Brookfield’s deteriorating labor relations cause for concern for investors
There are deteriorating labor relations at multiple Brookfield Asset Management owned properties.
Brookfield owns five large union hotels across North America and we hope for good middle class standards at all locations.
Labor disputes place undue risk on investors, who could face interrupted revenues, boycotts or picket lines, and headline or reputational risk. Positive engagement can mitigate those risks. We hoped for a harmonious relationship with Brookfield similar to those maintained with other private equity managers, however labor relations at Brookfield owned hospitality assets are deteriorating.
Recently, UNITE HERE filed unfair labor practice charges with the National Labor Relations Board (NLRB) at a Brookfield owned property.
Furthermore, Valet workers at the Brookfield owned Hard Rock Casino in Las Vegas voted to be represented by the Teamsters Union in 2009 and have been negotiating for a first contract for years. The Hard Rock has settled allegations of violating labor law violations during that time.
Other workers at the Hard Rock have asked Brookfield to remain neutral and to agree to the Las Vegas standard of a fair process to choose whether to have union representation. They also seek job retention as Brookfield considers a sale of the casino. The vast majority of casino employers in Las Vegas have agreed to this fair process allowing workers to make their own choices and build a better future for themselves, their families, and the entire city. In August, Brookfield agreed to just such a process — designed to reduce risk for investors and workers —at the Hyatt Vineyard Creek Hotel in Santa Rosa, California.
Unfortunately, Brookfield has not agreed to that process. Instead, the Hard Rock has engaged in anti-union activities. In September, UNITE HERE filed two rounds of unfair labor practice charges against the Hard Rock Hotel & Casino Las Vegas with the NLRB.
Brookfield recently won operating rights at several Toronto area gaming establishments, including the Woodbine, Ajax Downs, and Great Blue Heron Casinos. Toronto area community groups, including labor have invited Brookfield to discuss labor peace and community benefits agreements, thought Brookfield remains unresponsive.
Limited partners should encourage Brookfield to engage productively with UNITE HERE and agree to community standards such as the request for a fair process and worker retention at the Hard Rock in Las Vegas.
Additionally, limited partners should urge Brookfield to negotiate fairly and quickly to mitigate labor risk and ensure communities continue to have good, middle class jobs.