What will happen to undocumented workers? Hotels wait and worry

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American Hotel & Lodging Association CEO Katherine Lugar at the Americas Lodging Investment Summit.
American Hotel & Lodging Association CEO Katherine Lugar at the Americas Lodging Investment Summit.

LOS ANGELES -- The fate of many immigrant hotel workers was a big topic of conversation at the Americas Lodging Investment Summit (ALIS) here.

Hotel operators, investors and analysts feared that potential deportation of hundreds of thousands of undocumented immigrants would drive up labor costs and reduce profit.

While the mood among the approximately 3,000 attendees at the conference was generally optimistic because of the good economy and President Trump's corporate tax cut, the fate of the expiring Deferred Action for Childhood Arrivals (DACA) program was worrisome.

Wyndham Hotel Group CEO Geoff Ballotti called it the hotel industry's top issue.

"Labor's always been our No. 1 issue. It becomes all the more important right now. I think everyone in the industry wants to see that resolved and resolved quickly," said Ballotti, who is the vice chair of the American Hotel & Lodging Association, the U.S. hotel industry's trade group.

Alex Tisch, Loews Hotels & Co.'s executive vice president of commercial and business development, said, "I'd like to see it play out where it comes to a reasonable solution for a lot of good employees."

The potential impact of DACA's expiration may be particularly acute for the hospitality industry.

The hospitality, retail and construction sectors accounted for almost half of the 1.3 million immigrants that were eligible for DACA status when President Donald Trump said he was dismantling the program last September, the Washington Post reported last September, citing a study that national business coalition New American Economy performed for the newspaper.

Aimbridge Hospitality CEO Dave Johnson said hotels "need more employees to clean rooms and work the kitchens."

"It's getting tough," he said. "We need some kind of immigration reform. We need those employees."

Speaking on a panel at ALIS, Susquehanna Financial Group senior lodging analyst Rachael Rothman estimated that labor accounts for as much as 35% of full-service hotel costs. And those costs stand to increase if more immigrant workers are deported, especially if the U.S. unemployment rate remains low. It was 4.1% last month, when California, Hawaii and Mississippi had their lowest unemployment rates in more than 40 years.

"We have a country that's not so open to immigration," said ALIS panelist Michael Barnello, CEO of LaSalle Hotel Properties. "With this level of unemployment, the people who don't have jobs don't want jobs."

DACA launched under the Obama administration in 2012. Marriott International, the world's largest hotel operator, immediately pledged its support for the program, saying at the time that it would "remain committed to working with Congress on broad immigration reform efforts and call on members to urgently pass the DREAM Act or other legislation to provide the certainty and permanent solution that DACA individuals deserve to remain valuable contributors to our society and economy."

While declining to comment specifically about the debate over DACA, Tisch said he would "like to see the historical norm remaining in place."

Ballotti also declined to elaborate on the pros and cons of DACA. He did say he was "optimistic" that the Trump administration would resolve the issue shortly.

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