Tim Hudak, Clare Gallagher, Elizabeth Colombo

Pittsburgh Hotels: Why So Many
New Ones and Who Employs All
These People?
Presented by:
Tim Hudak, Clare Gallagher, Elizabeth Colombo & Jay Blount
LEGAL PRIMER: 2016 UPDATE
AUGUST 5, 2016
Hotel Background and Lingo
Hotel Background and Lingo
ADR (Average Daily Rate) –– The average rate paid for rooms
sold, calculated by dividing room revenue by rooms sold.
Occupancy % –– The percentage of available rooms that were sold
during a specified period of time. Occupancy % = number of rooms
sold ÷ number of rooms available.
RevPAR (Revenue Per Available Room) –– The total guest room
revenue ÷ the total number of available rooms. RevPAR differs from
ADR because RevPAR is affected by the amount of unoccupied
available rooms, while ADR shows only the average rate of rooms
actually sold.
Hotel Background and Lingo
100 Rooms
Scenario A
Scenario B
Scenario C
$500
$125
$250
Rooms Occupied
25
100
68
Rooms Available
100
100
100
Occupancy %
25%
100%
68%
RevPAR
$125
$125
$170
ADR
Pittsburgh Market – Rooms Growth
Hotels opening in 2015 (and early 2016):
• 248-room Hotel Monaco
• 135-room Holiday Inn Express North Shore
• 150-room Homewood Suites by Hilton in the Strip District
• 225-room Embassy Suites in the Henry W. Oliver Building
• 197-room Hilton Garden Inn in the Tower Two-Sixty project
Total of 955 additional rooms, expanding the Greater Downtown hotel market by 21%.
Hotel pipeline:
• 180-room Drury Inn and Suites on Grant Street
• 186-room Distrikt Hotel on Boulevard of the Allies
• 75-room Holiday Inn First Avenue
• 155-room Even Hotel taking two floors in the Macy’s/Kaufmann’s redevelopment
• 131-room AC Hotel at 11th and Smallman
• 161-room luxury hotel as a part of the second phase of the 350 Oliver project
Total pipeline of 1,535 rooms in the next two years.
* From the 2016 Pittsburgh Downtown Partnership’s State of Downtown Pittsburgh Report
Pittsburgh Market – Potential Effect
Historic ADR and RevPAR
* From the 2016 Pittsburgh Downtown Partnership’s State of Downtown Pittsburgh Report
Will this trend continue?
Pittsburgh RevPAR Projections
Pittsburgh RevPAR Projections
Pittsburgh RevPAR Projections
Pittsburgh RevPAR Projections
Who Employs All These People
Staffing
Agency
Joint Employer Developments
McDonald’s –– In July 2014, the NLRB’s General Counsel authorized complaints
against McDonald’s for the employment decisions of individually owned and
operated franchise restaurants. Litigation continues on these cases.
Browning-Ferris Industries –– In 2015, the NLRB issued a decision replacing the
“direct and immediate” control standard with an “indirect” and “potential” control
standard.
Miller & Anderson – In July 2016, the NLRB issued a decision that employer
consent is not necessary for proposed bargaining units that include both solelyand jointly-employed employees if the employees share a community of interest.
Potential effect on hotel franchisors and hotel managers
Joint Employer Developments
Marriott Form Franchise Agreement in 2012
Marriott Form Franchise Agreement in 2015
Joint Employer Developments
Recommendations for staffing agreements:
• No authority over the wages, hours, benefits and working conditions of contractor’s
employees (including any reservations of that authority).
• No requirements to follow your employment practices/policies for your employees;
contractors to have their own written policies (with employee handbooks).
• Require contractor to provide an on-site supervisor to supervise contractor’s employees.
• Require indemnification from contractor re: finding of joint employment.
• Require your contractor’s workers’ compensation coverage to include an “Alternate
Employer Endorsement” (WC 00 03 01), naming you as the alternate employer.
• Consider using only contractors with national operations (to minimize risk of “fly by night”
operators who don’t take the risks seriously).
Questions?
Tim Hudak
(412) 566.2584
thudak@eckertseamans.com
Clare Gallagher
(412) 566.2069
cgallagher@eckertseamans.com
Elizabeth Colombo
(412) 566.2915
ecolombo@eckertseamans.com
Jay Blount
(412) 566.5945
LEGAL PRIMER: 2016 UPDATE
jblount@eckertseamans.com
AUGUST 5, 2016