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Election Reflection

How will last week’s election potentially affect the hotel industry? At the AH&LA Fall Conference, industry leaders gave their thoughts.

Monday, November 12, 2012
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With the election quickly vanishing in the rear view mirror, it’s time for the hotel industry to start thinking about the ramifications of a newly empowered Obama administration. With the election now over, some of the foggy uncertainty of current and potentially emerging administration policies are beginning to take shape and the hotel industry is thinking about what’s next.

This past weekend at the American Hotel and Lodging Association’s annual Fall Conference, industry leaders discussed this specific issue and some of the other big topics that effect hotel, restaurant and tourism businesses. One of the more notable parts of the conversation focused on how existing policies will change the future financial outlook for the hospitality industry and what tweaks must be done to keep the hotel business moving through the upswing to record profitability.

Jim Abrahamson, CEO of Interstate Hotels & Resorts said he’s concerned about the inability for hotels to continue to add jobs because of expected rising business costs from higher taxation and other government programs. Most notably are the potential added costs of new health insurance policies taking effect under a plan commonly known as “Obamacare.”

“Job creation will be limited if we see more regulation and that could repress overall job creation in our industry. We will also see emphasis on part time from full time jobs,” said Abrahamson.

What a shame. Hotel industry employment has been a major bright spot for the overall United States economy. According to the US Travel Association, the travel sector has been responsible for adding 296,000 jobs since December 2009 and had recovered 59 Percent of all jobs lost during the Great Recession.

Aside from the aforementioned healthcare costs, there is a potential for rising tax rates if a series of set to expire tax discounts are not extended.

“Owners need to pay debt and mortgages and a lot of talk is about taxes next year. Imposition of new tax policy will have lot of influence next year,” Abrahamson said.

Michael Kaufman, past chair, National Restaurant Association and president, Centerplate Restaurant Group said he is extremely concerned about the overall effects of newly created regulations for healthcare. “There are profound implications now that are hard to predict. But my sense is we will see a lot of conversion of full time to part time employees,” said Kaufman. The reason for that is many of the new health focused regulations will not apply to part time employees.

And expect immigration reform to be another key issue. The way we see it is hoteliers need more workers – especially seasonal ones -- to fill many lower paying jobs. In the past the industry has been strained to fill many jobs and have sought easier ways for foreigners to work here.

The latest republican presidential loss had a twofold effect on this issue. It’s given the Obama administration more political capital simultaneously to many republican leaders who are thinking they need to woo Latino voters and immigration reform may be a way to attract this exploding demographic.

“We have to believe both parties understand and will attempt to do something about this issue. This landscape requires a more thoughtful approach,” said Kaufman.

“We need great talent,” said Kirk Kinsell, president, the Americas, InterContinental Hotels Group

John Russell, board member, IHMRS, and chief executive officer, Campus Brands said one of his political concerns is the revival of the Employee Free Choice Act. He feels it’s a possibility as the now emboldened Obama administration is more pro-labor than a Romney administration would have been.

The ironically called the “Employee Free Choice Act” is a legislative measure that if passed it would strip employees of their right to vote in private ballot elections in determining union representation at their workplace such as a hotel. If signed into law, the Act would require an employer to recognize a union if a majority of workers in a proposed bargaining unit indicated a desire for representation. Lodging industry executives have continued to be concerned this would spurn the creation of unions which would drive higher wages and crimp operating margins.

Russell also said he see the administration as favoring the hotel business. “This administration is very pro travel. I think they are true believers,” he said.
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RE: Election Reflection article link
Many companies provide health coverage to their employees in order to attract and retain talent. A conversion to part time workers often comes with a price, as quality of service may suffer.

Smaller businesses employing less than 30 employees, that currently have difficulty attracting and keeping loyal employees, will now be eligible for tax credits which offset the cost of providing coverage by up to 30%.

The following study looked at Massachusetts as a model and concluded that Obamacare, which shares similarities with the Massachusetts law put in place by Romney, would not have a debilitating effect on jobs or otherwise prohibit economic growth.


Posted by: Mr. Andrew Noce

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