Just three years ago, the hotel industry was "very
fragmented" and had "little to no political capital," according
to PwC hospitality industry leader Scott Berman. Now, through the work of the
American Hotel & Lodging Association, the Asian American Hotel Owners
Association and the U.S. Travel Association, that has changed. The industry has
a clearer agenda, and it's spending far more in Washington to move that agenda
forward.
Between 2013 and 2016, AHLA increased its annual lobbying
spend in Washington by 83 percent from $1.3 million to $2.4 million, the
highest level in the organization's history, according to data gathered by the
Center for Responsive Politics, a nonprofit that tracks campaign contributions
and lobbying money. That figure does not include AHLA's lobbying spend on state
or local levels or campaign contributions made by its political action
committee. During that same time span, USTA grew its federal lobbying spend 21
percent to $2.3 million and AAHOA increased its spend by 212 percent to
$250,000. While the lodging and tourism industry's $12.6 million lobbying spend
last year was dwarfed by airlines' $86.6 million, the increase from 2013 still has
given hoteliers a seat at the table to weigh in on policy issues that threaten
travel to the U.S.—or their own interests.
In his opening remarks at the recent New York University
International Hospitality Industry Investment Conference, event chair and Loews
Hotels CEO Jonathan Tisch called on industry leaders to "take action now
to ensure today's uncertainties don't turn into tomorrow's next lost decade of
travel." Tisch outlined the way the travel industry previously came
together to fight for the Travel Promotion Act of 2009, which led to visa
reform, an improved customs and entry process and Brand USA, a destination marketing
organization for the U.S.
He said the industry now needs to unite once more to save
Brand USA, which is on the chopping block in President Donald Trump's most
recent budget proposal, as well as to fight anti-travel policies and to shape
the administration's plans around infrastructure.
Joining with "the Enemy"
A powerful symbol for industry unity emerged following Tisch's
remarks. Hotel investment conferences, in particular, often lead to a glut of
discussion about the ways online travel agencies harm the hotel industry;
hoteliers pay Expedia and Booking.com far higher commissions than their airline
and car rental counterparts do. But in one of the NYU conference's first
general session panels, Hyatt Hotels Corp. CEO Mark Hoplamazian, AccorHotels
CEO Sebastien Bazin and Park Hotels & Resorts CEO Thomas Baltimore shared
the stage with Expedia CEO Dara Khosrowshahi. "The reality is, [Expedia's]
market cap is actually higher than most hotel companies and they are a
formidable player," Berman said. "So the message is: They're a
formidable partner too."
Khosrowshahi said in a press meeting later that the company
is spending more time trying to advance policies in Washington. "Coming
together and having our voices heard in this administration is vitally
important," he said. "Travel is a very, very strong economic driver. Our
voices need to get louder and louder to protect our customers and protect our
family."
Key Hotel Industry Agenda Items
Labor
Labor continues to be the single biggest threat to hotel
industry profit margins, making it the No. 1 action item for the industry. CBRE
Hotels director of Americas research information services Robert Mandelbaum
previously told BTN that labor comprises 45 percent of a hotel operator's
expenses. Hotel executives said in January at the Americas Lodging Investment
Summit they hoped the new administration would roll back Obama-era labor
initiatives that added to potential labor expenses by expanding overtime pay
rules, requiring health care coverage and increasing liability for hotel
companies through joint employer standards.
Franchise-based companies won a small victory this month
when the Department of Labor altered its prior guidance, issued during the
Obama Administration, on the joint-employer aspect of the Fair Labor Standards
Act. The guidance potentially made franchisors liable for any misdeeds
committed by franchisees and the workers they employed, and AHLA and AAHOA spent
hundreds of thousands of dollars combined last year lobbying to change it. The
National Labor Relations Board, an independent federal agency aimed at
protecting the rights of private sector employees, still maintains its
Obama-era guidance on joint employment, and it remains to be seen if and how it
will change.
Airbnb & Its Counterparts
The AHLA grabbed headlines in April when The New York Times
got ahold of documents that the organization presented to its board in late
2016 and early 2017 outlining the success it had already had in combating
Airbnb on the local, state and federal levels and the plans it had mapped for
future fights.
While some hoteliers have been clear about the threat they
believe Airbnb poses to the industry—Best Western Hotels & Resorts CEO
David Kong said
in January Airbnb could be more harmful and more impactful to the industry
than OTAs have been—AHLA maintains that its fight against Airbnb and providers
like it is about creating a "fair playing field" that "reins in
illegal hotels." Though Airbnb has worked with municipalities across the
U.S. to begin to remit and collect occupancy taxes on behalf of its hosts, AHLA
maintains that those taxes don't compare to what hoteliers and bed-and-breakfast
owners pay, nor does it make Airbnb subject to the ever stricter regulations
being placed on the lodging industry around issues like compliance with the
Americans with Disabilities Act, another lobbying area for the AHLA and AHOA.
Khosrowshahi said that while he doesn't necessarily buy into
the hotel industry's argument that Airbnb leads to a lack of affordable housing
in major cities like San Francisco, he does believe in the idea of a level
playing field and thinks constructive, commonsense regulations designed to
protect and benefit the customer are needed. "Anytime a new business forms
in a marketplace, regulations have a tough time catching up," he said. "This
is a new product that consumers want. Let's not try to block it." Expedia
does own HomeAway, a player in the home rental space, but its properties more
often are located away from urban markets.
With Airbnb continuing to grow—it reached a $31 billion
valuation in March and turned profitable in 2016—there is little doubt that
AHLA will continue to throw its funding toward fighting Airbnb and others like
it, both through regulatory efforts at every level of the government and
through studies
that attempt to outline the impact of short-term rentals.
OTAs
Despite any Kumbaya imagery conjured on the NYU conference main
stage, AHLA is still putting its weight behind regulations targeting OTAs.
Berman said the property owner community, in particular, sees fighting OTAs as
a priority because they're the ones facing the high commissions on bookings made
through OTA channels.
In its 2017 policy guide, AHLA argued that increased OTA
consolidation limits options for the consumer. "Seventy-five percent of
consumers don't realize that when they go to any number of the OTA sites, that
they actually go up to the same two companies," said AHLA president and
CEO Katherine Lugar at the NYU conference. "Consumers want choice. They
also want transparency."
The association is pushing back against what it calls "deceptive
marketing practices aimed at manipulating travel and hotel search results."
That touches on the OTA practice of "dimming" certain hotel content,
which happened
to Hilton last year, or giving higher placement in search results to hotels
willing to pay more.
One piece of legislation to keep an eye on this year is the
Marketplace Fairness Act of 2017, which would give each state the right to
collect the sales and use taxes they're owed from out-of-state businesses and
online retailers, such as Expedia. Michael Enzi, a senior Republican senator
from Wyoming, introduced the legislation. He also sponsored a similar bill in
2015, for which AHLA lobbied. The AHLA PAC also contributed to Enzi's senate
campaign in 2014, according to records from the Center for Public Responsiveness.
Infrastructure
While worrying about U.S. infrastructure isn't part of AHLA's
2017 policy agenda, it is key for USTA, of which many of the major U.S. hotel
companies are also a part. The organization has already spent $650,000 in 2017
on lobbying in Washington for such infrastructure issues as transportation;
aviation, airlines and airports; and roads and highways.
During his conference remarks, Tisch spoke to a particular
need to update the radar-based U.S. air traffic control system: "After
all, I think, and probably you agree, that the technology directing our planes
should be at least as sophisticated as the GPS system being used by your Uber
driver."
This month, Trump threw his
support behind plans to put ATC under nonprofit control. However, the
specifics behind the president's pledge to put $1 trillion toward updating U.S.
infrastructure remain murky even after he revisited the topic more recently. It's
likely USTA intends to be a strong voice in Washington to shape how those plans
proceed.