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Slow San Francisco Tourism Complicates Hotel Strike Resolution

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Hotel workers strike outside the Hilton San Francisco Union Square hotel on Oct. 22, 2024. (Martin do Nascimento/KQED)

Outside the Hilton San Francisco Union Square, life at the picket line has become routine for workers like Evelyn Luarca. For over two months, the banquet waitress has volunteered to cook and serve meals to fellow strikers chanting and banging loud drums in front of the city’s largest hotel.

The 50-year-old prepares eggs or pancakes at 5:30 a.m. under a tent every weekday. Then comes a lunch shift that won’t end until after 1 p.m.

“If I wasn’t staying busy like this, I’d be a lot more stressed out, just thinking,” said Luarca, as she dished out frijoles charros, a steamy bean and meat soup, to coworkers on a recent day. “This is the longest I’ve ever been on strike. The bosses want to break us.”

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The walkout, which began Sept. 22, has grown to include 2,500 housekeepers, bellhops, bartenders and other workers at six downtown hotels operated by some of the industry’s largest brands. An additional 1,600 hotel workers in the city could join the strike, according to the union Unite Here.

Their demands include wage increases and keeping health care costs down, similar to what thousands of Unite Here members in Honolulu, San Diego and other cities recently achieved in new contracts after walking off the job. However, the labor standoff in San Francisco is expected to continue as a post-pandemic tourism slump complicates reaching a deal.

Hotel workers picket outside the Hilton San Francisco Union Square hotel on Oct. 22, 2024. (Martin do Nascimento/KQED)

San Francisco’s tourism industry relies heavily on convention business, which is set to increase next year. But unlike Honolulu, San Diego and other cities that have largely rebounded, hotel occupancy and revenue in San Francisco remained significantly lower than in 2019. San Francisco collected $414 million in hotel tax revenue that fiscal year but just $283 million in fiscal year 2023-2024. Lingering perceptions of homelessness and crime on city streets are still discouraging more conferences and visitors.

David Sherwyn, who directs the Center for Innovative Hospitality, Labor and Employment Relations at Cornell University, said the union’s proposal to raise labor costs is tough to advance at a time when the real estate investor groups that own those hotels are seeing lower sales.

“The employees are saying, ‘Hey look, I need a big increase because I need to keep up with inflation.’ The owners are saying, ‘Look, this building, this business is not doing well. And we’re not in a position to give raises out of the revenue,’” Sherwyn said.

Most walkouts are short because they are difficult to sustain as workers forego their paychecks. Unite Here offers a weekly strike stipend, but it’s a fraction of what employees like Luarca normally earn. She has cut all non-essential purchases, including Christmas presents, she said.

“What we are doing is a very big effort, but it is for a just cause and a long-term benefit,” said Luarca, who has worked at the Hilton Union Square for nearly 30 years. “I’m prepared to fight for as long as it takes.”

A union worker drums on a bucket as she pickets outside of the Hilton San Francisco Union Square hotel on Sept. 3, 2024, in San Francisco, California. For the second time this month, 1,500 Unite Here Local 2 hotel workers from the Grand Hyatt, Hilton, and Westin St. Francis in Union Square have walked off the job, protesting pay and understaffing. (Justin Sullivan/Getty Images)

Both parties have dug their heels in, waiting for the other to budge on issues such as health insurance costs, which have risen faster than wages and become a major flashpoint for strikes, said Rebecca Givan, who teaches labor and employment relations at Rutgers University. Union and hotel negotiators have not met in weeks.

“The employers are gambling that if they stay out long enough, the workers will sort of lose hope and won’t be able to afford to stay out any longer,” Givan said. “It’s really a war of attrition.”

Hilton, Hyatt and Marriott, the employers that operate the hotels, rebuffed a union offer to accept modest wage increases in exchange for a share of profits if sales recovered in coming years, said Anand Singh, Unite Here Local 2’s chief negotiator. Conversely, the union rejected a proposal that would make health care more expensive for employees, especially new hires, he added.

“These companies have the resources to deliver on a fair contract,” Singh said. “This is really about their attempt to roll back the standard for working people in the city and permanently reduce their labor costs.”

Singh believes that the 1,900-room Hilton Union Square, which is up for sale along with the nearby Parc 55, is not a bellwether for the city’s hotel industry. The two hotels’ last owner, Park Hotels & Resorts, refused to pay related loan debt as the buildings’ value plunged by $1 billion since 2016. Meanwhile, the Hilton has seen many cancellations due to the strike, contributing to a multimillion operating loss, according to a bondholders’ report on the properties.

Hilton and Marriott did not respond to requests for comment, though they have stated they are committed to negotiating a fair contract and serving guests through the disruptions. A Hyatt spokesperson declined to comment on any economic impacts of the strike but said the company is offering competitive wages, health care and retirement benefits.

“The safety and security of guests remains a top priority, and we have contingency plans in place to minimize the impact on hotel operations related to strike activity,” Michael D’Angelo, Hyatt’s head of labor relations in the Americas, said in a statement.

The union has asked visitors not to eat, sleep or meet at the sites with strikes, including the Palace, Grand Hyatt, Marriott Union Square, Marriott Marquee and Westin St. Francis. In response, Lufthansa Airlines and a conference by the Association of American Law Schools have pulled their business from the Hilton Union Square. Some economists participating in another conference scheduled for January are urging the expected 13,000 participants to cancel their reservations at hotels with labor unrest.

Unite Here believes mounting economic losses will pressure the companies to reach a deal, as guests don’t like to encounter picketers banging on drums all day, and the brands’ reputation can suffer. But that remains to be seen, Sherwyn said.

“Are the owners going to increase their labor costs when business is so low, or are they going to say, ‘You know what, it’s not worth it, I’ll give [the hotel] back to the bank’?” Sherwyn said. “To say that five years ago would be theoretical puffery nonsense, but not anymore.”

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