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02/18/2021

Hilton CEO: $15/HR Minimum Wage Will be Balanced by Improved Hotel Efficiencies

Michal Christine Escobar
Senior Editor (Hotels)
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During Hilton’s fourth quarter 2020 earnings conference call on Feb. 17, Hilton’s President and CEO Chris Nassetta was asked if he thought the $15 per hour national minimum wage bill would impact development economics for select service hotels, specifically because these hotels tend to be in smaller markets where the labor rate is much lower.

In response, Nassetta asserted that he was very supportive of moving the minimum wage higher over time.

“But as I said to a number of people in the administration, how you do it and when you do it matters,” he explained.

Nassetta said that his understanding of the minimum wage proposal was that it would allow companies to gradually increase what they pay to employees over a five year period. For Nassetta, this makes the change easier for hotel owners to adjust to and accommodate.  

“My personal worry and concern is that the hospitality industry has been more impacted from a jobs point of view than any industry in the country [due to COVID],” he added. “And it’s been the slowest to bring jobs back. I don’t think raising the minimum wage, no matter how you look at the analysis, is going to help. I think it will slow the rehiring of people in the industry. And so I am hopeful that in the end that rational thinking will prevail.”

However, Nassetta iterated that he did not feel too concerned that the increase in minimum wage would happen any time soon or that it would become a major issue in the short to intermediate term.

I don’t know that it’ll end up in this first bill,” Nassetta said. “Based on what I’m hearing it is possible but not highly likely.”

When the minimum wage raise does get passed, Hilton’s hotels will be at an advantage, Nassetta explained, because the company has been hard at work improving staff member efficiencies.

“The work we’re doing right now in every one of our brands is about making them higher margin businesses and creating more labor efficiencies, particularly in the areas of housekeeping, food and beverage and other areas,” Nassetta explained. “So when we get out of the crisis, those businesses will be higher margin and require less labor than they did pre-COVID.”