Hotel Online  Special Report

UNITE HERE Members Vote to Strike at the Claremont
Resort & Spa in Berkeley, California; Labor Dispute
Goes Back to September 2001


BERKELEY, Calif. - June 13, 2005 -- On Wednesday, May 25th, employees of the Claremont Resort & Spa in Berkeley, CA voted overwhelmingly to authorize a strike. Over 70% of the 292 workers eligible to vote cast ballots, with 94% of these workers voting "Yes" to authorize a strike any time after June 1st, 2005 if there is no settlement of their labor dispute.

CNL Hotels & Resorts, Inc. - the nation's second largest hotel REIT (and formerly known as CNL Hospitality Properties) - purchased the resort in February 2004.

A strike in June would be the second strike endured by the Claremont this year. A March 5th, 2005 San Francisco Chronicle article reports that Claremont kitchen workers walked out on strike on March 4th "to protest what they called the unfair suspension of a cook by the head chef." The Claremont is the only unionized, CNL-owned hotel that has experienced a strike while under CNL ownership.

Since September 2001, over 400 Claremont workers have been engaged in a bitter labor dispute against the hotel's management company - KSL Resorts - which has waged an anti-union campaign against its workforce. A federal administrative law judge issued a recommended decision in November 2002 that KSL had committed multiple violations of federal labor law. In response to management's union-busting, the overwhelming majority of Claremont workers authorized a boycott of the hotel in May 2002, prompting major clients such as the City of Berkeley and Kaiser Permanente to pull their business from the hotel.

KSL has a history of labor disputes with unions representing its resort workers, including the International Longshore Workers (ILWU) and the Teamsters (IBT).

CNL has the ability to resolve the Claremont dispute because it chooses third party operators to manage the properties it owns. After CNL purchased the hotel from KSL in February 2004, it retained KSL as a temporary manager with an interim management agreement. CNL can terminate the agreement at any time with seven days written notice, according to its 10-K filed on March 15th, 2005.

CNL could replace KSL Resorts with another, more reasonable, operator and statements that CNL has made in its SEC filings indicate that such an action would be in accord with its objectives:

  • In its last Proxy Statement filed with the SEC on June 21st, 2004, CNL stated that "we focus on increasing same hotel and resort performance through the following actions: selecting the most appropriate third-party management company and brand affiliation for our properties; entering into management agreements that provide the third-party management companies with performance incentives and align their interests with ours; developing a culture of accountability for third party management companies..." and "actively and consistently monitoring and advising third-party management companies."
  • In its 10-K filed on March 15th, 2005, CNL concedes that "resorts operated under interim management agreements may not perform as well as they would under long-term management agreements... In addition, the interim third-party management companies may decide to focus more of their resources on other properties with respect to which they have long-term management contracts."
UNITE HERE Local 2850 Vice President Wei-Ling Huber states that "the Claremont workers have given us an overwhelming mandate to strike in June if necessary. CNL has the power to bring about a fair and quick settlement to the labor dispute carried on by its management company. If it truly cares about 'developing a culture of accountability for third party management companies,' then it should use its ownership power to ensure that KSL behaves responsibly, or find another operator that will. Unless there's a settlement soon, this will be a long, hot summer for the Claremont - and for CNL Hotels & Resorts."

UNITE HERE Local 2850 represents approximately 3,000 workers in Northern California, including workers at the Claremont Resort & Spa which is owned by CNL Hotels & Resorts and managed by KSL Resorts. UNITE HERE represents approximately 440,000 workers in the United States and Canada employed in the hospitality, gaming, laundry, textile and other industries.

CNL Hotels & Resorts, Inc. owns properties operated by hoteliers such as Marriott International (NYSE: MAR), Hilton Hotels (NYSE: HLT) and KSL Resorts. As an unlisted REIT, its publicly traded competitors with properties in the luxury and upper-upscale niche include Host Marriott (NYSE: HMT), LaSalle Hotel Properties (NYSE: LHO), Strategic Hotel Capital (NYSE: SLH), FelCor Lodging Trust Inc. (NYSE: FCH) and MeriStar Hospitality Corp. (NYSE: MHX). In addition to the Claremont Resort, CNL owns hotels in Dearborn, MI, Hawaii, Rye Brook, NY, San Diego, San Francisco and Washington, DC whose employees are represented by UNITE HERE.



Also See: Sean Maddock Appointed Vice President and General Manager of 279-room Claremont Resort & Spa in Berkeley, CA / February 2004
KSL Resorts Enters New Phase of Operations Following Sale of Six Resorts to CNL Hotels & Resorts, Inc / August 2004

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