New York Hoteliers Wisely Share The Spoils

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Are you ready to pay your housekeepers $60,000 a year plus full medical benefits and a generous pension at retirement? Probably not, unless you own or operate a hotel in New York City that was part of a recent landmark settlement with the city's hotel workers' union. That agreement, covering 30,000 workers, was consummated with a minimum of fuss and bluster and ensures labor peace for the next six years.

While some might think New York hoteliers have gone loco to be so generous to their workers, in actuality the owners are crazy like foxes. This kind of contract, as costly as it may be for hotel owners, makes perfect sense on a number of levels. First, of course, it nearly guarantees the record of 25 years without a citywide hotel strike remains intact and continues nearly to the start of the next decade. That gives the number crunchers some hard data to factor into their cost and profit calculations for years to come. It's a lot easier to obtain financing to buy or build a hotel when you can accurately forecast your biggest expense item.

Bill Marriott often likes to credit his father for a simple philosophy of success in the hotel business. To paraphrase, Marriott says if you take care of your associates, they'll take care of your guests. We all know the hotel business is a simple endeavor that's proven by this axiom. It's a safe bet this contract makes a lot of housekeepers in New York happy about their job, which should translate into greater efficiency and improved service to all their customers. It works for Bill Marriott and it will work for the hotels in NYC.

By any measure, the terms of the contract are mindboggling. Housekeepers currently make about $46,000 a year and will receive 4% increases in each of the next six years for a top annual salary of just under $60,000. Benefits are extremely generous, too. The employers' contributions to pensions will rise, and the hotels covered in the agreement will continue to fully fund medical, dental and vision benefits for workers. Wisely, the hotels are able to hold down medical costs by operating four clinics in association with the unions at which workers and their families can access basic medical, dental and eye care.

Finally, and most importantly, the hotel owners in New York need to be congratulated for doing both the smart thing and the right thing. Tourism and the hotel industry are booming in the city—50 million visitors last year and undoubtedly more this year and beyond—so it's a very profitable business to be in these days. Union members read the papers and listen to the TV news, so they know the hundred of millions of profits at stake. It's only right they fully participate in the spoils of this success.

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