceling their Los Angeles events, he said.

The story is similar at the nonunion Westin South Coast Plaza in Costa Mesa, according to director of sales Mike Mustafa.

“We’ve been in touch with our sister properties (owned by Starwood Hotels & Resorts Worldwide Inc.) regarding groups that might want to relocate,” he said.

So far, none has, Mustafa said.

While OC has felt little impact so far, success for the union in Los Angeles, San Francisco and elsewhere could up pressure here.

Unite Here plans to work on boosting membership in OC, according to the union’s Lopez.

Last summer Local 681 lost about 3,500 members when food service workers at the Disneyland theme parks formed their own local separate from that of the hotel workers.

“The union is a business,” Mustafa said. “They have to try to replace those members.”

Unite Here’s members are at six hotels: Disney’s hotels; Hilton Anaheim; Coast Anaheim; and culinary and housekeeping workers at Balboa Bay Club & Resort.

The last big push to unionize OC hotels came with a rush of hotel openings from 2000 and 2003, after the expansion of the Disneyland Resort. Most organizing efforts failed.

Westin South Coast Plaza’s Mustafa, who came from the Sheraton Gateway in Los Angeles, said he thinks the grocery workers’ strike that began last year struck a chord with potential union members. Hotel workers today are more aware of the comparable benefits of union and nonunion employment, he said.

Still, running a union hotel can cost more in benefits, pension contributions and wages, according to hotel operators. The flipside is hotels can get extra business booking government, public works and other groups that mandate union facilities.

Hilton Anaheim’s Karlan said the extra business outweighs any added costs.

“The value from being able to host union conventions is significant,” he said. “We’ve had about $2 million in revenue this year from union business.”

Hospitality Labor Primer

A key issue in the standoff between hotel workers and managers in Los Angeles and San Francisco is contract duration.

Employers want a five-year deal. Union Unite Here wants a two-year contract that expires in 2006, when unions in New York, Chicago, Boston and other major cities are set to renegotiate their pacts. Their aim is to boost their influence in an industry dominated by big players such as Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc. Con-tract duration is a gamble for the union, according to Marta Fernandez, a partner at Los Angeles-based Jeffer, Mangels, Butler & Marmaro LLP, who specializes in hotel labor issues.

She answered questions about contract duration and other issues from the Business Journal’s Sandi Cain.

Is it legal for Unite Here to demand a shorter contract in hopes of staging a broader strike later?

Duration of contract is considered a legal bargaining point by the federal government. But there is case law in which this has been considered bad faith negotiation, depending on the circumstances.

In California, contracts have been five-year contracts in the past. For their own advantage, the union wants a two-year contract. Making that a strike issue may not attract a lot of support.

Do hotels have a cost advantage from being nonunion?

Yes, from an operational standpoint. It’s costly to operate a union hotel, considering pension contributions, healthcare, the cost of negotiations and not being able to have employees operate outside their job description. They have to stick to job descriptions—i.e., a dishwasher can’t clean the counters. That restricts cost-savings in duties.

In the full-service and resort sectors, wages typically are comparable.

Few hotels set out to be union, but some developers are forced to be union-neutral.

Neutrality agreements occur when they agree to remain neutral while the union does a card-check process that is unsupervised (and during which the union can solicit union membership). When the hotel gets a certain percentage of union members, all (non-management) employees must then become union.

Typically, a city or some governmental authority demands the union neutrality in exchange for some sort of permit, entitlement (or other condition).

In general, what can hoteliers do to remain union-free?

We advise clients on preemptive measures (based on) employee surveys, wage analysis, policy handbooks and management training. But there’s no guarantee the measures will work.

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Sandi Cain is a freelance writer and contributor to the Orange County Business Journal and meetings industry publications. She specializes in hospitality, tourism and travel. Cain holds bachelor’s and master’s degrees in education from Kent State University in Ohio, where she majored in social studies. A former high school teacher, she has written for niche-market sports publications in the U.S., England and Australia and formerly worked in both the printing and high-tech industries. A Cleveland, Ohio native, Cain hasbeen a resident of Laguna Beach since the late ’70s. She enjoys travel, gardening, reading and spoiling her three cats.
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Contact:
Sandi Cain
Laguna Beach CA
949-497-2680
scainado@earthlink.net

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