Tuesday, September 22, 2009

Layoffs at Boston Hyatt Hotels — A “No-Win” Situation!

It has really been a difficult year for most of us.  I have watched organizations, peers, colleagues, suppliers, customers, friends and family all suffer at some level because of this recession.  The wounds go very deep in many cases, and unfortunately in some situations businesses have had to close their doors.layoff

The recent controversy emerging in Boston, with the mass layoff of housekeepers by (3) three Hyatt Hotels is a textbook example of an economy forcing a company to make tough …. actually unpleasant decisions!!!  Over the past several days I have watched this situation unfold with the goal of learning the truth.  For full details of this story two articles to read are the original Boston Globe article of September 17th and then the Official Hyatt response, published by USA Today on September 18.

Here’s a summary of the facts as I understand them:

  • (100) Housekeepers, many with long tenure, were terminated from their positions at the three Boston Hyatts.
  • Hyatt Management replaced those employees by contracting their housekeeping needs to an outside firm.
  • The housekeepers were invited to apply for open positions at the three hotels, however there are very few positions available due to economic conditions. They will continue to be welcome to apply for jobs at Hyatt hotels as positions become available.
  • Hyatt worked with local hotels and provided each housekeeper with current job openings elsewhere.
  • Hyatt provided them with an Employee Assistance helpline, and assisted them with benefit transition paperwork.
  • Hyatt provided severance benefits.

Now here is where it gets sticky.  An allegation was made by the Boston Globe article (although no names of witnesses were identified) that Hyatt assigned these “soon-to-be furloughed” housekeepers the task of training their replacements without advising them of their imminent termination.  Hyatt categorically denies any truth to that statement, stating “Press reports suggesting that we “tricked our associates into training their replacements” are absolutely false.”

This morning I received a phone call from Gus Vonderheide, Vice President Sales – Group, Hyatt Hotels. His call came in response to a conversation I had on Friday with Hyatt National Sales contact, Mark Henry.  After a short, yet cordial conversation Gus said he would be emailing me a letter shortly with a full explanation of the incident, from Hyatt’s perspective.  Here, for your review is his letter:

HyattText of Letter received on 9/22/09 from Gus Vonderheide, VP Sales – Group, Hyatt Hotels

“Thank you for your inquiry regarding recent news about our Boston properties.

The difficult decision to outsource the housekeeping function in Boston was made in response to the unprecedented economic challenges those hotels are facing in the current business environment. As a result, a large drop in revenues has made major cost cutting measures necessary.

We value and respect all our associates, and deeply regret whenever staff reductions are necessary. We are providing resources and support to assist employees who have lost their jobs as they seek new employment. We have provided them with severance and are working with them to help them find new jobs. Our Boston management teams have formed a task force led by the human resource directors from each of the properties and supported by the regional management team to develop and administer a support program for the affected employees. The support program will have several features, but will focus on retraining. We are also extending healthcare coverage through the end of this year to provide additional support. Through the task force, we will remain committed to utilizing every commercially reasonable means available to support and assist our former employees to secure new positions. We intend to remain committed to this as long as is necessary for those who are seeking new jobs to find them.

Unfortunately, a number of inaccuracies regarding the circumstances of this decision have been reported in the media and on the Internet. The change in our housekeeping services was not sudden. We have worked very successfully with this staffing firm in two of our Boston hotels for years. During this time, the firm has demonstrated that it can provide excellent services, which deliver a level of quality consistent with Hyatt’s demanding standards.

We appreciate your interest and understanding. Please be assured that these actions were not taken lightly and that we remain committed to the highest levels of hospitality and service.


Gus Vonderheide”

For clarity I asked Mr. Vonderheide this question in a follow up email — “So I need to ask this one tough question … as you know the Boston Globe reported that housekeepers were asked to train their replacements not knowing they were actually being replaced by them. Is that true, or not true, and if it is not true, then what were the circumstances?”

Vonderheide responded to that question with the following:  “No, that is not the truth!! This company has had involvement in these hotels for sometime and have been working along side the housekeepers as peers. A number of the housekeepers interviewed and were hired by the staffing firm and will remain on property.”

Clearly, many people inside and outside the Hospitality business are enraged by this incident.  So upset, in fact some are advocating a boycott of doing business with Hyatt.  The beauty of America, is we have the freedom to express ourselves, and of course I support that liberty.  However, I do not embrace the viewpoint of boycotting Hyatt…. it simply does not make any sense to me whatsoever.  Here’s why:

  • Since the recession began in December of 2007 (according to  National Bureau of Economic Research) more than 4,200,000 Americans have lost their jobs.  In July alone 206,971 workers were furloughed.  This is a serious problem universally across America,  not just an isolated incident.
  • There are companies that have laid off tens of thousands of workers.  These are unprecedented times and absolutely no one is enjoying any moment of all this.
  • Rather than focusing on negative things, such as boycotts and demonstrations, I believe we need to work energetically in communities of collaboration, to rebuild our businesses and jump-start the economy.
  • We need to leverage the lessons learned in this recession incorporating them into our personal and professional lives.  In fact we can learn from each other… lets start conversations to share new best practices and develop innovative ways of delivering customer service to our clients.

I don’t applaud Hyatt for their business decision, but I don’t condemn them either.  What they (Hyatt) did was not personal… Outsourcing is a survival strategy being used by many companies in the events industry.  In fact many business people believe it may emerge as a more common business practice as we exit this recession.

What is personal is the pain many people are feeling across the USA.  I am deeply saddened by all those around me that have suffered through this economic crisis.  I  certainly feel badly for those 100 housekeepers in Boston.  There is no good news in any of this….

So… Where do we go from here….???

Do you have some thoughts you’d like to share regarding this situation and others like it.  How can we as a business community bring about change that will light the fire under our economy again…. Please share your perspectives!

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{ 6 comments… read them below or add one }

Dave Lutz September 23, 2009 at 11:04 am

Mike, here’s a copy of what I posted on a couple other forums.

What gets me is “cleanliness” has to be a core value for any hotel. You don’t outsource a core value. You might supplement it with temps for spikes in occupancy, but not 100% of the time. Loyalty and pride of employees is rarely equalled by temporary workers. Employees who work alongside temps, help raise the bar for their performance. This move would surprise me less if we were talking about limited service or extended stay properties.

Right or wrong, this move has hurt the Hyatt brand significantly more than the cost savings envisioned. They need to move quickly towards a better strategy before more damage is done.

Dave Lutz
Velvet Chainsaw Consulting


Michael M McCurry CMP September 25, 2009 at 12:53 pm

@Dave Lutz,

You raise some good points here Dave, thanks for calling them out.

In my eyes time will tell whether this was a bad decision on Hyatt’s part or not. They made a business decision, based upon the real challenges they are facing, and have to live with the consequences that go along with it.

In our world today, with the economy being the way it is, trying new things, and innovating is not something a company should be faulted for. I think the real key here is the apparent manner in which they rolled this news out to the affected employees. Increasingly it is becoming obvious they were not very thoughtful in the way this piece of the process was handled.

I would love to see a response from Hyatt on this blog, or any other blog, but suspect we won’t see any.

Thanks for adding to the conversation Dave,



Dale Shuter September 24, 2009 at 8:57 am
Michael M McCurry CMP September 25, 2009 at 12:56 pm

@Dale Shuter,

Dale, thanks for providing the link to this article… this came out after I had published this article.

I personally believe there are other motivations to the MA Governors actions than concern for the well being of those laid off housekeepers.

It is interesting to note that he is not doing well in his re-election efforts and in particular it was pointed out in a Boston news article that the interest group he is weak with is the unions… we can read between the lines on that one.

Thanks again for adding to the discussion.



sethstorm September 24, 2009 at 11:53 am

While there is a certain fear of retribution in layoffs, it seems to be more pronounced in outsourcing/offshoring. From the point where that decision is made to outsource to a distant company or go offshore, a certain contempt(above and beyond what might be normally encountered in a layoff) is held for those marked to leave the organization.

To look on it lightly, they thought that it would help if the housekeeping staff didn’t know about what was happening. They thought the housekeeping staff wasn’t worth a notice. The problem occurred when they lost trust in their housekeeping staff.

The goodwill measures that are described may exist to control such damage, but there is no exact word(yet) on how many return to another Hyatt location(same or different position), how many get picked up by the outsourcing provider, and/or how many head to the unemployment line for good.

No matter how Hyatt wanted it to go, they lost some trust from other staff in similar positions and customers whom do not trust the new staff.


Michael M McCurry CMP September 25, 2009 at 12:59 pm


Seth, you have a good perspective here…

At the end of the day I believe you are right, regardless of whether what they did is right or wrong, Hyatt’s brand perception has been damaged and they have created some trust issues with employees and customers alike.

I do hope this incident can be resolved in a reasonable manner so we can all go back to focusing on recovery from the tough economy.

Thanks for your contributions… much appreciated!



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