SAN FRANCISCO--(BUSINESS WIRE)--LaSalle Hotel Properties [NYSE: LHO], Pebblebrook Hotel Trust [NYSE: PEB], and InterContinental Hotels Group [NYSE: IHG] have moved in recent days to transfer management of seven San Francisco properties away from the Kimpton Hotels portfolio. UNITE HERE Local 2 issued the following statement addressing these actions:
During the past five weeks, LaSalle Hotel Properties, Pebblebrook Hotel Trust, and InterContinental Hotels Group have taken extraordinary steps to evade contractual commitments pertaining to hotel employee organizing rights in San Francisco. This has created a climate of uncertainty and disruption at seven prominent San Francisco hotel properties. The city’s hotel workers union, UNITE HERE Local 2, denounces the move and calls on the three companies to reverse course and to honor their contractual obligations.
On June 17, 2015, UNITE HERE Local 2 requested that IHG uphold its contractual commitment to remain neutral in the event of union organizing drives at seven hotels newly managed by the company through its recently-acquired subsidiary, Kimpton Hotels & Restaurants. Three weeks after sending the request, Local 2 learned that operation of these hotels – three of which are owned by LaSalle and four by Pebblebrook– was to be transferred to new management companies. Among the affected hotels are the first Monaco-branded and the first Palomar-branded properties in the Kimpton chain.
The owners previously had expressed glowing satisfaction with Kimpton’s management. LaSalle COO, Alfred Young complimented the management of the San Francisco Monaco in 2014, stating “Kimpton has done a great job working with us.” Even as recently as June 11, Pebblebrook CEO Jon Bortz reaffirmed his company’s relationship with Kimpton, stating “we’re thrilled to continue to grow our successful relationship with Kimpton Hotels.”
Responding to the sudden change of management companies, Local 2 president Anand Singh stated, “This is a transparent effort to evade commitments that have been in place for years. These three companies are acting in extreme bad faith, and their decision to take such radical action now has caused real harm to hotel workers in San Francisco.” InterContinental has been party to the neutrality agreement in question for over eight years, while LaSalle and Pebblebrook both own other properties where identical agreements are in effect but have not been triggered.
In addition, these disruptive steps were taken without understanding what, if any, consequences a union organizing effort might have on the properties’ operating margins. Both LaSalle and Pebblebrook have indicated that brand changes could have an impact on short term operating results (LaSalle described the transition as “lumpy”). Yet when the union suggested meeting to address financial concerns, its offer was rebuffed.
The fact that LaSalle, Pebblebrook, and InterContinental provided such belated notice of the changes, and that these changes have been taken without an accurate evaluation of the financial consequences, should lead analysts to ask whether the companies have been sufficiently transparent in their dealings and whether they have acted in shareholders’ best interests.
The union has learned that numerous employees have lost their jobs due to the actions of these three companies. In addition, the combined efforts of LaSalle, Pebblebrook and InterContinental have undermined an established standard that has promoted labor peace in San Francisco hotels. UNITE HERE Local 2 urges the companies to take immediate steps to undo that damage and make the affected parties whole.