Meeting Mentor Magazine

December 2018

Cover Story

Expect ‘Subtle’ Impacts On Meetings
From Rising Minimum Wage

Growing efforts among states to raise their minimum wage will impact meeting professionals in their future planning and negotiations with hotels.

The big news came from California and New York, where governors signed legislation on the same day affecting about a third of the workforce in each state. The minimum wages there will rise to $15 over a graduated period of 5 to 7 years. Four other states began 2016 with higher minimum wages (through legislation or automatic cost-of-living rate increases), and eight have future enacted increases, according to the National Conference of State Legislatures. Currently, 29 states and the District of Columbia have minimum wages above the federal level of $7.25 per hour, according to NCSL, while five states have no minimum wage at all: Alabama, Louisiana, Mississippi, South Carolina and Tennessee.

The inclination of management at convention centers, individual hotels and other meeting venues will be to “pass on those costs,” said Bjorn Hanson, Ph.D., professor in the Tisch Center for Hospitality and Tourism at New York University. Meeting planners and sponsoring organizations will counter that their budgets haven’t increased. “What will be more visible are subtle changes in how events are structured,” he suggested.

Examples on the meeting planner side: A buffet that uses fewer employees may become a more attractive option at a lower price, if it’s acceptable to the host group. Also, instead of changing room setups multiple times a day, a group may choose rounds of 10 to accommodate both educational sessions and dinner. These are actions that “many attendees may not notice,” Hanson said. A third option for a group may be leaving the hotel — say for a team-building activity — that doesn’t require labor to set up tables and chairs or theatrical equipment.

Examples on the hotel and venue side: Facilities may use more part-time workers and partial-shift employees, Hanson said. “Is that good or bad? Most people say that’s bad, because [these workers] may have less experience, may be going from one job to another and [consequently] more tired or using extra transportation that causes them to be late.”

Picking up on that issue, Adam Briggs, vice president, housing and registration, ConferenceDirect, said: “Other than an overall increase in the costs of goods and services across the board, the area where I see more directly attributable increases would be in the cost of on-site temps for registration and other event services,” he said.

“Obviously a lot of people working at hotels make minimum wage,” cited Dr. Deborah Breiter, professor, Rosen College of Hospitality Management, University of Central Florida. “The ones always at the lowest rung are housekeepers. If they are paid more, the cost per occupied room will go up. So will rates go up as the minimum wage rises, and how significantly? It’s hard to say.” While the seller’s market is riding high, she noted, the U.S. hotel industry forecast is for RevPAR and rate increases to drop off in in 2018. She doesn’t see the minimum wage increases affecting catering, since the standard 24 percent service charge means banquet staff makes well above the minimum wage.

As that seller’s market continues for hotels, “it is easier for them to increase prices and implement higher service fees. So we need be diligent with negotiating these to keep them under control for clients,” said Jason Bond, vice president, conference management, ConferenceDirect.

For its part, the American Hotel & Lodging Association was closely watching Los Angeles, where a year-old ordinance on a hotel-only minimum wage rise is playing out. As reported by the Los Angeles Times, exemptions in the local ordinance for unionized hotels cut “a sizable minority” of workers out of these pay increases. However, the city then passed a citywide $15 minimum wage, to which all workers in Los Angeles are entitled, said Frank Mateljan III, deputy director of community engagement and outreach in the Los Angeles City Attorney’s Office. Just two extremely limited minimum wage exemptions are in place for employees: learners (under the age of 18) and those in re-entry training for transitional jobs.

The bottom line on minimum wage impacts: “Changes on both parts — venues and meeting planners — will require creativity and thoughtfulness. There will be give-and-take on costs, and the effects won’t be so significant to attendees,” Hanson concluded. — Maxine Golding

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About ConferenceDirect
ConferenceDirect is a global meetings solutions company offering site selection/contract negotiation, conference management, housing & registration services, mobile app technology and strategic meetings management solutions. It provides expertise to 2,500 corporations and associations through our 325 Associates globally. www.conferencedirect.com

About MeetingMentor
MeetingMentor, the leading publication for senior meeting planners, is circulated to the clients, prospects and sales associates of ConferenceDirect, which books more than 3.87 million room nights. www.meetingmentormag.com

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