Park Hotels & Resorts, the operator of two of the most prominent hotels in San Francisco, is handing in the keys on the properties — and, in essence, giving up on a city that has fallen on hard times.
Park Hotel stopped making payments on a $725 million loan tied to the Hilton Union Square and Parc 55, the real estate investment trust said on Monday. The hotels, a few blocks from the once-bustling Moscone Center conference hall, have a combined total of nearly 3,000 rooms.
A slowing economy and a remote-work thunderclap have emptied offices across the country, with some warning of a ticking bomb in the commercial real estate market. Slammed by a wave of layoffs in the tech industry and a steep slowdown in Moscone’s conference calendar, downtown San Francisco has been hit hard.
“Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges” that will reduce demand for business and leisure travel, said Thomas J. Baltimore Jr., the chief executive of Park Hotels & Resorts.
The company previously warned investors that it was weighing options for the loan and told analysts last month that the properties contributed only a small amount toward its 2023 guidance.
Shares of Park Hotels & Resorts rose more than 2 percent on Tuesday. The company’s portfolio of 46 properties includes Hiltons in Chicago, Honolulu, Midtown Manhattan and San Diego.
The abrupt departure of Park Hotels & Resorts is raising fears that others could follow suit. San Francisco is highly dependent on business travel, which has yet to return to prepandemic levels. JPMorgan Chase brought back its annual health care conference this year, but other events have moved out, including VMWare’s tech conference.
Not everyone is giving up. “We’re not writing San Francisco off,” James Risoleo, the chief executive of Host Hotels & Resorts, parent company of the Marriott Marquis San Francisco, told analysts in May.
“I have concern about how the market is performing relative to 2019 and what happened with the layoffs in the world of tech and the like, and return to office in that market is really lagging the rest of the country,” he said. “But it is the center of tech and it’s going to be the center of artificial intelligence as the world returns.”
Tesla sued for ‘widespread and ongoing’ racial harassment at California plant
The U.S. Equal Employment Opportunity Commission is suing Tesla Inc. for “widespread and ongoing” racial harassment of its Black employees and for retaliating against workers who spoke out about the problem, the federal agency announced Thursday.
Since at least 2015, “Black employees at Tesla’s Fremont, California, manufacturing facilities have routinely endured racial abuse, pervasive stereotyping, and hostility as well as epithets,” the commission said in a statement.
The EEOC added: “Black employees regularly encountered graffiti, including variations of the N-word, swastikas, threats, and nooses, on desks and other equipment, in bathroom stalls, within elevators, and even on new vehicles rolling off the production line.”
The lawsuit was brought by the EEOC’s San Francisco District Office, which has jurisdiction over Northern California, northern Nevada, Oregon, Washington, Alaska, Idaho and Montana.
EEOC officials said the lawsuit is seeking compensatory and punitive damages “and back pay for the affected workers, as well as injunctive relief designed to reform Tesla’s employment practices to prevent such discrimination in the future.”
EEOC Chairperson Charlotte A. Burrows said the lawsuit “makes clear that no company is above the law.”
“The EEOC will vigorously enforce federal civil rights protections to help ensure American workplaces are free from unlawful harassment and retaliation,” she said.
Attempts to reach officials at Tesla for comment were unsuccessful.
Tesla, the world’s most valuable car company, faces similar action on several other fronts.
In February, the California Department of Fair Employment and Housing filed a lawsuit on behalf of more than 4,000 current and former Black Tesla workers — the largest racial discrimination suit ever brought by the state based on number of workers affected.
In that suit, three former employees alleged that racist slurs in English and Spanish were often aimed at Black employees by co-workers and supervisors. They said Tesla segregated Black workers into separate areas, gave them the hardest tasks and routinely denied them promotions. And they alleged that when they informed the company about racist treatment, their complaints went ignored or they were fired.
Tesla disputed the former employees’ accounts, stating that the three workers did not complain to the company about racism and that any discipline they received was the result of their own workplace behavior.
“Race plays no role in any of Tesla’s work assignments, promotions, pay or discipline,” attorneys for the company said in a statement at the time. “Tesla prohibits discrimination, in any form.”
Thursday’s lawsuit puts a different kind of pressure on Tesla, said attorney Clifton W. Albright, founding partner and president of Albright, Yee & Schmit, a labor and employment law firm in downtown Los Angeles.
“The EEOC’s preference is to resolve issues quietly…. They don’t have a dog in this fight,” he said, unlike lawsuits filed by private firms or civil rights organizations.
“For the EEOC to come out so strongly, they must think there is significant evidence that the employer refuses or fails to recognize or address.”
The unionization wave hits L.A. area bubble tea cafes
Six Boba Guys locations in Los Angeles County will become the first unionized boba stores in California after a successful election, the union said Wednesday.
The bobaristas will join the California Retail & Restaurant Worker Union, which also represents workers at Genwa. The Los Angeles Korean barbecue restaurant chain unionized in 2021.
“When companies remain neutral and do not interfere with anti-union campaigns … the workers will overwhelmingly support unionizing of their workplace,” said CRRWU President José Roberto Hernández.
Hernández said the union had been engaging with workers for the last six months. They filed for a union with the National Labor Relations Board in July and counted the results of the mail-in ballot election Wednesday afternoon. Boba Guys will be the first unionized boba stores in California, if not the country, Hernández said.
CRRWU also represents workers in ongoing unionization efforts at Korean grocery outlet Hannam Chain and at air purifier manufacturer Coway.
“We want to publicly express our support of the labor vote conducted by the National Labor Relations Board and [CRRWU],” Andrew Chau, co-founder and CEO of San Francisco-based Boba Guys, said in a statement. “We have always believed in the right to organize and have cooperated with CRRWU and the NLRB throughout the entire process.”
Chau encouraged other businesses to “follow suit and open up the conversation on the much-needed dialogue surrounding labor in this country.”
Last fall, the boba chain — known for its drinks made with organic milk, loose-leaf teas and homemade syrups — faced backlash after firing a worker from its flagship store in San Francisco’s Mission District; the worker said Boba Guys told her it was because she had made “inappropriate, disparaging” comments to co-workers that were sexual in nature, but she believed she had been fired for posting about unions in a company Slack channel.
At that store, several workers publicly complained of reduced hours, a decrease in time given to open and close stores, and fewer people working per shift. They also spoke of working through heat waves without air conditioning, dealing with vermin and having their hours cut when they took their concerns to management.
The company eventually permanently closed that location.
Carmen Lau, a former manager at Boba Guys’ Culver City shop, said workers had been unhappy for months about their working conditions but weren’t sure what they could do about it.
“How do you fix it? How do you do more than just talk to the people in charge who have heard your complaints a number of times, acknowledge [them], but there’s no follow through?” Lau said.
She left the company in May for another professional opportunity, but also because of increasing demands at work and issues that remained unaddressed, she said.
“The increasing expectations for work, just having less time to prepare and prepare all the ingredients for opening — I found that it was getting really impossible to meet those expectations,” Lau said.
News of what happened at the Mission District store spread rapidly and drove a lot of the desire to push for increased benefits and protections, said Stephen Lightfoot, who works at the Boba Guys location in North Hollywood.
As an actor and sound designer, Lightfoot was well aware of the benefits joining a union could bring workers and was active in spreading the word to his colleagues, who were “very excited,” he said.
Los Angeles has become a center of labor activity as screenwriters, actors, hotel employees and city staffers went on strike over the summer, and there are unionization efforts underway at companies including Starbucks, Amazon.com and Trader Joe’s.
Column: The FTC is right about Amazon’s monopolistic practices, but struggles with what to do about them
Few Amazon customers or sellers could be surprised by most of the allegations in the massive lawsuit filed against the company Tuesday by the Federal Trade Commission and 17 states.
The lawsuit accuses Amazon of a host of anti-competitive practices, all aimed at exploiting its enormous footprint in the online retail market.
These include price manipulation and punitive and coercive behavior against sellers with the temerity to use competing retail platforms or to set their own prices or engage in non-Amazon methods to serve their own customers.
The harms here…have basically created a really distorted and competitive landscape….That may require significant relief.
— FTC Chair Lina Khan, contemplating an Amazon breakup
Then there’s the degradation of the Amazon shopping experience by the infusion of “sponsored” — that is, favored — products that may be inferior or more expensive than those a buyer may be seeking.
The company’s public response to the lawsuit is that it would result in “fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses,” its general counsel, David Zapolsky, said in a prepared statement, adding that the agency is “wrong on the facts and the law.”
But most of the FTC’s allegations are familiar enough. Consumers know how hard it is to determine whether Amazon’s prices are the lowest available. They know that when they’re searching for an item on Amazon.com, the varieties pushed at them most assiduously are those from Amazon’s commercial partners or marketed by Amazon itself.
They feel the pressure to sign up for Amazon’s Prime service, now $139 a year, necessary to receive one- or two-day, or even overnight, delivery, in addition to the company’s video and music streaming services.
Sellers who have marketed their merchandise on Amazon are certainly aware of the cost — a share of as much as 50% taken by the company.
They know the consequences of flouting its rules or trying to discount its products from Amazon’s price, which include banishment from the website’s one-click “buy box” or the burying of discounting sellers “so far down in Amazon’s search results that they become effectively invisible,” to quote the lawsuit.
The question is what to do about it.
That’s the question implicit in every one of the FTC complaint’s 174 pages. It’s the same question raised any time the government tries to rein in a big, powerful corporation, but it’s especially important in this case, because there are so very few corporations that dominate their markets so powerfully.
The FTC points to Amazon’s ability to leverage its various businesses, which include its “fulfillment” services — the warehousing, packing and shipping of sellers’ merchandise — and Prime eligibility, which gives sellers’ products preferential placement on the website and by eliminating shipping charges lowers the cost of their products for buyers.
That suggests that one answer would be to break up Amazon, say by forcing it to divest its fulfillment operation. FTC Chair Lina Khan dodged that issue in her statements about the lawsuit, possibly because she knows that the remedy to Amazon’s misdeeds, assuming it’s found guilty, would be in the hands of a federal judge.
“At this stage, the focus is more on liability,” she told reporters in a briefing session Tuesday. On Wednesday, during an appearance at a Washington, D.C., conference sponsored by Politico, she noted that in the lawsuit “we don’t specify any one type of remedy.”
She also observed, however, that “the harms here are really mutually reinforcing, and have basically created a really distorted and competitive landscape … that may require significant relief.”
The lawsuit isn’t entirely silent on possible remedies, mentioning, among other options, “structural relief.” That could only mean a breakup.
Some disclosures are proper here. I am, like many other customers, a willing prisoner of the Amazon ecosystem, or perhaps more accurately, an addict. The books I read for pleasure are almost invariably ebooks, which means they’re Amazon ebooks; I blindly buy the latest version of the company’s Kindle e-reader (up to and including its new large-format Kindle Scribe).
If I’m interested in a book that doesn’t come in a Kindle version, I’ll wait until it does. I can’t remember the last time I bought an ebook not on Amazon. All but two of the books I’ve written come in Kindle versions, for which I’m thankful.
Outside of food and gasoline, I probably do 70% to 80% of my shopping online, and the vast majority of purchases are on Amazon. I’ll make a purchase on Amazon even if the product is available at a store less than a mile away, and especially if it will be delivered the next day or even (increasingly) overnight.
That doesn’t mean that I’m an uncritical fan. I’ve had to train myself to look past the “sponsored” products Amazon thrusts at me when I’m searching for a product. I’ve avoided its Echo/Alexa devices, because I know they exist to push favored products my way, and who wants a device in the home with the capability of listening in to private conversations?
I’m not happy that I can’t own an ebook purchased on Amazon, but only purchase a license giving me the right to read it (but not give it away, like a physical book). Nor that this arrangement gives Amazon rights over my ebook library that I may not even know about, as when it stealthily deleted from customers’ Kindles versions of George Orwell’s “Animal Farm” and “1984” after copyright issues arose with those versions.
An Amazon ebook generally can be read only on an Amazon Kindle or an Amazon app — another pair of mutually reinforcing near-monopolies.
Quite obviously, Amazon could never get away with such restrictive rules if it had genuine competition in the ebook or e-reader markets.
Amazon and its mouthpieces in Congress have made much of the fact that Khan has had Amazon’s number for years. Exhibit A is her 2017 article in the Yale Law Review titled “Amazon’s Antitrust Paradox.” Amazon and Meta (then Facebook) tried to use it to force Khan to recuse herself from FTC proceedings against them. Wisely and properly, she turned them down.
The article delved deeply into Amazon’s anti-competitive strategies, which consisted chiefly in undercutting competitors’ prices and consequently taking losses; the company’s expectation that this would drive rivals out of its markets and leave the field clear for it to turn to extracting profits from consumers by exploiting its near-monopoly bore fruit in the long term.
Khan homed in on, among other tools, Amazon’s fulfillment services. But she noticed how Amazon leveraged its Prime membership by bundling “other deals and perks” into it, turning Prime into its “biggest driver of growth.”
The discussions in the FTC lawsuit of Prime and fulfillment as anti-competitive tools replicate Khan’s 2017 analysis with astonishing fidelity, showing that Khan understood Amazon’s business strategy very well indeed.
The remedies Khan offered in 2017 wouldn’t be adequate to rein in the Amazon of today. She recommended applying especially close scrutiny to merger deals reached by companies that already dominated their markets — but that might not work with a company such as Amazon, which has the ability to expand its market dominance without having to acquire other companies.
What most people overlook is that the 2017 article was a critique not so much of Amazon, but of the failure of antitrust regulators to recognize that the new online retail market was fundamentally different from bricks-and-mortar retailing, and that Amazon had been able to exploit that failure.
The best example, Khan pointed out, involved the efforts by major book publishers to counteract Amazon’s policy, rolled out in 2007, of pricing bestseller ebooks at $9.99, undercutting the publishers’ hardcover and ebook prices. Within two years, Amazon’s share of the ebook market was 90%.
The publishers struck a deal with Apple allowing them to set their own ebook prices for sale on Apple’s iBooks app. Amazingly, the Justice Department sued Apple and the publishers for colluding to fix prices. As Khan noted, the DOJ found “persuasive evidence lacking” that Amazon had engaged in predatory pricing.
Apple eventually settled the lawsuit for $450 million, the three largest publishers — Hachette Book Group, Simon & Schuster, and HarperCollins — settled for a combined $69 million, and the last two, Macmillan and Penguin, settled by agreeing not to set ebook prices. Apple never became a significant player in the ebook market.
As Khan perceived, old-school antitrust regulators failed to understand how the retail market had evolved and Amazon was poised to take advantage: “How steep discounting on a platform … creates a higher risk that the firm will generate monopoly power” than discounting in physical stores, and how Amazon’s business had become so big and varied that it could undercut rivals’ prices, take a temporary loss, and recoup its red ink in multiple ways.
The lawsuit that her FTC filed against Amazon sends a clear signal: She doesn’t intend to make the same mistake.
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