How the hotel industry's lobby arm puts the squeeze on disruptors


NEW YORK — Katherine Lugar (center, above, with AH&LA colleagues) is celebrating her three-year anniversary as the CEO of the American Hotel & Lodging Association, more commonly referred to as the AH&LA. In that time, she has championed for and lobbied on behalf of the collective hotel industry, using both the carrot and stick approach—applauding legislative bills that strike at online booking scams, while censuring action that aims to put a crimp on traditional business models, such as the NLRB joint employer rule.

Through it all, the former Retail Industry Leaders Association exec has showed poise and received majority praise for her work from hotel industry CEOs and other hospitality leaders, alike.

A Uniter

One of her hardest jobs has been what she called "uniting a very fragmented industry," though she has succeeded on that, growing the AH&LA membership to some 24,000 members. "It's a wildly fragmented and competitive industry," Lugar told HOTEL MANAGEMENT, during a media conference in New York.

That's an understatement. The hotel industry has myriad stakeholders, from ownership groups, hotel companies and their brands, to third-party management companies, franchisees and asset managers. Not to mention, the lifeblood of the industry: employees. According to the AH&LA, one out of every nine jobs in the U.S. is linked to tourism. "At the heart of the industry are the team members," Lugar said.

Lugar talks media through AH&LA's 2016 goals.
Lugar talks media through the AH&LA's 2016 goals.

Wage War

So very true, yet, optically, some of the AH&LA's positions appear geared to help employers, rather than employees. Consider the AH&LA's response when The Department of Labor proposed an overtime rule that would raise the threshold of pay for salaried employees working more than 40 hours per week from $23,660 to $50,440.

“As an industry responsible for nearly 2 million jobs in communities across America, AH&LA supports policies and regulations that ensure a fair and equitable working environment for both employees and employers. That’s why today’s announcement by the Department of Labor is so disappointing,” said Vanessa Sinders, SVP and head of government affairs for the AH&LA. “The proposed changes to overtime rules will hurt our employees and severely impact small business owners, who will be unable to continue the pace of job growth that has been so vital to boosting the economy."

The AH&LA's stance is that most jobs within the hospitality industry are well above the $7.25 minimum wage and provide "accelerated pathways" to long careers. And that any drastic wage-change legislation would hurt job growth.

Meanwhile, last May, the Los Angeles City Council voted 14 to one in favor of an ordinance to increase the city's minimum wage from $9 per hour to $15 per hour by 2020—unfairly, or not, targeting the hotel industry. It, unsurprisingly, did not sit well with the AH&LA, whose bulk of contempt was aimed at the unions.

“The hotel sector is clearly the bright spot in our nation’s economy," Lugar said at the time of the ordinance. "Hotel jobs are good jobs, with high wages, benefits and the opportunity to advance quickly into a life-long career. Hotel employees are the backbone of our industry. That’s why it’s especially troubling that in cities like Los Angeles, small business hotel owners are being singled out by union-backed extreme wage initiatives that will hurt those seeking to get on the ladder of opportunity.”

Airbnb Again

Wage issues are not the only subjects keeping the AH&LA on its toes. Airbnb, one, for sure.

While the organization does not come right out condemning Airbnb—it ostensibly does—but takes a tack of attacking it on legal merit. As Lugar put it: "Unfortunately, there is a growing trend in commercial operators buying buildings and renting them out 365 days a year," she said. "There is a lack of transparency over Airbnb. There must be a sense of responsibility to protect guests, pay taxes and respect zoning."

According to the AH&LA, 30 percent of Airbnb inventory is driven by full-time operators. And 40 percent have more than two units.

Duping Customers

Another cause célèbre for the AH&LA, particularly as the summer season heats up, is online booking scams—spurious outfits that disguise themselves online as actual hotels, feasting on unsuspecting consumers who make a booking, thinking they are making a reservation at the actual hotel, when, of course, they are not.

According to the AH&LA, 15 million bookings a year are affected by fraudulent websites and call centers posing as hotel websites. This, reportedly, translates to $1.3 billion in bad bookings per year.

The AH&LA is taking action. The Stop Booking Scams Act will seek to do three things:

  1. Require third-party booking sites to have continuous and prominent notification that they are not the hotel's website, before any consumer's credit card is charged.
  2. Empower state attorneys general to pursue restitution on behalf of consumers who have been scammed and are seeking financial compensation.
  3. Require the FTC to study the scam and issue a report on the actions they are taking to address it.

Consolidation among the online travel agencies, whereby Expedia and Priceline control the majority of market share, is not making matters easier for consumers, and making it very hard for hotel companies to engage customers directly. Between Expedia and Priceline, the two spend some $6 billion per year just on marketing.

Other programs, like Expedia's Accelerator, what many call a pay-for-play model, whereby hotels can bid up their search placements, puts consumers at even more disadvantage. "This is an industry of innovation," Lugar said. "OTAs play an important role, but we want to make sure they serve guests with choice and transparency."

The AH&LA: Looking out for you, looking out for the hotel industry.