Industry Group Fails to Acknowledge Hotel Owners’ Responsibility
On September 6, 2018, the American Hotel & Lodging Association (AHLA) announced its “5-Star Promise,” a long overdue response to widespread sexual harassment and assault in the hotel industry. AHLA’s Promise contained a set of voluntary, non-binding recommendations lacking specific scope or timeframe for adoption and assigned no role or responsibility for hotel REITs, despite the risks and liabilities that sexual harassment holds for them:
- In 2018, Host Hotels and Resorts, the world’s largest hotel REIT opposed a shareholder proposal to increase disclosures about the impact on investors of hotel operators’ environmental, human rights, and labor practices.
- Sunstone Hotel Investors, another hotel REIT, declined to share information about the costs of and risks to the REIT from sexual harassment claims by hotel employees despite a March 2017 settlement of a lawsuit by two female employees of the hotel alleging sexual harassment and threats of retaliation.
“People are the heart and soul of the hotel industry,” says the American Hotel and Lodging Association, but Marriott’s Green Program is a debit against its human capital account. Host Hotels & Resorts recently told investors that Marriott’s so-called ‘Green Choice’ programs are “positively impacting expenses,” but these programs have a damaging impact on hotel housekeepers:
- Housekeepers say Green Choice rooms are harder to clean and are dirtier than rooms that are cleaned daily.
- Because the rooms are so dirty, housekeepers report using larger quantities of hazardous chemicals. These products may “cause damage to eyes,” “cause severe irritation to skin,” and “irritate throat and respiratory system.”
- The Green Choice program has been in practice longer at legacy Starwood hotels. An analysis of 23 legacy Starwood hotels over 9 cities shows that Legacy Starwood hotels had a 49% increase in the number of injuries between 2013 and 2017.
- A survey of one hotel found 91% of housekeepers with lower seniority have been left off the schedule or lost hours as a result of Green Choice.
Pebblebrook Hotel Trust has spent a year and considerable financial resources pursuing a merger with LaSalle Hotel Properties, which is on the cusp of being voted on and consummated. But both have high performing properties subject to rare hotel worker strikes at a critical time for the merger.
Moreover, if Pebblebrook is planning to sell large union properties to finance the merger, as is reported, why is it willing to bear a disproportionate share of the current Marriott strikes?
A new UNITE HERE report raises the following issues:
- LaSalle and Pebblebrook have 9% and 10% of EBITDA respectively in hotels that are on strike
- Is selling the Westin Copley Place during a strike optimal?
- Why is Pebblebrook bearing the brunt of strikes if it is selling its largest union properties?
- Does Pebblebrook need additional risks to the LaSalle deal in the closing days?