The Hospitality Industry Under the Trump Administration

Reasons for Optimism

By Dana Kravetz Managing Partner, Michelman & Robinson, LLP | August 06, 2017

Pro-employer stars are aligning in Washington, D.C., that can only benefit the hospitality industry. What began with President Donald J. Trump’s appointment of conservative Alexander Acosta as the United States Secretary of Labor, has been followed by his nomination of Republicans Marvin Kaplan and William Emanuel to fill vacancies on the National Labor Relations Board – moves that are decidedly a boon to business. Under Secretary Acosta, the Department of Labor withdrew guidance put in place by the Obama administration on the joint employment issue, a positive step for hotel and resort owners, operators and franchisors. If confirmed, Messrs. Kaplan’s and Emanuel’s presence on the NLRB is certain to lead to the unraveling of various labor-related actions also deemed unfavorable to employers, hoteliers included.

Add to this the anticipated decision by the U.S. Court of Appeals for the District of Columbia Circuit in Browning-Ferris Industries of California, Inc. (BFI) – by which the court may reverse course on the current union-friendly standard for determining joint employment status under the National Labor Relations Act – as well as the recent introduction of a bill in Congress to limit the definition of joint employment under federal wage and labor law, and there can be no doubt that the labor-leaning tides in D.C. are shifting indeed.

By virtue of the changing of the guard in Washington – including a reshaped NLRB – joint employer liability and a breadth of associated union issues are squarely in the crosshairs of an administration bent on giving employers a leg up. Good news for those in the hospitality space to be sure, as is President Trump’s undeniable interest in hotels and resorts. But as a practical matter, how will the landscape change for hoteliers, particularly when current pro-employer sentiments in our nation’s capital are held in check by state and local activism that serves to protect employee interests?

Rescission of Obama-Era Guidance Defining Joint-Employers

The Labor Department’s rollback of guidelines established by the Obama administration to determine when companies are joint employers of contract and franchise workers – the first change of labor policy under President Trump – was not unexpected and is a great indicator of things to come. The move narrows the previous joint employment standard that took into consideration a worker's level of "economic dependence" on a company and subjected franchisors to lawsuits even when they were not responsible for setting working conditions. In the wake of the DOL’s action, these companies are once again deemed joint employers only when they have a role in hiring, firing and wage and supervision decisions – a cause for muted celebration among hotel and resort owners and operators.

Full-fledged cheers would be premature because the withdrawal of the guidance does not affect the NLRB’s expansion of joint employment liability as articulated in BFI, which drastically eased the criteria for a company to be considered a joint employer. In lieu of the longstanding and traditional joint employer test that focused on governance, wage and supervision decisions and control, the NLRB in BFI adopted a much more lenient standard requiring that a business merely exercise "indirect" (or potential) control over workers to be held liable for labor violations committed by franchisees and contractors. However, given the political winds blowing at the moment, the position taken by the pre-Trump board in BFI will likely be short-lived.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.