Hotel association warns service charge law may force employee cuts

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THE Philippine Hotel Owners Association, Inc. (PHOAI) said it opposes the new legal requirement to equally distribute the service charge collected by hotels and restaurants among all employees and remove the share collected by hotel management, noting that the rules could force the industry to reduce staffing.

PHOAI President Arthur M. Lopez also told reporters after a forum Thursday that hotels, which collect 15% of the service charge, use the fee to cover pilferage and breakage.

Republic Act No. 11360, signed in August, would give rank-and-file employees 100% of the service charge while removing the share given to managerial employees. The Implementing Rules and Regulations for the law were issued this month.

Mr. Lopez said that removing the managers’ share might result in some managers receiving less money than the people they supervise.

“We also give a share to some managers. If we don’t, there might be a distortion in the salary structure.”

Service charges, he said, make up 10% of hotel sales, which then use their 15% to cover various losses.

“It is big money for the investors. It happened all of a sudden without warning,” he said.

Mr. Lopez said that hotels do not want to adjust rates to offset the loss in service charge money as doing so “might scare away tourists.”

“We have to reduce a number of people. We have to reduce cost,” he said, noting that tourism investors considering the Philippines may have second thoughts.

He said that the hotel industry currently employs 2 million people. Mr. Lopez added that workers receive around P30,000 a month in service charges in addition to their salary. — Jenina P. Ibañez