Friday, October 2, 2009

Hyatt PR Gaffe Goes Viral, Global

Hyatt’s Boston-area recent firing of nearly a hundred housekeeping employees has demonstrated how a management decision, perhaps thought to be a minor local action, can reverberate around the world and threaten the foundations of an otherwise respected brand.

The Boston Globe broke the story in its September 17 edition and the very next day, at 6:24 pm September 18, an unidentified individual registered the Web URL, which is now pumping out support for the terminated employees and spitting venom at the hotel chain.

Hyatt’s decision resulted in a viral campaign. Hyatt should have considered the ramifications for social media destruction, noted a hotel manager in faraway Beijing, as they failed to manage the response in the online world. Instead of managing discussions at sites like Twitter, Facebook, etc., they simply issued a formal press statement.

And the story kept growing and growing and growing….

How It Happened

Employees are critical stakeholders — it’s such an obvious statement that to say it seems simplistic. Yet executives at three Boston Hyatts seem to have missed that lesson in their corporate management class. Here’s how this blunder came about at the Hyatt Regency Boston, Hyatt Regency Cambridge and Hyatt Harborside at Logan International Airport.

We know the global economy has been in crisis during the past year. This created an equally serious decline in business and recreational travel, including hotel bookings. As a result, hotel management everywhere has been under pressure to cut expenses.

Facing this dilemma, the Hyatt Boston-area brain trust decided housekeeping costs were too high. So executives decided to outsource housekeeping, replacing employees earning up to $15/hour (plus benefits) with less experienced workers making about $8/hour and no benefits.

To smooth the transition from the existing workforce — some of whom had over 20 years on the job at the hotel — to the new contract crew, the 100 in-place workers were assigned to train their replacements, being told that the trainees would be vacation replacements.

And then…

The City of Boston joined “the battle against Hyatt,” the city council issuing a resolution condemning Hyatt’s “poor treatment of its employees” and Mayor Thomas Menino adding that the job cuts “fly in the face of what Boston is all about.” Governor Deval Patrick even threatened to have state employees boycott the hotel chain.

Showing a further lack of insight and sensitivity to community and other stakeholder interests, Hyatt Regency Boston president Phil Stamm fired back, “We are very disappointed by the governor’s decision to threaten a boycott of our hotels since it directly threatens the 600 associates who work in Hyatt properties and who live and work in Massachusetts.”

A local TV station reports that a union representing some 1,700 Boston cab drivers said it will boycott Hyatt hotels in the city unless the company rehires the fired housekeepers. And at least one news broadcast about the situation went global on YouTube.

The social activist organization joined the fray and made “Join the Hyatt Boycott” its lead story. Highly respected institutions and sites ranging from AOL Travel to the and the Harvard Business Review have prominently covered the story and, in doing so, denigrate Hyatt’s management decisions. In fact, the HBR piece calls Hyatt’s actions a “sure-fire way” to “damage to your brand.”

International travel authority Fodor’s has an active blog thread on the Hyatt debacle with one reader echoing the sentiments of several others:

“This morning on NPR, there was a piece about Hyatt Boston firing all their housekeepers and hiring temps, so as to save on healthcare and benefits. There was a woman who had worked housekeeping for Hyatt for 19 years who had a 13 year-old son with asthma. Where is she going to get another job or healthcare benefits? I for one will NEVER stay at Hyatt again.”

All these actions keep the story in the active media eye, keep the pot stirred and prevent the story from simply fading out of the public consciousness.

Timing is Everything

Do you believe in coincidence?

Hyatt announced in August it had filed a statement with the SEC proposing an initial public offering of its shares. In such a situation it is common to clean up the balance sheet, cut expenses, boost top-line revenues as high as possible and optimize cash flow — everything a potential investor wants to see. And since employee costs are always a big item in service industries, they’re always vulnerable.

Of course, if service goes to hell because employees are demoralized, who cares? Once the Prizker family members get its money from the IPO, the whole mess is someone else’s problem. Let shareholders worry about shoddy service and a sinking reputation….

So we wondered: Since other hotel operators are suffering from the same global economic downturn, how are they handling the inconvenience of paying housekeeping staffs?

Earlier this year the Liberty Hotel, a posh Boston establishment, took the opposite route, eliminating their outsourced security and night janitorial services and replacing them with hotel workers from other departments who might otherwise have been laid off. “We would not [outsource housekeepers] because we want to tightly control the guest experience here and the cleanliness,” managing director Jim Treadway said. And when asked, Hilton and Marriott executives told the newspaper that they had no plans to outsource their housekeeping responsibilities.

All stakeholders — including employees, customers and shareholders — count big time; all of them. And management should never, ever forget it… because the communication impact can be devastating, especially in this age of viral online communication among consumers. We are best advised to never forget the power of an angry individual, either.


My thanks to one of my favorite blogs — edit30… insight for business communicators — for bringing this mess to my attention!

And, as always, thanks to my readers for participating.

Jan Thomas
The Communication Heretic

No comments:

Post a Comment