Hyatt Does Damage Control After Firing Housekeepers

by lisa ~ October 5, 2009

Oct. 5, 2009 - The firestorm that was ignited when Hyatt Hotels Corp. fired 98 non-union housekeepers and replaced them with lower-paid workers from a subcontractor continues to flare more than one month later. This comes at a particularly crucial time as the chain prepares to sell its stock to the public.

Perhaps the privately held, Chicago-based company figured the lay-offs would go unnoticed as the national unemployment rate careens toward 10%. But in notoriously liberal, strenuously pro-labor Boston, that was unlikely.

After a front-page article in the Boston Globe, the whole world believed that the housekeepers had been tricked into training their replacements. Then the largely immigrant staff, some of whom had been on the job more than 15 years, were fired from their $15-per-hour jobs. In their places, Hyatt brought in a contract staffing company that paid its workers $8 per hour.

Now Massachusetts Gov. Deval Patrick is urging state employees and agencies to boycott Hyatt facilities. Hotel union Unite Here Local 26 is organizing demonstrations and vowing to pressure Hyatt’s biggest customers.

It’s all but certain that Hyatt is managing this crisis on its own, without any external communications experts, judging by its public statements. Since the news broke, privately held Hyatt has issued no fewer than four press releases in response to the negative news, each with an increasingly conciliatory tone.

The first press release came one day after the Globe article. Three days later, it announced “the formation of a task force to provide additional support to the 98 Boston-area Hyatt employees affected by the recent restructuring of the hotels’ housekeeping services. In support of their transition to new jobs, the program will include extended healthcare coverage and retraining assistance tailored to the situation of each individual.” Two days after that, in response to the governor’s threats, it announced that more lay-offs might be necessary.

Then, one week after its first press release, Hyatt promised that all of its laid off housekeepers would be offered new full-time positions by one of its sub-contractors. Despite the agreement that their pay scales and health benefits would be extended, many of the housekeepers have refused the aid.

The matter has now rippled across the national landscape. Ellen Ruppel Shell, a correspondent for The Atlantic, claims that Hyatt fired the housekeepers in order to install temporary foreign workers under the contract, even going so far as to apply for H-2B visas for them.

Hyatt protests that the decision to fire the housekeepers was made in Boston, not at the national level. Nevertheless, every significant business decision throughout the chain should be examined as the company prepares for an initial public offering (IPO) later this year, according to BusinessWeek. In combination with the weak travel and lodging sector, the company may see weaker demand than expected for its shares.

In its Editors’ Blog, the Harvard Business Review gave advice that everyone in PR - as well as management - should heed: “So what’s the ‘so what’ for companies? Be careful. Tread lightly. Think twice. You are surrounded by the watchful eyes, loud voices, and powerful key-stroking fingers of people who are angry, who are paying attention, and who believe they have the power to change the world. Ignore this climate, or assume you can ‘control the message,’ and, well, you may end up having a fortnight like Hyatt’s.”

Lisa Tibbitts is the principal of Tibbitts Creative, a public relations and marketing service that emphasizes corporate communications. She has an extensive background in financial services and an MBA in marketing. Follow her on Twitter: http://twitter.com/FinancialPR.

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