MARRIOTT EXECS: ROOM FOR GLOOM IN WALKOUT
Strike downplayed, but pressure grows
Marriott executives downplayed the financial impact of the six-city strike at its hotels this week, even as it foresees lower-than-expected growth in the coming months — but at least one local Marriott-owned hotel expects a significant financial impact.
“While cancellations have been minimal thus far, the longer the strike continues, the greater the risk for more cancellations and pressure on profits,” said Jay Johnson, chief financial officer at DiamondRock Hospitality Co., the owner of the Westin Waterfront, during an earnings call last week. “We estimate approximately a $2 million impact to (earnings) in the fourth quarter based on a resolution late in the quarter.”
During a conference call with analysts earlier this week, Marriott Chief Executive Arne M. Sorenson said the strike will not substantially change the company’s financial position.
“Let me take a moment to address the strikes that are occurring at 21 of our hotels in six North American cities. This is out of a portfolio of 6,700 hotels. We have been negotiating in good faith for many months and we are making progress,” he said. “Just this weekend, we welcomed our associates back to work after contract settlements in Oakland and Detroit. We hope to welcome more of our associates back to work soon. We don't expect the strikes to have a material impact on our earnings in the fourth quarter.”
There have been some notable cancellations in the Boston area. Gov. Charlie Baker’s re-election campaign moved his election night party from the Marriott-owned Sheraton to avoid crossing a picket line. Baker’s campaign held their event in the John B. Hynes Veterans Memorial Convention Center. The city of Boston has also moved its We Are Boston Gala, an event honoring immigrants in Boston, from the Westin. The Gala, held later this month at the Boston Park Plaza, is expected to have as many as 900 guests.
Still, the strike is clearly having an effect on hotel operations, more than a month after UNITE HERE Local 26 workers walked off the job in an effort to improve wages and health care. In the Westin Waterfront, the lobby Starbucks popular with conventiongoers at the Boston Convention and Exhibition Center has gone to substantially reduced hours, and the hotel’s breakfast restaurant remains closed. A makeshift to-go station has been set up in its absence.
“The reports that I continually get is rooms are not anywhere near clean to the standards that they ordinarily are, there’s an inordinate amount of noise outside the hotels,” said Brian Lang, president of the union. “All the evidence that has come before me indicates the strike has had an enormous impact.”
Lang said negotiations have been progressing between the union and Marriott leaders, but there is no resolution yet, despite contract agreements in other cities.