President Obama drops time bomb on troubled US hotel industry


Times are rough for the hotel and hospitality industry, and they’re about to get dramatically worse. Tourism crisis insurance becomes more and more important for anyone operating in the global travel and tourism industry.

The next time you’re at an industry convention, shake the hand of the person on either side of you – chances are good that one of you may not come back.

The latest bomb with potential to rock the industry comes from the Obama administration. US President, Barack Obama, has mandated that all employers with 100 employees or more must submit a detailed report outlining salary information on employees, broken down by race, gender and ethnicity.

The motive is a good one – Obama is attempting to bring transparency to glass ceilings and wage discrepancies. While it’s a cause everyone can support, the practical implications will create a massive migraine for the hotel industry.

Let’s recognize a politically incorrect stereotype: hotels tend to hire ethnic minority females as housekeeping staff. The stereotype exists for a reason – people imagining a hotel housekeeper will think of a Hispanic woman, simply because very large percentages of housekeeping staffs actually are Hispanic females.

There are reasons for those stereotypes. But whether those reasons are good or bad, hotels will be forced to admit that they have a very dramatic wage gap – not just on gender lines, but along racial and ethnic lines as well.

Hotel managers – if you were scared of TripAdvisor ratings, equal pay transparency will give you nightmares.

Let’s be blunt: when the media discovers that the local Westin/ Hyatt/ Marriott pays Hispanic women only 25% of what it pays Caucasian males, there will be devastating headlines.

Special interest groups will have renewed interest in ugly truths. Conventions will relocate, either due to public pressure or out of a spirit of wanting to do the right thing.

For the hotel industry, the timing couldn’t be worse. This is an industry that is on its back foot to start, thanks to the disruptive nature of AirBnB – which in only a few short years has become the largest ‘room-seller’ on the planet. An entire generation of traveler is learning that you don’t NEED to stay in a hotel in order to sleep in a new city.

Add to that a completely useless worldwide travel advisory issued by the US State Department, thanks to the global threat of terrorism, and the headache stew just keeps getting worse.

Thankfully, there are some easy solutions. The solution depends on which of the three groups of hotel providers you belong to.

The first pool of operators we call the denial pool. Some providers are going to inevitably dive headfirst into that denial pool. There can be no problem as long as they pretend there are no problems – after all, “people will always complain about something. Right?” Unfortunately, you can say goodbye to those hotel operators first, because they’re about to discover the pool is empty. That headfirst dive will result in a broken neck.

Then there are the ‘mushy middle’ providers who are afraid of the results. Some will send out internal memos. Some will craft tone-deaf denials. Some will do everything they can to obfuscate, bury and hide. These are the ones paying SEO firms to bury Google results (with only limited success) and suing third party review sites.

Then there is a third group of providers – a small, elite group – who recognize a dangerous opportunity for being exactly that. An opportunity.

Really smart providers are going to get out in front of this as soon as possible. If the numbers are ugly, they’ll have put some genuine thought, and crafted a response as to why.

Elite operators will be making plans to sit down with stakeholders and third party groups, so that there are no ugly headlines. It may hurt, but relationships will be strengthened and alliances forged, despite harsh realities.

The next 18 months are going to be ugly. But the saving grace is that you can see it coming. What are you doing to get ready?

Jeff Chatterton is the creator of the world’s first crisis communications insurance product.

Chatterton is also the President of Checkmate Public Affairs Inc., a crisis-communications firm dedicated to serving the international travel and tourism