By Doyinsola Oladipo
NEW YORK (Reuters) - Unionized hotel workers demanding significant pay raises will rally on May Day in 18 U.S. and Canadian cities, as talks are beginning with operators Marriott International, Hilton Worldwide Holdings and Hyatt Hotels Corp.
Talks will cover about 40,000 workers who look to secure new contracts for the first time since the pandemic. Workers want to reverse pandemic-era staffing and service cuts, as well as duplicate the big pay hikes that organized workers across the nation have been winning in the recent years.
Demonstrators rallying for raises on May 1, the international workers' holiday, may face some pressure in markets still recovering from the pandemic, such as San Francisco and Hawaii, analysts say.
"There have been a series of staffing and service cuts that have led to both painful working conditions for the workers and reduced services for the guests," said Gwen Mills, international union president at Unite Here, which represents nearly 300,000 workers in hotels, casinos, food service, airports, and more across the U.S. and Canada.
After domestic travel cratered during the pandemic, hotel operators hiked up room rates in the travel boom that followed. In response, workers are demanding a larger share of profits.
Workers will march through downtown Boston, Greenwich and several cities in California. Others in Baltimore, New Haven and Toronto will picket outside hotels. In Honolulu, workers will rally on the main thoroughfare in Waikiki.
2023 was a significant year for labor negotiations in the U.S. with manufacturing, auto and hospitality workers in Las Vegas among those that landed record contracts as a tight labor market allowed employees to flex more bargaining power.
The Culinary and Bartenders Unions in Las Vegas, Unite Here affiliates, said its workers got a 10% wage increase in the first year of its new five-year contract and a total 32% in raises, a record in its history.
This will be Unite Here's first multi-city contract campaign since 2018, when about 7,000 Marriott workers went on strike in eight cities. The union secured substantial wage increases, affordable health care and protections against sexual harassment, including panic buttons for housekeepers.
Marriott said in 2018 the renegotiated contract following the strike led to a roughly 4% rise in labor costs.
Negotiations have already started in Washington D.C., Hawaii and Boston. The union said negotiations will be held with each hotel to secure an individual contract.
The result of these negotiations could be far-reaching as "non-union hotels will likely also increase wages to attract and maintain employees," said Emmy Hise, CoStar Senior Director of Hospitality Analytics.
"We look forward to negotiating fair contracts with Unite Here locals across the country that have expiring collective bargaining agreements this year," said Michael D’Angelo, Hyatt head of labor relations Americas.
Marriott and Hilton did not immediately respond to a request for comment.
The bulk of negotiations are set to take place during the summer, the union said.
U.S. gross operating profit per room in 2023 increased 8.6% year-over-year and 0.5% compared to the same period in 2019, according to commercial real estate analytics firm CoStar.
Hotel staffing per occupied room is down 13% since 2019, the union said.
U.S. hotel revenue per available room, a key metric in the hospitality industry, in 2023 was the highest for any year on record at $97.97, which increased 4.9% from 2022, according to Costar.
Room revenue growth is expected to moderate to 4.1% in 2024. Hilton's U.S. room revenue fell 0.4% during the first quarter.
In San Francisco, "profitability for hotel owners is still way off of 2019 levels, so hotel owners will be very reluctant to give an inch to the unions as they really can’t afford to do so," said Patrick Scholes, Truist Equity Analyst.
The same may hold true for lodging Real Estate Investment Trusts, a growing share of hotel owners, who are concentrated in union markets and have operating margins that are under pressure due to higher costs.
(Reporting by Doyinsola Oladipo in New York; additional reporting by Aishwarya Jain in Bengaluru; editing by Peter Henderson and Aurora Ellis)
