Strike Against Downtown Chicago Hotels Edges Toward Resolution
The Chicago hotel workers strike that began earlier this month isn't over yet, but it came closer to a resolution on Wednesday after the workers, who are represented by the Unite Here union, reached an agreement with the Knickerbocker and Ritz-Carlton hotels.
About 6,000 workers — including housekeepers, bartenders, bellmen, doormen and banquet servers — went on strike beginning the first week of September, after a previous contract expired.
The strike began against 26 Downtown Chicago hotels. Last week, the union reached an agreement with nine hotels, including Marriott properties. With the Knickerbocker and Ritz-Carlton agreements, the union still remains on strike against 15 hotels, including the Ambassador Chicago, Drake Hotel, Hilton Chicago, two Hyatt properties and the Palmer House.
Details have not been released on what the signed agreements look like (statements to Bisnow by Marriott and Unite Here simply acknowledge an agreement did take place), but the union was primarily demanding that hotels provide health insurance for workers who are laid off in winter when business is slower.
If what Trump Hotel CEO Eric Danziger said at the Lodging Conference in Phoenix this week is accurate, the relatively quick settlement on the part of some of the hotels might not be much of a surprise. For the hotel industry, labor is in short supply.
"We talk about new technology at all of these conferences, but we can turn it all off if we don't solve the labor issue," Danziger told the conference, as reported by Hotel Management. He said the industry needs to figure out how "to get and keep great people who like to provide genuine, sincere hospitality."
The Chicago strike comes at a time when the local hotel business is doing well, despite some concerns about overbuilding.
Marketwide occupancy fell slightly in 2016 with the entrance of new supply, and while demand for hotel rooms continued to increase in 2017, it was outpaced by new supply, which led to a decrease in marketwide occupancy, HVS reports.
Still, the company predicts citywide bookings will increase this year and in 2019, along with continued increases in demand from both commercial and leisure travelers.
Ultimately, new supply might not be an issue for the Chicago hotel market.
"Over the last six or eight years in coming out of the recession, we forgot what a normal growth rate in hotel supply is," Marcus & Millichap National Hospitality Group National Director Pete Nichols said. "No one was building during that period."
Now, as the market returns to pre-recession normalcy, the influx of new supply to the market really isn't an influx — it is merely a return to a normal pattern of development after a steep dropoff for a number of years, Nichols said.
"There are some markets in which you wonder how all of it will be absorbed, such as Nashville," Nichols said. "But Chicago isn't one of those markets."