Hyatt Hotels Uses Chesapeake Lodging REIT to Unload Boston Boycott, Says UNITE HERE Local 26
Hyatt Hotels [NYSE: H] has sold its boycott-laden Hyatt Regency Boston to Chesapeake Lodging Trust [NYSE: CHSP], shifting the economic effect of the Boston-area labor dispute onto this newly public real estate investment trust, according to Bostons UNITE HERE Local 26.
Chesapeake Lodging has bought a boycott fueled by the public outrage Hyatt created when it fired approximately 100 Boston housekeepers at 3 Hyatt hotels in August, replacing them with minimum wage workers hired through a temporary agency, says the Boston hotel workers union.
“…potentially providing us with additional attractive acquisition opportunities.”
The firing of the Hyatt 100 became an international news story that has fueled a boycott that has cost the Hyatt Regency Boston almost a $1 million dollars. A significant customer representing approximately 9% of all rooms at the hotel on an annual basis has recently indicated that it may move out of the hotel as a result of the dispute.
Elected officials led by Massachusetts Governor Deval Patrick have called on Hyatt Hotels to rehire the 100 housekeepers, who faced what the Governor called “the worst nightmare of every worker in today’s weak economy” in a letter to Hyatt CEO Mark Hoplamazian. The Harvard Business Review blog posted an analysis entitled, “Lessons From Hyatt: Simple Ways to Damage Your Brand” and media outlets across the nation have chronicled Hyatt’s mistreatment of Boston housekeepers as disposable.
“Why Chesapeake Lodging would take on ownership of Hyatt’s Boston boycott as its first owned hotel is befuddling,” says Janice Loux, President of UNITE HERE Local 26. “I imagine Hyatt was supposed to be good for Chesapeake investors; instead, it looks to us like Chesapeake may be Hyatt’s dumping ground for its messy hotel problems.”
Before it consummated its initial public offering of stock in January, Chesapeake Lodging entered into a sourcing relationship with Hyatt Hotels, which it describes on its website as “…potentially providing us with additional attractive acquisition opportunities.” Hyatt Hotels, on the other hand, purchased 4.9% of Chesapeake’s shares at $18.80, below the $20.00 public offering price. In announcing this sale, Hyatt Hotels says it secured a “long-term management agreement” at the Hyatt Regency Boston.
UNITE HERE Local 26 has demanded that Hyatt reinstate the 100 fired housekeepers in its Boston hotels, and the boycott of the Hyatt Regency Boston will remain in effect as long as Hyatt operates the hotel without reinstating its fired housekeepers.
In a letter to Chesapeake CEO James L. Francis sent before the sale was announced, Loux wrote: “…the fact that Hyatt and its affiliates were offered an opportunity to purchase Chesapeake Lodging shares at a price below the public offering price brings a higher level of scrutiny to any potential transaction with Hyatt, but especially one where Hyatt attempts to sell a property burdened by a boycott of its own making to an eager hotel buyer. You have an obligation to investigate.”
