October 19, 2010
Private equity firm forecasts recovery for hotels, recession for hotel workers
As workers return to the job at three Blackstone-owned Hilton hotels in San Francisco, Hawaii, and Chicago, Blackstone has broken its silence over the the taxpayer-funded $180 million prize it netted in restructuring its debt to the Federal Reserve Bank.
In comments to the Honolulu Star Advertiser, Blackstone spokesman Peter Rouse claimed, “The Federal Reserve struck a very hard bargain and ultimately will make a profit from its position.” The article states Blackstone’s position: “The Fed continues to be an investor in Hilton and, as a result of the hotel’s recent recovery, should recoup the money it wrote off, Blackstone says.”
Usually when a company owes a bank money, they have to pay back the total sum plus interest. But Blackstone managed to convince the Federal Reserve to take $180 million less than it was owed. That sounds more like a “very hard bargain” for the taxpayers.
If we are to take Blackstone at its word, and grant that this debt restructuring will increase Hilton’s financial health and profits in the years to come, why is Blackstone still pleading poverty at the bargaining table with its workers? And if Blackstone really can’t afford to settle with hotel workers for a contract with fair wages, affordable healthcare, and a decent pension, why should we believe them that future profits will offset this current loss to taxpayers?
Meanwhile, Blackstone continues to gobble up more hotels. The private equity group just bought 680 hotels as part of an acquisition of Extended Stay Inc. and is looking to to buy 14 more from Columbia Sussex. To make these investments, Blackstone must be predicting a strong recovery for hotels.
Blackstone is banking on the future earnings of the hotel industry while trying to lock workers into recession contracts. This weekend workers took to the streets to show Blackstone’s executives what they think of its double-talk.
permalink // tags: Blackstone, Hilton, News, Strike
