Blackstone Buys Company for $4.7 Billion While Battling UNITE HERE Hilton Workers Over Pennies

by Randy Shaw on August 16, 2010

The Blackstone Group, the private equity firm that owns the Hilton Hotel chain, has acquired a Houston power company for $4.7 billion while refusing to pay an additional 12 cents an hour for increased pensions for its UNITE HERE employees. Citing tough times, Blackstone is also pushing for a 50% increase in housekeeper workloads. UNITE HERE’s biggest Hilton locals are in San Francisco, Chicago and Honolulu, three cities where workers face increased costs of living despite the recession. In light of last Friday’s purchase, Blackstone must explain to Hilton workers why it is taking a hard bargaining position on pensions and workloads when it has enough money for “the largest leveraged buyout in the world this year.”

When UNITE HERE was negotiating with the Hilton and other global hotel chains in 2009, the industry was suffering from the nation’s sharp economic downturn. UNITE HERE offered a scaled down one-year contract to account for these poor economic conditions, but the hotels resisted, arguing that they were facing years of declining business and that at least a three-year contract was needed to address this.

But the hotel industry in UNITE HERE cities has bounced back, with occupancy and room rates both up. And last Friday, August 13 the Blackstone Group showed it was doing well enough to pay $4.7 billion for Dynegy, a Houston power company.

It was Blackstone’s biggest acquisition since it picked up the Hilton chain for $27 billion in 2007.

Blackstone’s Pinching Pennies for Hotel Workers

I asked UNITE HERE Local 2 President for his reaction to Blackstone’s $4.7 billion deal. Casey spends many of his days with Local 2’s bargaining committee in a Hilton ballroom hearing from the company about how they cannot afford a 12-cent an hour increase in pension contributions for Hilton workers. Many on the committee are housekeepers, who are battling the hotel’s efforts to increase their workload as much as 50%, to as many as 21 rooms per day.

Casey has been around the block enough to know how the global hotel giants cry poverty regardless of economic realities, but even he was incredulous that Blackstone could toss out $4.7 billion while telling Hilton workers they cannot afford to increase pensions.

Casey noted, “if Blackstone can spend billions buying other corporations, it can certainly afford a mere 50 cent increase per hour over four years (12 cents a year) so that Hilton employees can have pensions of $750-800 per month rather than the current range of $600-700. And they certainly do not need to have housekeepers clean seven to eight more rooms a day, which amounts to a 50% increase in workload.”

If Blackstone agreed to UNITE HERE’s proposal, workers who have spent their entire careers at Hilton would still only be getting an annual pension of less than $10,000. It’s hard to believe that Blackstone would even notice the 12-cent per hour increase in its balance sheet.

The Hilton’s proposed increase in housekeeper workloads relates to its “Refresh” program, whereby guests are offered small rebates in exchange for not having their rooms cleaned. Hilton housekeeper and Local 2 Executive Board member Guadulupe Chavez recently explained to me that rooms that go days without cleaning then take two to three times as long to tidy up when the guest leaves. So while the Hilton thinks it can cut down on housekeeping by not cleaning rooms daily, it ignores the additional time needed to clean much dirtier rooms.

Since Blackstone had $4.7 billion available to buy Dynegy, it is hard to believe that it needs to even try to save money by increasingly workloads for its overwhelming female housekeeping staff. This workload increase was among the factors that led every single Hilton housekeeper to recently walk off their jobs in protest, taking over the San Francisco Hilton lobby to the joy of tourists but to management’s dismay.

Casey describes the Hilton as taking a “hard line” on these pension and workload issues. As negotiations resume today, one wonders how Blackstone’s representatives will be able to keep a straight face when it blames “tough times” for its inability to meet workers’ needs.

Randy Shaw is Editor of Beyond Chron.

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