Given the power, hotel execs would relax regulations
Given the power, hotel execs would relax regulations
09 FEBRUARY 2017 10:04 AM

We posed the question to hoteliers: What government regulation would you change if you could? 

LOS ANGELES—Hoteliers in the U.S. gained some measure of confidence with the inauguration of President Donald Trump—a hotel owner himself—that a federal government more favorable to business had emerged. Still, a president has limited power when it comes to setting policy, or changing the rules, and the pace of such a shift is often slow.

As a result, some uncertainty lingers—here and around the world—over regulations that affect how the hotel industry does business. Those include a National Labor Relations Board ruling in 2015 that redefined joint-employer status to include franchise companies, proposed legislation that would more than double the federal minimum wage, and a U.S. Department of Labor rule (in limbo after a federal judge’s ruling to delay its implementation) that would increase the number of workers eligible for mandatory overtime pay.

And regulations are not a concern limited to the U.S. In the United Kingdom, the rules for doing business are changing with the rise of a nationalist movement that culminated with a vote to exit the European Union.

With all of that in mind, Hotel News Now editors caught up with hotel executives during the Americas Lodging Investment Summit in Los Angeles recently and asked: What regulation would you change or eliminate if you had the power to do so?

Here’s what they had to say about the current regulatory environment, what it means for the industry, and what changes they would like to see:

Geoff Ballotti, president and CEO, Wyndham Hotel Group
“The (National Labor Relations Board’s) stance right now on joint employer, which effectively takes out of the hands of very capable and proud owners and operators the ability to be in charge of their employees and put it back to their franchise company. … There’s no issue for the Asian American Hotel Owners Association that ranks above joint employer right now in terms of getting that changed. What we’re hearing from all sides of the aisle is what most likely will happen is the politicized nature of the NLRB will be depoliticized and that it will be something that will come up for discussion not right away but by the middle of the year as repealable.”

Oliver Bonke, chief commercial officer, Loews Hotels & Resorts
“In general, striking a healthy balance between running a profitable business—where you have the ability to make profitable business decisions, (while) at the same time fulfilling your responsibility against a broader set of social consciousness—is the right balance. We as a company are a conservative, long-term-hold equity investor, and at the same time, we’re a company with deep roots in philanthropy and in caring for our neighborhoods where we do business. For us, this balance is extremely important. Leaning too far one way or another is not good for long-term business. I welcome a review of legislation, and I welcome stress-testing the things that have been on the table to find what is the right balance for issues like minimum wage and healthcare. … There’s been almost four to six years of stagnation, bumping up against a divided Congress. This notion of review and stress-testing is good.”

Anthony Capuano, chief development officer, Marriott International
“I’m a developer; I’m the eternal optimist. But there’s a lot we worry about: Broad macro challenges, slowing GDP growth in China and the potential ripple effect. While there are things to be optimistic about in this administration, there are things (we worry about). What would the ramifications be of trade wars? A tightening of borders? We worry about those sorts of things. We worry about terrorism, and the human toll that takes, as well as the business impacts of these events. We worry about all that.”

Justin Knight, president & CEO, Apple Hospitality REIT
“The biggest challenges we as an industry have from a regulations standpoint are not necessarily national regulations. Those regulations I would most like to see repealed are hotel-specific regulations related to labor and wages in specific markets—regulations that unfairly discriminate against hotels specifically and create a disadvantage for hotels in a specific market would be the most onerous. Generally speaking, an environment with less regulation could spur business development.”

Fredrik Korallus, CEO, Generator Hostels
“Brexit, to us, is not an issue. Our headquarters are in London, we earn in Euros, so in one way, with the pound being devalued, our overheads are lower. Our travelers are global, so open borders for tourism is critical. Then I would say in general, I believe in less regulation. We operate in 10 different countries, so wherever regulations can be simplified and made more business-friendly and more investment-friendly is good.”

Sam Nazarian, chairman and CEO, SBE Entertainment Group
“We have great relationships with our union folks, but we’d like to see how we could look to the future of our amazing associates and employees that we have. How can we make it a win-win where we can reinvest in food-and-beverage areas, specifically, at hotels that have seen a better day and create more jobs? We did economic studies when we opened in Vegas, and there we worked hand-in-hand with the culinary unions. So how can guys like me who acquire hotels like the Hudson or the Royalton, where we want to reinvest, work in a better way? And union leadership all wants to do the right thing, too, so how do we get to the table and create a new paradigm?”

Patrick Pacious, president and COO, Choice Hotels International
“The joint-employer issue is something that really has (franchisees) scratching their heads. Franchising has been around for 50 years, and for the National Labor Relations Board to start to redefine that doesn’t make a lot of sense. We do feel optimistic that that’s going to head back in the right direction. And some of the overtime rules were imposed too quickly, and they really didn’t give people the chance to sort of walk their way through it. But I also think on the distribution front (there are some) issues around fairness to consumers with rate parity issues. Consumers are not being exposed to the best price always because of some of the rate parity issues that are existing in some of the agreements. I think from a regulatory perspective, creating a level playing field in a lot of these areas is what we’d hope to see.”

Richard Stockton, CEO, Ashford Hospitality Prime
“I would definitely have a very close look at Airbnb. I think that allowing a loophole in regulation that suggests someone can go out and buy a number of vacant condos and then essentially operate a hotel company through an internet distribution network seems to not be correct. It seems to be somehow the regulation has failed to capture that circumstance. … I’m all for the sharing economy and knowledge economy and connecting people and everything else, but not at the expense of the safety of people. That’s where I think there needs to be more scrutiny.”

Let us know your response to the question in the comments below.

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