Labor Troubles Beset La Jolla’s American Property Management

A San Diego hotelier who recently acquired a hotel near Los Angeles International Airport and increased workers’ minimum pay rates to meet a living wage ordinance that has yet to take effect in that city, says a coalition of nearby hotels bent on getting it repealed has threatened to try to undermine the hotel’s business.

“Since we have announced our support of the living wage increase, many of the other hotel operators and owners have called our hotel management team at the Sheraton Four Points and have threatened to not send us any of their overflow business and have also stated that we will not be a part of the convention blocks,” said Michael Gallegos, president and chief executive officer of La Jolla-based American Property Management Corp.

On Dec. 12, APMC finalized the purchase of the 568-room Four Points by Sheraton Los Angeles International Airport for $43 million, bringing to 46 the number of hotels the company owns nationwide, including three in San Diego. A week earlier, it acquired a resort in Cancun, Mexico. In all, the corporation counts 47 hotels.

But after announcing a wage hike to $9.39 an hour for the lowest paid employees, a benefits package that includes health, dental, vision and life insurance, a decreased workload for the hotel’s maids and improved working conditions in the laundry area, APMC found itself fielding calls of protest from local and state politicians as well as labor union leaders regarding 12 employees who were let go when the company changed hands.

“We never fired anyone,” Gallegos said. “When a company acquires a hotel, the seller must terminate all the employees and the buyer has the opportunity to rehire any or all of them, so those 12 were not our employees to begin with.

“We rehired more than 95 percent of the staff, but we typically place several of our personnel at a hotel both in management and in the line staff, and we also restructure and look for some efficiencies.”

The hotel has some 300 employees. Of the 12 who were let go, some had duplicate positions as those of the APMC staff members who were brought onboard, Gallegos explained. Three had been involved in attempting to organize for a local hotel workers’ union; however, he said he was unaware of that beforehand.

Meanwhile, APMC also announced it had signed a neutrality agreement with the union, meaning that it would not interfere with attempts to organize at the Four Points by Sheraton LAX.

A Change Of Heart

At first, APMC resisted the pressure to rehire the 12, but then changed its mind amid the magnitude of the labor situation , hotel employees had staged a fast in front of other hotels near Los Angeles International Airport in protest of their trying to have the living wage ordinance turned over. But on Dec. 14, Gallegos announced the hiring of the 12, with backdated pay.

In a news conference in Los Angeles, he denounced the effort by 11 other hotels and the “millions of dollars they are spending” to try to toss the new ordinance aside. It was set to take effect in January. The hotel coalition wants it taken to a vote of the public in a special election in May.

“They are on the wrong side of this issue,” Gallegos said. “Los Angeles is a very expensive city to live in, and I am embarrassed that my fellow hoteliers would rather spend millions of dollars to stop the living wage from being enacted than invest those same millions into its people. And we’re just talking about giving people enough money to exist and care for their families with the bare essentials.”

The pay hike at the Four Points by Sheraton LAX will cost his company $1 million within a year, he added.

Wages paid the firm’s lowest tier workers at its three local hotels , the Holiday Inn Sea World, the Radisson Hotel San Diego in downtown and Hotel La Jolla , range from $8.50 to $11, he said.

None of the San Diego hotels is unionized.

“There have been no attempts to organize our hotels (locally),” Gallegos said. “Most likely that is because of our pay and benefits program and the manner in which we care for our team. The average turnover rate of employees in the hotel industry nationwide is 38 percent and in our hotel portfolio it’s 16 percent.”