ATLANTA – Hotel owners and operators are keeping close tabs on two issues that could have a major impact on the lodging industry. The first issue is efforts by governments at the local, state and national level to raise the minimum wage. The second issue is short-term rental companies like Airbnb that operate without having to pay hotel occupancy taxes.
During the recent Hunter Hotel Conference held at the Marriott Marquis in downtown Atlanta, Matthew Maclaren, vice president of member relations for the American Hotel & Lodging Association (AHLA), told hundreds of industry professionals about the need to fight against minimum wage increases and ensure that Airbnb pays hotel taxes.
“Advocacy is our primary focus right now,” said Maclaren. “We’re working on the issues that impact your bottom line.”
Maclaren said that it’s important for the industry to share its success stories, such as the high number of hotel employees who start at entry-level jobs and go on to become managers or even run their own companies.
An important issue for AHLA is efforts aimed at raising the minimum wage. Los Angeles, for example, recently passed an ordinance doubling the minimum wage only for hotels. The city council voted last September to raise the minimum wage for hotel workers to $15.37 an hour, according to Reuters.
The federal minimum wage is $7.25. The council’s decision to raise the minimum wage is slated to go into effect on July 1 of this year, but the measure faces a legal challenge.
AHLA, in conjunction with the California Lodging and Hotel Association and the Asian American Hotel Owners Association, filed a lawsuit in December 2014 against the measure in an effort to prevent it from becoming law, and is expected to hear the results of that suit sometime in April.
The groups have also taken the Los Angeles City Council to task directly and fought the battle in the media. Maclaren vowed to continue the fight against raising the minimum wage regardless of the outcome of the lawsuit.
AHLA for now has successfully halted a proposed minimum wage hike in San Diego, but was unsuccessful in fighting wage increases in Seattle and Chicago.
Eight out of 10 jobs in the hotel industry already pay above minimum wage, according to AHLA. Among those jobs that pay minimum wage, 80 percent are eligible for a raise within one year and 100 percent are eligible for a raise within two years.
AHLA is hoping to turn the tide, or at least discourage other local governments from trying to raise the minimum wage for hotel employees.
The organization also is engaging the National Labor Relations Board (NLRB) as the board considers whether to hold franchisors responsible for the actions of franchisees. The NLRB is considering whether McDonald’s Corp. is defined as a joint employer with its individual franchisees, according to media reports. If the board rules McDonald’s is a joint employer, McDonald’s could be held responsible for pay, working conditions and worker’s rights violations at individual franchise locations.
“NLRB wants to hold McDonald’s responsible for the actions of its franchisees,” said McLaren. “Our fear is that if they can do it with McDonald’s, there’s little stopping them from doing it with franchisors in the hotel industry.”
Maclaren said the idea of holding franchisors responsible for the actions of franchisees runs counter to how the franchise model was originally set up. AHLA has reached out to Congress in an effort to fight the legislation.
A conflict between McDonald’s and labor unions prompted the issue being brought before the NLRB. The board may not decide on the case until 2016 or later.
Airbnb and hotel taxes
Airbnb and other companies who offer short-term rentals booked online currently are exempt from paying local hotel taxes, also known as occupancy taxes, in most cases. These taxes range from around 5 to 15 percent of the listing price, according to Airbnb’s website, Airbnb.com.
Airbnb users also do not have to be licensed, according to Maclaren.
“Companies such as Airbnb are currently playing outside of the rules,” said Maclaren. “ In New York City, companies are taking entire apartment buildings and using them most of the year just like a hotel room.”
AHLA is working with local governments in cities across the country to require that short-term online rental companies pay occupancy taxes.
The Tennessee Legislature is considering a bill that would require statewide licensing to be paid by short-term online rental companies. If the bill passes, it would make it easier for AHLA to work toward getting similar bills passed in other states.
A second advantage is the issue could be tackled at the state level, rather than at the municipal level, where there are many more individual governments.
— Haisten Willis