Author of www.HotelLawBlog.com
5 October 2006
Quick settlement with the union.
The Beverly Hilton hotel is expected to announce today (October 5, 2006) that it has signed a three year contract with Unite Here, according to Alana Semuels, Los Angeles Times Staff Writer. Both sides are claiming victory with the announcement of a quick resolution, along with increased wages, maintaining the current health benefits and a commitment to hire more African Americans. But beyond that, what is the significance of this settlement for others who may be sitting on the other side of the table, facing the union soon–whether in New York, Chicago, San Francisco, Washington, DC, Honolulu, Toronto or elsewhere?
What is an MEG? What are these union-MEG contracts?
As we have discussed in prior postings, the hotel unions orchestrated all their contracts in 6 major cities to expire in 2006. In each of these cases, the local union has a contract with a city-wide Multi-Employer Group (or MEG) of hotels–hotels that have agreed to work together as a team for collective bargaining purposes.
How binding is an MEG union contract on other non-MEG hotels?
So what does it mean that the union is cutting a deal with the MEG hotels in Chicago, or San Francisco or LA? Hotel employers should recognize that the MEG contracts are not binding on them unless they are one of the MEG hotels. The law requires arms length negotiations for each individual employer. Nothing mandates that other union hotels adopt a “me too” agreement as the union usually proposes. Independent hotels can and should consider their specific needs, and negotiate the economic as well as the non-economic proposals according to their agenda, not the union’s. There may be solid reasons to justify tailoring provisions to an individual hotel.
Thus, in Los Angeles, there are 25 “other” union hotels with contracts expiring that are not part of the MEG. In San Francisco, the contract with the MEG hotels covers less than one third of the union hotels. Similarly in all the cities where MEG contracts have been cut or will soon — New York, Chicago, San Francisco, Washington DC, Honolulu or Toronto.
Significance of the Beverly Hilton deal and 2 important lessons.
Hospitality lawyer Marta Fernandez, my partner as well as a senior member of JMBM’s Global Hospitality Group and the Firm’s Labor & Employment Group — said that the expected contract between Unite Here and the Beverly Hilton Hotel is significant because the Beverly Hilton is not one of the MEG hotels in Los Angeles. And this successful deal suggests two important strategies that she often counsels her clients to adopt.
Don’t rush to join the MEG! Consider opting out of the MEG if you are in.
First, consider avoiding being in the MEG (Multi-Employer Group). Marta has advised several of our hospitality clients in major gateway cities to follow this procedure and it has worked very well for them. That is what the Beverly Hilton did too. By opting out of the MEG, hotels may avoid being the focal point of union organizers, strikes and settling for the lowest common denominator.
Sometimes owners and operators think joining a Multi-Employer Group is easier. Join the herd. Go along with the group. That is not always a benefit. You may be able to cut a much better deal on your own and avoid being part of the “example” the union wants to make of the MEG.
Move with speedy caution.
Second, consider going in early to cut a fast deal. You may end up with the best arrangement and avoid costly work interruption. Again, that is what Marta has counseled many of her hotel clients, and what the Beverly Hilton has accomplished.
Congratulations to both the Beverly Hilton and Unite Here.
Marta Fernandez is a senior member of the Global Hospitality Group® and a partner in the Firm’s Labor & Employment Group. A management labor lawyer with more than 20 years’ experience, Marta specializes in representing hospitality industry clients in all aspects of labor and employment, including labor-management relations such as union prevention, collective bargaining for single as well as multi-employer bargaining units, neutrality agreements and defense of unfair labor practice charges before the NLRB; implementation of preventative management strategies, such as executive training, arbitration enforcement and policies and procedures; defense of administrative and litigation claims, such as employee claims of sexual harassment and discrimination. For more information please contact Marta Fernandez at 310.201.3534 or MFernandez@JMBM.com.
Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $50 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at firstname.lastname@example.org or 310.201.3526.
Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why.
Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM’s Global Hospitality Group® – a team of 50 seasoned professionals with more than $50 billion of hotel transactional experience, involving more than 1,000 properties located around the globe.
Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right “fit” for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.
Jim is frequently quoted as an expert on hotel issues by national and industry publications such as The New York Times, The Wall Street Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim’s books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.
Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm’s Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at email@example.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.