Kimpton Losing Hotels Over Union Issues

Late last year IHG announced they would purchase Kimpton in a $430 million deal.

It was a smart move on IHG’s part, at least in theory. Kimpton has a really unique position in the market, with several dozen US boutique hotels. Their level of guest satisfaction is through the roof, because they truly do things differently. I know I’ve certainly enjoyed my Kimpton stays.

So when the IHG takeover of Kimpton happened, the obvious question was “what impact does this have on Kimpton?” That applies both in terms of the actual guest experience, as well as the Kimpton Karma Rewards program, which is quite unique. Is there a way Kimpton can join the world’s largest hotel chain while still maintaining their identity?

Kimpton-InnerCircle-Welcome-Amenity

Well, unfortunately it looks like the answer is no. At least that’s what many of the individual hotels seem to think.

Over the past several months, seven of the nine Kimpton properties in San Francisco have decided to leave the chain.

Here are Kimpton’s San Francisco properties a few months ago:

Kimpton-1

And here are Kimpton’s San Francisco properties now:

Kimpton-2

San Francisco was Kimpton’s single largest market, so seeing more than three quarters of their hotel leave in a short period of time is rather troubling.

What’s causing Kimptons to leave the chain? Via HotelChatter:

More Kimpton hotels to be rebranded in the weeks ahead to avoid become unionized. IHG’s local union contract requires any new IHG properties go thru “card check”, and the union came a’ knockin’. Lasalle and Pebblebrook own almost every Kimpton Hotel in SFO, so Kimpton will only be left managing the Buchanan and Sir Francis Drake, which are already unionized.

Basically seven of the nine San Francisco Kimpton properties have left because IHG requires properties to vote on unionization, and that’s something the individual hotel owners weren’t up for. So they decided to leave the chain altogether.

That’s a pretty bold move. In many cases the hotels are being renamed, so they’re losing all the brand equity they’ve built up over the years. For example, the former Hotel Monaco (one of the better regarded Kimpton properties in San Francisco) has been rebranded independently as The Marker San Francisco.

What’s the perspective of UNITE HERE on the transfer?

LaSalle Hotel Properties [NYSE: LHO], Pebblebrook Hotel Trust [NYSE: PEB], and InterContinental Hotels Group [NYSE: IHG] have moved in recent days to transfer management of seven San Francisco properties away from the Kimpton Hotels portfolio. UNITE HERE Local 2 issued the following statement addressing these actions:

During the past five weeks, LaSalle Hotel Properties, Pebblebrook Hotel Trust, and InterContinental Hotels Group have taken extraordinary steps to evade contractual commitments pertaining to hotel employee organizing rights in San Francisco. This has created a climate of uncertainty and disruption at seven prominent San Francisco hotel properties. The city’s hotel workers union, UNITE HERE Local 2, denounces the move and calls on the three companies to reverse course and to honor their contractual obligations.

On June 17, 2015, UNITE HERE Local 2 requested that IHG uphold its contractual commitment to remain neutral in the event of union organizing drives at seven hotels newly managed by the company through its recently-acquired subsidiary, Kimpton Hotels & Restaurants. Three weeks after sending the request, Local 2 learned that operation of these hotels – three of which are owned by LaSalle and four by Pebblebrook– was to be transferred to new management companies. Among the affected hotels are the first Monaco-branded and the first Palomar-branded properties in the Kimpton chain.

Bottom line

These are certainly interesting times, and bold moves on the part of the companies which own the individual properties. This is a huge loss for Kimpton, and you have to wonder whether they anticipated this happening when the IHG takeover occurred. Individual hotels leaving a chain they were otherwise happy with and going independent is really, really bold, so they must have felt strongly about these union issues. And in a way it’s a bit surprising, since Kimpton has always been known for having amazing staff, so isn’t a chain you’d typically associate with union issues.

In just a few months Kimpton has gone from “65+” properties…

Kimpton-IHG-1

…to 59 properties.

Kimpton-IHG-2

I guess now we’ll see if any other properties leave Kimpton as well.

Are you surprised by the losses to the Kimpton portfolio as a result of the IHG takeover?

(Tip of the hat to LoyaltyLobby and Travel Codex)

Comments

  1. As an Inner Circle member, this news was shocking and disheartening, especially since I am a huge fan of the (former) Palomar in SF. That being said, IHG must have done their due diligence and their legal must have anticipated potential risks in advance of closing the acquisition, so they must have known this was a possibility.

  2. I’m a big Kimpton fan and have been an IC member for years. About 2/3 of my stays have been in SF (and in the Silicon Valley hotel they also just lost recently). It’s very, very sad. Kimpton is basically over for me now. The Sir Francis Drake is mediocre and impersonal, and the Buchanan is inconveniently located. This is so sad — almost like losing a family member. I’ll never be able to make IC again now, and without it I might as well just stay at any random boutique hotel. Please, Kimpton, find a way to fix this!

  3. As an IC member, I am very disappointed. I’ve been fortunate to have experienced most of the hotels in SF and they were wonderful. Suffice to say that I would not have stayed there had they not been Kimpton. This is no win situation for both Kimpton and the hotels.

  4. The two owners of those 7 hotels must be militantly anti-union and know that they really don’t treat their employees very well to not even allow a vote. If their employees were happy with the status quo and they knew that, then they would not have to worry about a union vote, they would be able to easily defeat a unionization effort. This is neither IHG’s nor Kimpton’s fault, this decision is exclusively at the responsibility of the two owners of these properties.

  5. “seven of the nine San Francisco Kimpton properties have left because IHG requires properties to vote on unionization” is simply not correct.

    For those who don’t know, card check is much different from a simple union/no union election. The latter is secret ballot, and employees can vote as they wish. Card check involves a public attempt to harass, intimidate, threaten, and possibly coerce employees to vote in favor of unionization out of fear.

    From the US Chamber of Commerce, via Wikipedia:

    “Under the existing law today, workers have a chance to vote for or against unionization in a private-ballot election that is federally supervised. Under Card Check, if more than 50% of workers at a facility sign a card, the government would have to certify the union, and a private ballot election would be prohibited–even if workers want one.”

    That’s precisely why the unions don’t want to settle for a secret election, and precisely why the management companies don’t want to be forced into a card check situation.

  6. Exactly right. Card Check is a disgraceful practice that allows the union goons to intimidate the employees into voting for unionization. Kimpton is consistently rated as one of the best companies in America to work for. As you say, Robert, if they really want a union then a secret ballot will yield that fact.

  7. It’s not uncommon to hear the drums and bullhorns of the SF hotel union picketing a downtown hotel. It has a reputation of being an aggressive union. I’ve often wondered why SF hotels are so much worse than hotels in NYC (in particular Hyatts), but no idea if there is a correlation. I’d say in general, service is worse at union hotels in SF, not necessarily rude, but often just indifferent.

  8. I see each of these hotels joining one of the myriad “boutique/lifestyle” brands when their contractual requirements are over.

  9. This is unfortunate, but surely management at ihg must have anticipated some of these losses; however, this really guts their SF portfolio. As others have said, card checking is more like how elections were run in the Soviet Union. This is why the large national unions like it. I can’t speak for labour relations at the hotels in question, but if staff feel that in general they are well-treated by management, both sides are likely happier not to have life disrupted by an outside union. Remember, if things really are bad, the workers could still unionize — just through the more democratic method of secret balloting.

  10. I have NOT been to a Kimpton, but I think any establishment not treating their employees well would have a very hard time providing the customer service the Kimpton patrons seem to experience. A company treating their employees poorly usually cannot keep the best employees and overall service suffers. These is seemingly not the case with the Kimpton hotels.

    It is entirely possible union rules would actually curtail some of employees’ abilities to go out of the way to provide good service. I have seen many cases where a problem could easily be rectified, but the employee were bound by union work rules, and could not assist even when they wanted to.

    It could also lead to higher wages (naturally CON to some extent from the business POV). Probably about enough to cover the union dues.

  11. Previous commenters are correct. With card-check recognition, which is not a vote, and employer neutrality, unionization is certain. What is unclear is if once unionized the Kimpton hotels would be accreted into an existing bargaining unit and labor contract or if they would negotiate new terms and conditions of employment for the affected employees. It is also unclear what IHG was buying. If IHG assumed these hotels were part of the consideration for the $430 million it paid, then IHG should be upset about their leaving, too.

    Maybe some of these properties could join the Starwood Tribute Portfolio. I haven’t heard of new hotels being added to this brand since it was announced a few months ago.

  12. I had just gotten a status match to IC back in May, anticipating 5-6 stays a year at the Palomar SF, 2-3 at 70 Park in NYC, and 2-3 at the Palomar Phoenix. With the SF properties gone, retaining IC is virtually impossible for me. I’ll still stay at the Palomar Phoenix due to location, but I’ll go back to the Grand Hyatt in NYC. I may still stay at the Palomar/Xenon in SF as it’s location is ideal for me for getting to the East Bay, and the Hyatt Embarcadero is often way more expensive and extremely dated.

    I think it’ll be interesting to see what these 7 hotels do. They’re all independent right now, but I could see them joining one of the more looser alliances with Marriott or Hilton if there is no similar union requirements. Or, I could see them forming their own management alliance and brand.

  13. “in a way it’s a bit surprising, since Kimpton has always been known for having amazing staff”

    How is it the least bit surprising? They have amazing staffs partially (not completely, but partially) because they are able to fire and hire, discipline and reward without the shackles of a union.

  14. Try to look at all sides and maybe talk to the line level employees around the country.
    It be nice to know if they “Kimpton “shared some of their good fortune with their employees.

  15. As a union employee in New York City, I joined the union in a “card check” vote in which 98% of employees voted to certify the union. I can assure you there was no coercion on the part of the union and my colleagues and I enjoy competitive wages, benefits and working conditions. Union hotels in New York City enjoy greater labor peace quite simply because wages are higher, working conditions are better and hotel managers know better than to fight the union here. I am proud to offer excellent service to our guests and enjoy a living wage (well above the prevailing wage in San Francisco, even when adjusted for cost of living) as a result of the relative strength of the New York local.

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