REPORT FROM THE U.S.—President Barack Obama signed into law Tuesday the The Patient Protection and Affordable Care Act with possible amendments to come later from the Senate. But what exactly does that mean for the hotel industry? 
The bill has been criticized in the industry for the added costs some say it will place on businesses. At the American Hotel & Lodging Association’s Legislative Action Summit last week in Washington, D.C., Chris Nassetta, president and CEO of Hilton Worldwide, said the bill could add tens of millions of dollars in extra costs to the industry.
“The thing that needs to be done is trying to affect reform on health care, not health insurance,” which would reduce costs, he said during a panel discussion centered on health-care reform. “Unfortunately, we’re not trying to do that. I think it will cost jobs.”
Not everyone, though, is concerned with the bill’s associated costs.
‘It will not be a real blow’
Atul Patel, CEO of Allentown, Pennsylvania-based HMB Management, said the cost might not be that heavy a burden.
“My thought process is that in 2014 and 2015 (when major health-care expansion begins), this will hardly add 1 percent of extra costs,” he said. “It will not be a real blow.” He said his company, which has a portfolio of 12 properties comprising 1,200 rooms, offers 50 percent coverage to workers, and about 25 percent to 30 percent of his 300 employees are covered under the company’s health-care plan.
While not concerned about the cost, Patel indicated he is concerned that many details contained in the measure are still not widely known.
“No one knows what’s in it but the person who wrote it,” he said. “How many skeletons will come out of the closet?”
Cost, however, is on the radar.
Interstate Hotels & Resorts, which employs 18,500 people worldwide with the majority of its portfolio in the U.S., questions the cost of compliance to the new program.
“We are still reviewing the legislation and while we are gratified to see many of the benefit provisions we currently provide in support of our associates will be encouraged nationwide, we anticipate that compliance with the affordability provisions, among others, will prove quite costly,” said Laura E. Fitz Randolph, senior VP & assistant, general counsel, for the Arlington, Virginia-based company, in a statement provided to HotelNewsNow.com.
Gerry Chase, COO of New Castle Hotels & Resorts in Shelton, Connecticut, said cost is an issue. He said he has seen reports indicating that companies the size of his—New Castle employs 600 people—could be faced with paying an additional US$1,400 per employee each month for single coverage. His company pays for 70 percent of health-care coverage for singles, but Chase said he didn’t know how many employees were on the plan.
New Castle oversees 26 properties—19 of which it owns and seven of which it acts as third-party manager. The company manages one property in Massachusetts, which four years ago expanded health-care coverage to low-income earners.
“It’s lesser coverage for more money as it’s evolved over time,” Chase said of the Massachusetts program.
Chase also is concerned that part-time employees will be guaranteed coverage.
“If they mandate availability at part-timers that is a game-changer,” he said.
In the middle
While the bill has its share of proponents and opponents, Michael Allen likely falls somewhere in the middle of the health care debate. The president of Newport News, Virginia-based Allen Management Hotel Group, which manages 14 Virginia hotels comprising 1,300 rooms, said he is waiting to see how the legislation will affect Allen Management.
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Michael Allen
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Allen Management
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He said his company’s health insurance premiums have been rising by about 20 percent per year. Currently, he extends coverage only to management level employees of his company, which has a headcount of between 300 and 400 people.
“It might only be another US$50 a month (per employee), which might not seem like a lot to you and me, but some of my employees, like the housekeepers, can’t afford that,” he said.
He said the total number of people on his company’s health-care plan, which pays for 65 percent of health care for singles, totals just 10 percent. Among his concerns: How much extra will he have to deduct from paychecks to pay for health insurance?
Despite that concern, Allen said he is concerned for the segment of his employee base that might not have health insurance.
“I understand there is a large segment of my employees who have no insurance and are just one illness away from leaving their job with me and ending up homeless or in a deep financial hole they can’t get out of,” he said.
The brand perspective
Major hotel brands throughout the country are adopting a wait-and-see approach before initiating any major strategic changes. Of the seven brands contacted for this story, four said it was too early to provide comment about how the reform will impact day-to-day operations and long-term planning. The remaining three did not return calls by press time.
The facts
Now that it’s official, most Americans are attempting to get a better understanding of the reform. Following are some resources to help you make sense of the issue:
If you have a pressing question about health-care reform and how it could affect your hotel business, contact HotelNewsNow.com. We are working with experts in human resources, law and government affairs to bring you information on this complex topic. Send your questions to Stacey Higgins, stacey@hotelnewsnow.com, or submit a comment below.
Stacey Higgins, Patrick Mayock and Shawn A. Turner contributed to this article.
