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Hospitality Lawyer: SF hotel deal with big labor ends strife . . . for now

Author of www.HotelLawBlog.com
14 September 2006
After two years of strikes, lockouts, boycotts and tense negotiation, the 13 hotels that make up the San Francisco Multi-Employee Group reached a tentative labor agreement this week with Local 2 of the Unite Here union. Rank and file members of Unite Here will vote on the pact Sept. 22, and it is likely to pass. While the union touts a victory, the agreement is very close to the proposals originally made by the union two years ago. Yes, the SFMEG hotels stood up to the union throughout this time, but the negotiation process was clearly costly to all.


Union officials in San Francisco had sought a two-year contract whose expiration date would be the same as those in other major cities, in order to increase the union’s clout when bargaining with companies that own hotels in the affected cities. That was important to the union because it raises the impact and profile of the dispute to a national event, and limits hotel chains’ ability to bring in workers from hotels in other cities.

According to today’s San Francisco Chronicle story by George Raine, the hotel owners never explicitly agreed to align contract expiration dates. But because it took two years of effort to reach an agreement, the San Francisco agreement – which is retroactive to 2004 – expires in August 2009. Meanwhile, a 2009 expiration is being negotiated in Toronto, Monterey, Calif, and Hawaii. So while major U.S. hotel owners may be ending their labor woes, they will face many of the same challenges in just a few years.

WHAT DOES IT ALL MEAN?

This is an important time for the hotel industry. We are in the blossom of the hotel industry’s recovery from depths the industry hit in 2001 after a recession and 9/11 hurt business and leisure travel. And as we enter one of the busiest times of the year for hotels, simultaneous strikes in key cities, picket lines and the resulting bad publicity could have inflicted terrible pain. Hence, labor had a strong negotiating position, and the hotels agreed to concessions that they might have liked to avoid.

Marta Fernandez, one of my partners and a senior member of our Global Hospitality Group who represents management in labor and employment issues, worries about how the deal will affect the medium sized and smaller hotels. Their interests were not necessarily aligned with the larger chains who had their own “big picture” issues with the union.

“Even the larger chains did not always agree over how to respond to union demands on such issues as successorship, card-check neutrality and immigration,” she says. Marta raises an important practical issue when she says “One wonders if multi-employer bargaining in the hotel industry — which clearly suits the union’ s agenda to unify the terms of all its contracts — will go the way of multi-employer bargaining in the healthcare industry.” Ironically, that disintegrated in the late 1980’s after healthcare unions in San Francisco effectively shut down the City’s healthcare services during multiemployer bargaining.

For now, the San Francisco agreement may strengthen the union’s hand. Look for another post soon on this point.

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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 jbutler@jmbm.com 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.

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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 jbutler@jmbm.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.