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Katherine Lugar Discusses Key Initatives, Airbnb, and More

K.-LugarIt’s been an incredible year for the industry: record growth, occupancy, and hiring, says Katherine Lugar, president and CEO of the American Hotel and Lodging Association. “The hospitality sector remains the bright spot in the economy, and projections show that we can expect growth well into next year.”

And the same holds true for AH&LA, she says. Since January, membership has more than doubled than its highest point in history—to a 20,000-strong association, representing 2.5 million rooms.

Lugar spent some time with Lodging to discuss the state of the organization, pressing issues, and much more.

How has AH&LA’s tremendous growth in membership helped it push key industry initiatives? This was a year of big transition for AH&LA. In January, we changed our membership model to better reflect what our members wanted: a focus on advocacy and an association speaking with one, unified voice. And the growth in our membership—from all segments of our industry—is not only a testament to our success to date, it’s essential to our future success. We won’t be truly effective until we have the entire industry engaged, aligned, and focused. We are proud of the headway we have made this past year, but we still have a long way to go.

The association partnered with other industry groups this year on key initiatives, most notably with the merchant and financial services associations on cybersecurity and the National Restaurant Association on local extreme wage measures. Can you talk about how these partnerships have paid off? As we tackle more and more issues that impact different aspects of our industry’s day-to-day business operations, it’s important that we stay connected with other groups that share our concerns. In Washington, there is power in numbers. Joining forces on issues that have significant implications for our industry, such as fighting local extreme wage increases, protecting the franchise model, or the definition of the 40-hour work week when it comes to the details in the Affordable Care Act (ACA), makes us stronger and more effective. I am also proud of the tremendous partnership we have with AAHOA.

What are the next steps that AH&LA and partner associations are taking to fight the extreme wage initiative in Los Angeles that targets hotels? These local extreme and often discriminatory wage initiatives like we see in Los Angeles increase raise wages too high and too fast and, as many economic studies have shown, will ultimately hurt those seeking entry-level jobs in hotels. Particularly egregious with the L.A. ordinance is that it targets only hotels, and only non-union hotels. These initiatives are being driven by SEIU and UNITE HERE simply as a means to grow their numbers and are being done on the backs of hardworking men and women who could lose their jobs. Consider, for example, a restaurant inside of a hotel that could now be forced to close its doors as it’s unable to compete with a restaurant across the street with different wage laws. Make no mistake, this is a long-term fight and one with possible national repercussions. The industry is fully aligned and planning aggressive action to beat back this discriminatory ordinance through all options.

What’s AH&LA’s take on the National Labor Relations Board’s McDonald’s ruling, and how it will impact hotel franchises? We are watching the next steps in the Joint Employer decision by the National Labor Relations Board (NLRB) closely. As you may recall, the initial NLRB decision ruled against McDonald’s and could pose a serious threat to the franchise model in our industry.

We are going to fight this by working together with a coalition of industry partners from restaurants to retail on a grassroots campaign. But we’re also undertaking an aggressive campaign to educate our members about what this means for their day-to-day business activities so they can get involved in the fight. And we’re taking this campaign to Capitol Hill to shine the light on this damaging decision that could have very real consequences on small business owners who have put their life savings into owning and running a hotel.

How does partnering with the National Restaurant Association for the next Legislative Action Summit supercharge what the association is able to accomplish? I’m excited about this partnership. Together, we demonstrate the strength and prowess of the hospitality industry. Collectively, we represent millions in employees and add billions of dollars to the economy. We are joining forces on the issues we both have in common—whether it’s protecting the franchise model or growing the economy—but we are also retaining our own identity to focus on those that are unique to our association.

What can the association and the lodging industry as a whole continue to do to address short-term online rental sites like Airbnb? There is no question that this is an exciting time in our industry. Competition is a hallmark of the lodging industry. Innovation that we are seeing in the marketplace is to be commended. But innovation must not be used to mask failure to pay taxes or ensure the safety and security of all our guests. It is important that all players in the marketplace play by the same set of rules.

What we are seeing with the short-term online rental companies is an unwillingness to adhere to the same city, state, and federal laws as hotels. These laws were put into effect for the safety and security of our guests and must be equally applied in the sharing economy as well.

We commend the recent report by the New York Attorney General’s office. Not surprisingly, it validated what we’ve been seeing, which is that 71 percent of Airbnb rentals in New York City are illegal, with some $33.4 million in taxes going uncollected since 2010. The other revealing statistic is that while only 6 percent of hosts ran large-scale operations on Airbnb, that same group dominated the platform, generating 36 percent of all rental transactions and collecting 37 percent of total revenue—or $168 million. That means we’re not just talking about a young grad renting out a room for extra income. We’re talking about a new business model being adopted by some who are using apartment stock and turning them into illegal hotels. Ensuring there’s a level playing field and sensible regulations in place that keep the safety of our guests is paramount.

Going into 2015, what are the key industry goals that AH&LA is seeking to address? There’s no question this has been a strong year for AH&LA. We’ve had success on a number of fronts from House passage of Brand USA to Senate passage of the Terrorism Risk Insurance Act to wins in San Diego and Chicago on the uphill battle of extreme wage initiatives. We’ve taken a leadership role to push our members to implement 911 direct-dial in hotels, and we’re driving change to preserve the definition of the 40-hour work week related to the ACA and prevent changes to overtime regulations that would significantly impact the way jobs are structured in our industry. But the stakes are higher than ever, and going into next year, we may have a completely new paradigm in Washington following the midterms.

Now is not the time to let up the pressure. Along with issues discussed earlier, these are some areas we will continue to lead on next year: pursuing policy change and powering legislative action with data, especially when it comes to digital consumer deception or state tax fairness initiatives. We have a full agenda and will continue to be a strong voice for our members, advocate for change, and help them be more successful going forward.

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