Corporate governance failures of hotel REITs are centerstage this year as NAREIT gathers for its annual conference at the San Francisco Marriott Marquis, Host Hotels and Resort’s flagship 1,500 room convention hotel where workers have been on strike for nearly a month.
Around 7,000 hotel workers are on strike at Marriotts in San Francisco, Boston, Hawaii, San Francisco, San Diego, and San Jose. Many of these hotels are high performers for their respective REITs and REITs are highly exposed to the costs of strikes:
- Diamondrock’s Westin Waterfront by Marriott in Boston contributed 11% of 2017 EBITDA;
- LaSalle’s Westin Copley Place contributed 9% of 2017 EBITDA;
- Pebblebrook’s Westin Gaslamp in San Diego and W Boston combined for 10% of 2017 EBITDA;
- Host’s SF Marriott Marquis and Sheraton Boston are a combined 2,720 rooms and 3.8% of 2017 EBITDA;
- Braemar’s Courtyard Downtown SF was 10% of 2017 EBITDA;
- RLJ’s SF Marriott Union Square was 2% of 2017 EBITDA.
The main issues are economics and Marriott’s “Make a Green Choice” program that puts housekeepers at greater risk of pain and injury.