Keeping it clean? Hotel industry demanding tax breaks for cleaning equipment while promoting a job-killing plan to reduce cleaning staff

In the midst of the largest federal bailout in US history, the hospitality industry has stepped up to demand a slew of subsidies, one of the latest of which is a tax credit for cleaning equipment and expenses ostensibly to keep guests and employees safe from COVID-19. However, their rationale for the credit is not in synch with the actions of some of the industry’s largest players.

Many of the large hospitality real estate investment trusts (REITs) have vowed to use the pandemic as an opportunity to standardize a ‘new operating model’ whose main feature is reducing labor costs for cleaning.

The AHLA demanded a new cleaning tax credit supposedly to ‘benefit hotel employees’…

The American Hotel and Lodging Association (AHLA), the nation’s largest lobbying group for the hotel industry, sent a letter to Congress on May 20 that included the demand for a new cleaning tax credit. The idea was promoted under the AHLA’s ‘Safe Stay’ initiative, an initiative focused on modifying hotel procedures to meet the challenges presented by COVID-19. Among the provisions the letter cynically claims would benefit hotel employees was:

Tax credits for Capital Expenditures or Expenses to Meet the Industry’s Safe Stay Initiative: The hotel industry is taking extraordinary measures to ensure that our properties across the country are healthy, clean and sanitized for both our guests and our employees. This includes expenditures for deep cleaning, provision of personal protective equipment (PPE), and provision of personal kits for guests. Further, hotels are altering their operations and retraining staff to ensure compliance with updated CDC and state guidelines regarding physical distancing, promoting contactless staff interaction and implementing enhanced cleaning measures in guest rooms and common areas. Hotels, which are facing little revenue and demand, will need assistance to offset these new substantial costs.

The AHLA repeated this demand in a July 20^th letter to members of Congress. The lobby has also promoted the Healthy Workplace Tax Credit introduced by Rep. Tom Rice (R-SC), which would provide a 50% tax credit to businesses for purchasing PPE and engaging in deep cleaning.

…while promoting a plan to reduce housekeeping labor based on ‘anticipated’ guest concerns

It’s not clear exactly how this provision would help employees, unless by “helping” they mean separating them from their jobs or reducing their hours. The Safe Stay program in fact recommends that hotel operators substantially reduce housekeeper work by eliminating daily room cleaning unless guests specifically request it.

The basis for AHLA’s recommendation is apparently an “anticipation of individual concerns of guests” – an unsourced claim that is not attributed to the advice of any public health authority. The assertion that guests may not want daily housekeeping is contradicted by a McKinsey survey of hotel guests, which found that less than 10% of US respondents said that “no housekeeping during your stay” would make them more likely to stay at a hotel for leisure.

In practice, hotel companies’ daily cleaning practices have varied widely during the pandemic. Differences within hotel companies belie the public health rationale for eliminating daily room cleaning. For instance, Hyatt has made daily room cleaning optional, and requires most guests to opt-in to receive the service; however, elite guests will still receive the service, and must opt-out not to receive daily housekeeping.[1] Hilton has ended daily room cleaning (unless they opt-in) for guests in the US and Canada;[2] however, for certain brands outside the Americas, and for all hotels in China, the chain offers daily housekeeping.[3] It beggars belief that there is a public health rationale in denying or mandating daily room cleaning based on guest elite status, hotel brand, or hotel location.

Health experts support daily hotel guest room cleaning

Debunking industry statements, a group of 7 leading occupational health experts wrote to the San Francisco Board of Supervisors and contradicted the notion that daily cleaning of guest rooms presented a health hazard. They argued that, in fact, daily cleaning was a positive public health measure: “When understood in that light, we believe there is good reason to ensure that high-touch surfaces in guest rooms receive regular and thorough disinfection, as with other hotel spaces. Waiting until check out to clean a room occupied by an infectious guest or frequent visitor may increase the risk of contact transmission to employees, guests and visitors.”

The letter concluded:

We believe there are compelling reasons to encourage daily cleaning of hotel guest rooms, especially in the context of COVID-19. We understand from hotel employees that cleaning rooms after several days without housekeeping services makes it difficult to do a thorough and deep cleaning between guests – something that is all the more important during a pandemic. We also recognize that such delayed cleaning can necessitate the use of more intensive cleaning chemicals and physical effort, which can lead to adverse health consequences.

Hotel owners have discussed a new operating model based on labor reductions – not public health concerns

If health experts have come out against a cessation of daily housekeeping, and guests do not believe that it would keep them safer, why does the hotel lobby promote a program that would eliminate daily housekeeping?

Many hotel owners have discussed with investors their efforts to decrease operating costs during the pandemic. Several have extended this to describe a ‘new operating model’ that could be continued after the threat of COVID-19 has passed; this model features reduced work for housekeepers in particular, but also hotel workers of several classifications.

The discussion of this approach is remarkably similar across several companies:

Host Hotels: CEO Jim Risoleo argued in May that, “We view this opportunity, this crisis, truly as an opportunity to redefine the hotel operating model.”
Park Hotels: CEO Tom Baltimore mentioned on the company’s 1Q20 earnings call, “In general, we are expecting a different operating model overall for our hotels when travel resumes.” He added, “We are also expecting housekeeping to be altered in a way that provides guests with added assurance that the guestroom is clean and sterilized. We could see a move away from daily housekeeping service and an increase in contactless check-in, for example, such as Hilton’s Digital Key program.”
Braemar Hotels: “Additionally, we have specific plans to contain expenses and generate revenue as the portfolio reopens. We may eliminate housekeeping service from some properties for stay overs,” said CEO Richard Stockton.
Xenia Hotels: According to COO Barry Bloom, “Certainly, I think opportunities become more efficient throughout the hotel, whether that’s through providing housekeeping only on checkout, whether that’s through really getting to the point where mobile key, so keyless check-in checkout — or not keyless, passing the desk into check-in and checkout. I think, those are really large initiatives that we have been working toward for some time that I think will have some legs as we go through this. I think certainly, shortening and moving food and beverage offerings to more limited offerings and offerings that are much more expedient to be able to prepare on a style that may be available for grab and go, I think those are those are the primary areas where I think you’ll see, both cost savings initially, and things that have potential to stay in the operating model longer term.”

When the hotel lobby comes to Congress crying for a cleaning tax credit, we have to ask – are they motivated by health and safety? Or are they simply seeking another taxpayer handout and an opportunity to further cut staffing?

[1] Email from Michael D’Angelo to Connie Holt, “Subject: Housekeeping Guest Personal Preference,” 6/9/20.

[2] Hilton CleanStay U.S. & Canada Operating Guidelines V2,” Page 7, 7/2/20.

[3] Hilton CleanStay Website, accessed 6/30/20.