As Hotels Recover, Workers Fear Being Left Behind

S.F.’s hotels are among the worst off in the country. But even after a full recovery, workers fear a new normal of fewer jobs.

After more than a year of unemployment, Tina Yu was grateful to get back to work as a housekeeper at the Hilton Union Square in May. But upon returning to her job of 28 years, she discovered her workload had significantly increased.

“The past 28 years I never felt it was as hard as these two months,” Yu says.  

Instead of focusing on a single floor, Yu is now expected to clean rooms on multiple levels of the hotel, the largest on the West Coast. When she encounters a particularly dirty room, she is no longer able to call for backup as she once did. And if one floor’s supply closet is picked over — an increasingly common problem, she says — Yu can’t simply page a runner, but must head out on a scavenger hunt of her own, pushing her heavy cart wherever she goes.

Yu’s experience is in part a symptom of a local hotel industry that has been rocked by the pandemic. San Francisco is a magnet for tourists as well as for business travelers, but with fewer Midwesterners snapping up “Alcatraz Psych Ward” T-shirts and with more IPO power lunches happening over Zoom, the hotel industry in San Francisco is recovering slower than almost anywhere else in the country. The Delta variant, and the city’s track record of taking public health seriously, could set things back even further.

That’s not just bad news for hoteliers: In normal times, tourists and business travelers keep restaurants busy and bars packed until closing time; they visit museums, attend sporting events, and take in live performances. In the process, they have a profound impact on the city’s tax rolls and a lot of working-class jobs. 

Using history as a cheat sheet, it’s safe to assume restaurants, bars, music venues, and museums eventually will bounce back. The same goes for the business of renting rooms to weary travelers.

However, hotel workers like Yu are worried their hardships won’t end with a full economic recovery. There are signs that Yu’s increased workload, and the prolonged unemployment of many of her co-workers, represent a “new normal” at major hotel chains.

“What they do now is they just combine the positions. We are really worried it may become normal,” says Bill Fung, an unemployed former houseman at the Hilton Union Square whose job entailed supporting housekeepers by organizing and distributing supplies. “They’re not thinking that someone who worked very hard for them before, right now they’re suffering. Right now they really need help.” 

Riches to Rags

San Francisco might be better known as the epicenter of the tech industry, but for many working-class San Franciscans, the tourism industry pays the bills. 

In 2019, total spending by San Francisco tourists added up to more than $10 billion, generating more than $800 million in tax revenue and supporting over 86,000 jobs, according to the San Francisco Travel Association. While the city’s 15 million day trippers accounted for a larger number of tourists, its 10.4 million overnight visitors spent vastly more money. International visitors made up just 10 percent of total visitors, but accounted for about half of total tourist spending.

In the before times, San Francisco’s hotels enjoyed some of the highest occupancy rates, and commanded some of the highest prices per room of any major city in the United States. The Moscone Center was a major driver of that business, pushing room rates into the $400 or $500s for conferences like Salesforces’ Dreamforce. By some measures, tourism is the city’s largest economic sector. 

All of that changed in March 2020 when the city went into lockdown. Visitor spending dropped 77 percent to $2.3 billion, according to SF Travel, and the industry lost 65,000 jobs, one-third of them in hotels. Anand Singh, president of Unite Here Local 2, which represents hourly workers in most of the city’s big, Class A hotels including the Hilton Union Square, says 99 percent of the union’s 9,500 hotel worker members were furloughed during the height of the pandemic. 

Even as health restrictions eased up over the past few months, San Francisco’s tourism industry hasn’t seen the same recovery observed in other cities. 

San Francisco has seen the steepest decline in revenue per hotel room of any major city in the United States, according to a June report from the American Hotel and Lodging Association. Hotel occupancy is at about 45 percent, down from a pre-pandemic average of 80 percent, and room rates are averaging about $175 per night, down from a pre-pandemic average of over $300, according to the latest data from the S.F. Controller.  

“It continues to be an uphill battle. We’re on the right track, but it’s like being a mole and then digging your way out, you just keep treading sand a little bit,” says Stefan Mühle, managing director of the Argonaut Hotel and the Hotel Zoe, two independent hotels in Fisherman’s Wharf. “It’s not easy. We are definitely seeing an improvement month over month.”

In the wake of the pandemic, Mühle shut down both of his hotels and laid off all but 13 of his 250 workers. After reopening in April, it took until July for Mühle to see significant improvements to his bottom line. Both hotels are now about 45 percent occupied, and a similar proportion of workers are back on the job. Still, it’s a far cry from normal: This time of year, his hotels are in high demand, and typically run at 95 percent occupancy. 

“I’ve been able to keep my staffing levels at the level that I need to sustain current business levels,” says Mühle. “The next 12 months or so will most likely see a consolidation of many positions until the business levels are back to where they were a few years ago.”

Lonesome Crowded West

The tourists who are coming to San Francisco are a different breed than those who flocked to the city before the pandemic. 

“When I walked through the lobbies of our hotels in the summertime, I would listen to four or five or six different languages on any day,” says Mühle, adding that international travelers used to comprise more than half of his business. “Right now it’s 95 percent domestic travelers, and of that I would say about two-thirds come from within about 250 miles or so, coming in by car.”

Those observations were shared by John Anderson, general manager of the JW Marriott in Union Square. “It’s definitely a locally driven customer: Los Angeles, San Diego, Northern California.” Pre-pandemic, only 15-20 percent of visitors parked in the hotel. These days, it’s closer to 80 percent, Anderson says. 

The current popularity of tourism-by-car is yet another disadvantage for San Francisco’s hotel industry. Compared to the eastern half of the country, fewer people live within a reasonable driving distance of the city. 

This new cohort also creates a different set of challenges for hotel staff. JW Marriott went from catering mostly to business travelers and convention-goers, who typically travel alone, to almost exclusively hosting leisure travelers, who are much more likely to travel as a family. “There’s definitely more guests in each guest room,” Anderson says.

For housekeepers like Yu at the Hilton Union Square, that translates to more work. “Now the rooms are very, very nasty,” Yu says. “Sometimes they have five or six or seven people inside the room. Of course they make a mess. That’s why we have to do more. We have to clean more.” A lot of these families are bringing their dogs along, too, Yu says. “There’s so many dogs, I don’t know what’s going on.” 

Typically, when she encountered an especially dirty room, Yu would call a houseman for help. But lately, she’s finding that none are available. The few housemen and linen staff who are back to work already are stretched too thin — so much so that supply and linen closets often are understocked. “Now sometimes we have to travel two floors to get supplies, and also the linen,” Yu says, adding that many houseman and linen staff duties have devolved to housekeepers like her. “We do more now.”

The added work takes its toll. “We have to rush, otherwise we won’t finish,” Yu says. “It’s really, really hard. Every time I look in a mirror, my face is red.” 

‘Labor Efficiencies’

Singh is concerned big hotel chains are using the pandemic as an opportunity to reduce their labor costs, and juice profits. “The reality on the ground is the employment levels are lagging the occupancy levels as we start to recover here. And that’s not by accident. It’s by design, as this industry looks to recoup losses by artificially depressing staffing levels.”

Singh estimates the true occupancy rate of San Francisco hotels, when accounting for hotels that remain shuttered, is about 35 percent. But only about 20 percent of the hourly hotel workers the union represents are back to work, he says. 

While Singh acknowledges hotels have faced major challenges over the past year and a half, he doesn’t think this imbalance will be a temporary measure. “Almost immediately following the shutdown across the country, some of the top executives in the industry were commenting on viewing the pandemic as an opportunity to resize the business model.” 

Park Hotels, the real estate investment trust that owns the Hilton Union Square, Parc 55, the JW Marriott and other San Francisco hotels, wrote in a November 2020 investor report that it plans a “permanent reduction of full-time, hotel-level staffing resulting in $70M annual savings.” In a February 2021 earnings call, Hilton CEO Christopher Nassetta discussed the company’s plan to become a “higher-margin business” by “creating more labor efficiencies, particularly in the areas of housekeeping, food and beverage and other areas.” (Hilton operates Hilton-branded hotels, though many are owned by outside investment trusts like Park Hotels.) 

The Hilton Union Square and several other San Francisco hotels refused to disclose specific information about their occupancy rates, labor force return, or their long term recovery plans. In a statement, a spokesperson for Hilton Union Square said, “Staffing levels are informed by market demand, local business environments, as well as recommendations from government and health authorities. We look forward to welcoming back our guests and team members.” 

Anderson of the JW Marriott, whose staff voted against unionizing with Unite Here Local 2 in 2019, says the hotel’s staffing levels and occupancy rate are pretty much aligned at between 60 and 70 percent. He hopes to bring back the hotel’s full pre-pandemic workforce by the end of the year. “With the amount of services that we have, the last thing we want to do is overwhelm the workforce that we do have,” Anderson says, noting that all of the hotel’s amenities are back open. 

Winners & Losers

Even as major hotel chains look to slash their workforces, “the companies themselves have actually done remarkably well over the course of the last year,” Singh says. Marriott’s stock price is just about even with its pre-pandemic value, and Hilton’s is up by double-digit percentage points. Nassetta made $56 million in total compensation in 2020, more than double his 2019 compensation. 

Meanwhile, Bill Fung is still waiting for the call back to work. “Our budget is really, really tight. I have no extra money for anything, only for food.” 

For now, he and his family are subsisting on unemployment benefits and his wife’s salary as a hairdresser. But his biggest concern is health insurance, which his job used to provide for his entire family of four. After being laid off, he was able to get coverage from Unite Here Local 2’s rainy day fund. When that money ran out in November, he briefly got on Covered California, before switching back to an employer-funded policy through the COBRA budget deal the Biden Administration quickly pushed through upon assuming office. Those benefits are set to expire in September. 

With more than 25 years on the job, Fung is confident he’ll get rehired eventually, though he’s concerned he might take a job from somebody else with less seniority. “I can change to another position,” Fung says. “But I’d have to bump somebody. That means I get a job and somebody lost a job.” 

Bill Fung, former Hilton houseman

Despite the slower recovery of tourism in San Francisco, hotel workers here have better future prospects than in many other cities. Thanks to the Healthy Buildings Ordinance the city passed in September, hotels are required to provide daily room cleaning services. That sets the city apart from other places, where the push to decrease labor costs has made daily hotel room cleaning a thing of the past. Unite Here estimates these changes could eliminate 180,000 housekeeping jobs nationwide, representing $4.8 billion in annual lost wages. 

In San Francisco, job cuts could come for behind-the-scenes roles like housemen, as well as food and beverage service. “We see the hotel industry looking at the airline industry as their north star,” Singh says. In other words, expect a race to the bottom on amenities. “This industry, unfortunately, is no longer the hospitality industry of Conrad Hilton or Bill Marriott, hoteliers who said the guest experience is the most important thing. This is really dominated by real estate interests that are looking to increase their margins.” 

Singh doesn’t think that’s a winning strategy for workers or guests. And he pledges the union will fight these changes as it heads into labor negotiations next year. “Our members are not going to simply lay down and be run over by these changes. The behavior that [hotels] exhibit today doesn’t portend well for labor peace in 2022, when I think our industry really does need it.” 

Unemployed workers like Fung remain disillusioned. “For many, many years, I’ve never seen the hotel do something this bad,” Fung says. “They used to say, ‘Our employees are our foundation.’… But then this pandemic happened and they only consider their money. They don’t care about the worker.”

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