NEW YORK—The United States’ mid-term elections held 2 November shifted the balance of power back into the hands of not only the Republicans—but also the hotel industry.
“This is very positive for AH&LA,” said Lisa Costello, VP of governmental affairs for the American Hotel & Lodging Association. “A number of the (Congress) members that will be coming in are very pro-business and pro-lodging.”
Costello was one of four panelists discussing the changing political landscape and its effects on the U.S. hotel industry during a panel Monday at the International Hotel, Motel & Restaurant Show.
Republicans took 61 seats in the House of Representatives, and will hold 240 seats at the commencement of the 112th Congress next year. The party failed to achieve majority status in the Senate, but it did gain six seats for a total of 47 (compared to 53 held by Democrats).
The governor races trended conservative as well, with Republicans gaining seven seats for a total of 29 (compared to Democrats’ 19, one undecided race and one Independent).
Garnering less attention but of equal importance was the overall result of individual State Legislature races. Republicans won 680 total seats—the most in the modern era, Costello said.
“This will be really important during the re-districting,” where the Republican Party will have a greater say in the process.
This new political landscape will shape key issues facing hoteliers, none more formidable than taxes, healthcare and labor.
Taxes
The biggest tax issue on the table right now involves online travel agencies and their failure to remit taxes to state and local government, according to Jonas Niehardt, senior VP of governmental affairs for Hilton Worldwide.
For most municipalities, hoteliers are required to pay an occupancy tax for every room night booked at a given property. When rooms are booked through OTAs, however, those OTAs do not remit taxes on the service fees received, which ultimately results in less money being paid to local municipalities.
If OTAs aren’t forced to remit their taxes, Niehardt and other industry professionals fear hotels will be charged a higher tax by municipalities in an attempt to recoup lost tax revenue.
The OTAs have spent millions lobbying Congress to pass a Federal provision that pre-empts the authority of state and local government to assess taxes on facilitation fees. These efforts come on top of the millions the OTAs have already spent in litigation expenses to fight tax issues on various state and local levels.
“We looked at this situation and said, that’s not going to work out for us hoteliers,” Niehardt said. “…We figure we’re going to be stuck holding the bag.”
The hotel industry is fighting back. Thanks to a well-orchestrated PR campaign headed by the AH&LA, the major hotel companies have joined forces and are making headway in convincing government officials to vote down such any such measures by OTAs.
Labor
“If you roll back to 2008, the unions had spent (US)$500 million to get a Democratic-controlled Congress elected. They had a filibuster-proof Congress, and the No. 1 piece of legislation that would have guaranteed their resurgence was the Employee Free Choice Act,” explained Joy Rothschild, senior VP of human resources for Omni Hotels & Resorts.
But as the economy began to tank, health care was thrown into the spotlight, and UNITE HERE shuddered to a virtual standstill due to in-fighting, EFCA never saw the light of day.
“The union really squandered the biggest political capital it ever had and didn’t get the Employee Free Choice Act passed,” Rothschild said.
But they’re not done yet. Organized labor spent nearly US$400 million on candidates this year, and a Democratic-controlled National Labor Relations Board could enact big changes through administrative rule-making, she said.
One such change would be to shorten the amount of time for elections. There’s typically 38 days to 42 days before an election is held, which gives the union and the hotel time to adequately argue their cases.
“If the NLRB can shorten election cycle, there’s no way an employee can be told both sides of the story,” Rothschild said.
Another piece of administrative rule-making could change provisions for minority unions. At present, unions can’t pick within sub-sets of a labor force to form a union. Local 2 in San Francisco, for example, couldn’t organize a union with six busboys at one hotel, and 7 waiters at the next.
If the NLRB changes that, a union can organize a very small part of a hotel and then bite off little factions one at a time, Rothschild said.
As a preventive measure, hoteliers should follow one simple guideline: Treat workers with respect.
“It’s really important that we have good benefits, good wages, supervisors who treat people respectfully so that there’s no need for employees to go out and seek a third party,” Rothschild said.
Health care
Don’t expect an outright appeal of the Health Care and Education Reconciliation Act of 2010, said Tom Donnelly, public affairs advisor with Akerman Senterfitt and counsel to InterContinental Hotels Group.
“There will be a vote on a bill to repeal and replace health care reform. That vote will occur in the House. It will pass the House and it will go to the Senate, and it will not pass the Senate,” he said. “It’s a dead piece of paper.”
What hoteliers could expect is significant regulation attached to the various health care subcommittees to ensure money is being spent judiciously and programs are operating efficiently, Donnelly said.
Certain elements of the health care reform bill could be thrown out, however. The provision stipulating new procedures for 10-99 tax reporting and some key deadlines could be cut entirely, he said.
For now, hoteliers shouldn’t count on anything other than what’s spelled out in the bill.
“We’re moving forward as if its’ going to happen and introducing plans in 2013 that will compete with what we’re required to have in the exchanges in 2014,” Rothschild said.
