Road Warrior

Travel honchos invest in political clout to fight wage hike


To hear the travel industry tell it, tourism jobs are powering the U.S. economic recovery, creating a path back to the American Dream as the service sector's importance outpaces agriculture and manufacturing. That message, they hope, will boost the industry's political clout nationally and sap support for a higher minimum wage.

A survey released last week by the American Hotel & Lodging Association (AHLA) is the latest salvo in that campaign and asserts the hospitality industry provides "good high-paying jobs with benefits" and "flexible hours and continuing education opportunities."

Not everyone agrees. Eyebrows were raised in Los Angeles, one of the front lines of the minimum wage battle.

"I'd like to challenge anyone in the hotel industry to live on $22,000 a year in Los Angeles," said Leigh Shelton, spokeswoman for the Unite Here hotel workers union in Los Angeles. The average hotel pay there is $10.55 per hour, making it the city's biggest low-wage industry, she said.

The Los Angeles campaign seeks to raise the minimum wage to $15.37 per hour at hotels with more than 100 rooms. "That's about the minimum you could be paid and not have to rely on public assistance," Shelton said.

The wage fight comes as tourism numbers are reaching all-time highs in cities across the United States, including Los Angeles, which last year saw a record 42.2 million visitors who spent $18.4 billion, according to the Los Angeles Tourism & Convention Board.

"A lot of hotel jobs used to be full-time jobs. Now we have what some people call the casualization of the workforce," Shelton said, referring to a rise in part-time work.

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For the AHLA report, WageWatch surveyed 356 hotel management companies, representing 23 percent of the 53,000 U.S. hotels. Of those surveyed, about 25 percent of their workforce is made up of part-time employees, which Randy Pullen, the report's author said, is consistent with the industry. On average, a part-time worker in the hotel industry works 25 hours a week, he said.

Almost half of the companies said they pay at least 75 percent of their employees above the minimum wage. But the study does not address how many workers are making minimum wage, how many are making just slightly above minimum wage or work so few hours they don't qualify for benefits.

A bright spot?

With 52 months of consecutive growth, "hotel jobs and hospitality jobs remain a real bright spot in the economy, " Katherine Lugar, the president and CEO of the AHLA, told CNBC.

"The picture is just not as rosy as they're painting," said Valerie Wilson, a labor market economist at the Economic Policy Institute. "Leisure and hospitality, as an industry, they're at the bottom."

Elsewhere, Moody's Analytics pegs the average annual pay for all workers in the "traveler accommodations" industry at $32,347 in 2013, compared with the average of $52,539 for all other industries, excluding accommodations.

Although leisure and hospitality has the lowest wages of any major sector in the economy tracked by the Bureau of Labor Statistics, (BLS), that doesn't paint an entirely accurate picture of jobs in the travel industry, said David Huether, senior vice president for research and economics at the U.S. Travel Association. Travel covers not just hotels, but parts of retail, restaurants, transportation and energy and other sectors, he said.

Travel jobs tend to offer better advancement opportunities than other careers because they teaches interpersonal skills and offers lots of management options and flexible schedules ideal for people finishing college, he said.

Timothy "Speed" Levitch, a longtime New York City tour guide, agreed with that point. "I think it's a great profession," said Levitch, who was profiled in the 1998 documentary "The Cruise." But as for pay and working conditions: "Always awful. It didn't matter where I was, there was always something about the business; it's sketch."

While it does offer flexible hours, ideal for artists who need a day job, "you get angry customers. It's part of the challenge. I've been reprimanded by people on every inhabited continent in the world. It's a character builder," Levitch said.

Working eight years on a double-decker bus, his pay was generally $7.50 to $9 an hour, with no benefits. Now he's in Kansas City, Missouri, working on something more entrepreneurial, a food tour called CartWheelKC.

Shawnta Brown worked a summer job at Skyline Sightseeing in New York City, getting paid commission only to sell bus tickets to tourists.
Amy Langfield | CNBC

Shawnta Brown of Brooklyn, who took a summer jobs at Skyline Sightseeing selling hop-on hop-off style bus tickets, didn't even get minimum wage, she said. When the 19-year-old started her job, she thought it was for a salary plus commission, but it turned out to be commission only, she said.

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She said she worked about six hours a day, but didn't make nearly enough to cover rent, so she and her daughter live with Brown's mother. A few weeks into the job, she was already applying elsewhere, and questioned whether she was learning new skills. "I guess you could call it training," she said. "It teaches you to interact with people."

'Travel jobs, good jobs'

Indeed, employment in the travel sector is on the rise, increasing 2.1 percent in the first quarter of 2014 to nearly 7.7 million tourism-related jobs, according to the U.S. Department of Commerce. Travel officials bristle when pressed about the quality of those jobs.

"Travel jobs are good jobs" Jonathan Tisch, the chairman of Loews Hotels & Resorts told a packed hotels convention this summer, asserting the industry needs to speak with a strong, unified voice. His speech culled heavily from a two-year old report by the U.S Travel Association that portrays travel jobs as all-American, middle-class jobs, and says "2 out of 5 workers who first took a job in the travel industry are earning more than $100,000 per year."

Tisch, in his speech to industry executives, said they need to counter news stories that claim the good jobs before the Great Recession have been replaced with bad jobs. He touched on several of the industry's talking points: that the industry has gained back more jobs than it lost during the recession, that it is keeping jobs in the United States and bringing in foreign spending through tourism.

"Travel is at least on par in importance with agriculture," Tisch said, comparing agriculture and tourism jobs (1.8 million vs. 8 million) and exports ($141 billion vs. $180 billion.) "Some people want travel as a cabinet level post," Tisch said, continuing his dig at the U.S. Department of Agriculture and its $150 billion budget, farmer subsidies and 90,000 government employees in 7,000 offices.

That theme was expanded in other sessions at the conference. "The fragmentation in this industry has let so many people exploit it," Lugar of the AHLA said during a session on hotel industry policy issues.

'"If you're not at the table, you're on the menu," Lugar said, by way of encouraging other hotel players to beef up their political action committee contributions and court politicians by touting the industry's jobs that provide access to the American Dream. The PACs for the lodging and tourism industries have made nearly $1.5 million in federal contributions this election cycle, according to Federal Election Commission filings aggregated at the nonpartisan, nonprofit

"We've been on the defensive for five years in D.C.," said Pratik Patel, the chairman of the Asian American Hotel Owners Association, which has 12,500 members representing 20,000 hotels.

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In addition to the fight against a raise in the minimum wage, the AHLA's main policy goals are comprehensive immigration reform, renewed funding from Congress for the Brand USA campaign to bring foreign tourists to the U.S., and an extension of the Terror Risk Insurance Act, which otherwise might leave hotels without required coverage by Jan. 1, Lugar said in an interview with CNBC.

But the minimum wage battle, especially in Los Angeles, is primary, she said. For its fight against the "extreme minimum wage," the hotel industry has been working with the National Restaurant Association, the National Retail Association and the National Franchisee Association, Lugar told the hotel panelists this summer.

In June, the AHLA issued a report on the effects of raising the minimum wage. An "extreme minimum wage"—which includes President Obama's push for an increase in the federal minimum wage to $10.10 per hour from $7.25—would cause hotels an annual loss of $2.53 billion through extra wages and lost business due to the price increase, said John O'Neill, the report's author and director of the School of Hospitality Management at Pennsylvania State University. Cities and other government groups would lose $70.4 million in hotel occupancy taxes, hotels would have to cut 12,195 hotel staff positions and hotel values would decline more than $1 billion, O'Neill predicts.

To cover an increase in the minimum wage to $10.10, the price of hotel rooms would need to rise by 3.4 percent, according to the report. Based on the national average room rate of $110.33 when the report was issued in June, that translates into an extra $3.75 nightly per room, O'Neill said.

—By CNBC's Amy Langfield. Follow Road Warrior on Twitter at @CNBCtravel.