Washington Hospitality Magazine Winter Edition

WA S H I N GTO N

Winter Edition 2016

MEGA TRENDS

OPERATIONS

PLUS: TECHNOLOGY 2016

ELECTIONS REVIEW

Washington Hospitality Association 510 Plum Street SE Olympia, WA 98501-1587

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Inside

wahospitality.org

Features

14

16

11

Affordable Care Act Reporting Requirements Get Tough In 2017

14

Election 2016: Quick Overview

16

Key Dates that Should Be on your Radar

18

Hospitality Goes High Tech

22

DOL’s Mandatory Tip Pool Regulations Now in Effect: Are You in Compliance?

24

Fight Back Against Norovirus

26

FAQ: Complying with Seattle’s New Hotel Regulations

In Every Issue 18

WA S H I N GTO N

Winter Edition 2016

MEGA TRENDS

OPERATIONS

PLUS: TECHNOLOGY 2016

ELECTIONS REVIEW

President and CEO: A Year to Remember

9

News Briefs

12

Local Government Affairs

28

Calendar/New Members

30

Ask the Expert: Five Sales Building Tactics that Won’t Break the Bank

On the cover

The hospitality industry is operating in an environment of constant change. As you face many new challenges, Washington Hospitality Magazine is here to show you the latest trends and solutions, helping you succeed.

Washington Hospitality Association 510 Plum Street SE Olympia, WA 98501-1587

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President and CEO EDITORIAL STAFF Publisher, Anthony Anton Executive Editor, Lex Nepomuceno Editor-in-Chief, Marianne Scholl Art Director, Lisa Ellefson Managing Editor, Paul Schlienz Contributing Editor, Andy Cook Contributing Editor, David Faro Contributing Editor, Jillian Henze Contributing Editor, Stephanie McManus Contributing Editor, Wendy Hughes Research Editor, Sheryl Jackson EXECUTIVE COMMITTEE Co-chair, Phil Costello Stop n’ Go Family Drive In Co-chair, Frank Welton Hilton Worldwide EXECUTIVE TEAM President and CEO, Anthony Anton Vice President, Teran Petrina Director of Business Development, Ken Wells Director of Communications & Technology, Lex Nepomuceno Director of Local Government Affairs, John Lane Director of State Government Affairs, Julia Gorton Director of Internal Operations, Kylie Kincaid Director of Membership, Steven Sweeney Education Foundation, Naja Hogander

510 Plum St. SE Olympia, WA 98501-1587 T 360.956.7279 | F 360.357.9232 wahospitality.org

Letters are welcomed, but must be signed to be considered for publication. Please include contact information for verification.

Reproduction of articles appearing in Washington Hospitality Magazine are authorized for personal use only, with credit given to Washington Hospitality Magazine and/or the Washington Hospitality Association.

Articles written by outside authors do not necessarily reflect the views or positions of the Washington Hospitality Association, their Boards of Directors, staff or members.

Products and services advertised in Washington Hospitality Magazine are not necessarily endorsed by the Washington Hospitality Association, and do not necessarily reflect the opinions of the Washington Hospitality Association, their Boards of Directors, staff or members.

ADVERTISING INQUIRIES MAY BE DIRECTED TO: Michele Holmes Allied Relations Manager 206.423.3902 micheleh@wahospitality.org Washington Hospitality Magazine is published monthly for members. We welcome your comments and suggestions. email: news@wahospitality.org, phone: 800.225.7166.

Circulation: 6,310.

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A Year to Remember What a year 2016 has been! Both for your association and your business. The Greek philosopher Heraclitus is famous for saying “change is the only constant in life.”

This has never been truer.

Looking back on 2016, we were the solitary moderate voice on the minimum wage debate that spanned the entire year. We’ve faced restrictive scheduling mandates, controversial new labor provisions for Seattle hoteliers in Initiative 124, changes to tip pooling regulations and new paid-leave mandates. Additionally, our government is changing. No matter how you voted in the election, we can all agree it has been a polarizing political time. When you pair all of these adjustments with the ongoing cost and strain of running a hospitality business, you have faced great challenges.

As 2017 arrives this resourcefulness must continue. We used to face significant change once a decade, now it happen once a year. We have to be willing and open to embrace changes we have been slow or afraid to consider. How you adapt to change will be the future of your business. If you haven’t incorporated social media in your business plan, now is the time. If you haven’t examined how you will deal with increased labor costs – be it with new technology, new efficiencies, service charges or increased prices – you must. But you aren’t alone when it comes to embracing these changes. We are here to help.

Our new, combined hospitality association means our industry has come together.

Our logo and brand have changed, but our goals remain the same. We are a supportive and responsive member resource; a powerful, unified and credible advocate for the hospitality industry. Hospitality is a living, vital, needed part of our cultural fabric more than ever, and it now has an association to support it.

We will work to help the restaurant industry fill an estimated shortage of 9,000 line cooks statewide. We will support you with solutions for increasing labor costs. We will fight for local hotels’ reputations and to protect them from forced unionization. We will ensure our RETRO program continues to be a proactive force for workplace safety in our industry. And we will support your growth with training and education offered by our Education Foundation.

We have already hit the ground running in providing solutions. In November, we hosted a hiring event in Seattle in partnership with the Department of Health and Social Services . In just half a day, more than 65 deserving individuals found new jobs.

During the event, participants could earn a food handlers permit, apply for Orca Lift cards and receive childcare assistance if needed. This is a prime example of how the hospitality industry is a pipeline for employment from first job to lifelong career.

Together, we are the largest private employer in the state, employing nearly 270,000 people. We aim to hold more of these events across the state and continue moving roadblocks for people who want jobs.

It is active steps like this that will help increase the pool of talented applicants for employers, lifting people up and giving them the opportunities once provided to us. I believe we will embrace change and grow in 2017. We will be the association and the industry that blazes trails to finding solutions and welcoming every group, nationality and creed.

Anthony Anton President & CEO Washington Hospitality Association

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LODGING

FULL SERVICE RESTAURANTS

QUICK SERVICE RESTAURANTS

Primary Source of Information | News Briefs National Restaurant Association and American Hotel & Lodging Educational Institute Combine Forces on Hospitality Training In November, the National Restaurant Association and the American Hotel & Lodging Association announced that the NRA was acquiring the training business assets and products of the American Hotel & Lodging Association Educational Institute (AHLEI). Currently owned by AH&LA, AHLEI provides hospitality education, training and professional certification.

AH&LA will retain the certification business, and the NRA will assume day-to-day responsibility for AHLEI’s training program business. Under the intended agreement, NRA will purchase the AHLEI portfolio of 180 training products and assets, which includes online learning, distance learning courses, videos, seminars, textbooks and study guides.

“We are grateful that AHLEI business has found a home with the National Restaurant Association. It’s a natural and logical evolution that combines two outstanding teams committed to excellence in the restaurant, foodservice and hospitality industries,” said Dawn Sweeney, president and CEO, National Restaurant Association. “By adding the AHLEI assets and business lines to our offerings, we will increase our reach and enhance our credibility as the acknowledged leader in industry training and certification – while extending our expertise to the hotel and lodging industry.”

“AHLA’s core mission is to provide employees with the best career opportunities through training and development.

Recognizing important partnerships that help us achieve our goals has been and continues to be critical to the industry’s success,” said Katherine Lugar, president and CEO of the American Hotel & Lodging Association.

AHLEI will be run as a separate business under the NRA’s Training & Certification division. The acquisition is slated to be completed by the end of 2016.

Federal Tip Pool Rule and Overtime Regulations Go Into Effect in December This month, Washington hospitality employers are faced with two key deadlines for compliance with this federal labor laws: The new federal overtime rules go into effect on Dec. 1, and on Dec. 5 Washington hospitality businesses must be in compliance with Department of Labor’s rules on mandatory tip pools.

Under the DOL tip pool rule, employers must exclude non-tipped employees from mandatory tip pools. The Washington Restaurant Association was a plaintiff in Oregon Rest. & Lodging Ass’n v. Perez, which challenged this rule in court.

In September, the Ninth Circuit Court of Appeals refused to reconsider an earlier ruling, upholding its support of the DOL rules. Hospitality employers where given until Dec. 5 to get in compliance with the DOL rule on mandatory tip pools or face the possible of penalties. The Washington Hospitality Association has advised its members to remove tip pools from the payroll structure. See page 22 of this issue for more details.

DOL’s new rules on overtime exempt employees will be in effect as of Dec. 1. These rules include an annual salary threshold of $47,476 a year or $913 a week for overtime exempt status and a “highly compensated employee” threshold of $134,004.

As of press time, federal legislation to give employers more time to adjust to the new overtime rules was stalled. Look for more about the new rules and get updates on the status of that legislation at www.wahospitality.org.

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LODGING

FULL SERVICE RESTAURANTS

QUICK SERVICE RESTAURANTS

Primary Source of Information | News Briefs

Lodging Awards Recognize Employees Who Embody the Spirit of Hospitality Eight talented employees received the Washington Hospitality Association’s 2016 Stars of the Washington Lodging Awards. They were honored on Nov. 7 at the Davenport Grand Hotel in Spokane during the Washington Lodging Convention.

Nominations for the awards were submitted by supervisors, HR directors and peers in four categories, and winners were selected for going above and beyond their normal job responsibilities to provide outstanding service to the property, guests and the community. The 2016 winners are as follows: OUTSTANDING GENERAL MANAGER: Charlotte Mayo, general manager, Springhill Suites Wenatchee OUTSTANDING MANAGER OF THE YEAR: (full-service): Margrett Gustafson, senior sales manager, DoubleTree by Hilton Spokane City Center OUTSTANDING MANAGER OF THE YEAR: (limited-service): Irma Trujillo, Director of Housekeeping, Best Western Executive Inn Seattle OUTSTANDING LODGING EMPLOYEE: (full-service) Nirmal Kaur, room attendant, Radisson Hotel Seattle Airport OUTSTANDING LODGING EMPLOYEE: (limited-service): Terrence Lewis, Laundry Attendant, Homewood Suites Seattle Pike Street RISING STAR OF THE YEAR: (full-service): Hannah Seagrave, catering coordinator, Ramada at Spokane Airport RISING STAR OF THE YEAR: (limited-service): Melissa Graves, Breakfast Bar Host, Holiday Inn Express Spokane Valley The Radisson Hotel Seattle Airport was recognized for the second year in a row for its community service, and the Adrift Inn received its first Stars award for its commitment to good earthkeeping.

2016 marks the 18th year of the awards, continuing the longstanding tradition of recognizing the best in the industry.

Restaurant members were honored earlier in June at the Association’s State of the Industry event in Seattle. Award winners included Dick’s Drive-In (Restaurant Neighbor Award); Whidbey Coffee Company (Restaurant Neighbor Award); Scott Fraser, owner of Frasers Gourmet Hideaway (Cornerstone Humanitarian); Jim and Fawn Spady, owners of Dick’s Drive-In (Quick-Service Operator of the Year); Budd Gould, founder of Anthony’s (Full-Service Operator of the Year); Randy Irvine, president of the Seattle Operating Unit of Food Services of America (Allied Member of the Year); and Roberta Greer of Tillicum Village (De Vere “Jerry” Burtenshaw Award). Additionally, Taylor Hoang, owner of Pho Cyclo Café, who received the National Restaurant Association’s Faces of Diversity Award, in Washington, D.C., in April, was also honored at this event. Congratulations to all!

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STAY TUNED: Washington Hospitality Association let you know if there are any changes in ACA requirements under the in coming administration.

Affordable Care Act Reporting Requirements Get Tough in 2017 This past year, employers were given extra time to meet information reporting requirements under the Affordable Care Act, and larger employers were given some leeway on the shared responsibility mandate, A.K.A. “play or pay.” You should not plan on receiving similar relief in 2017.

Under the shared responsibility provisions of the ACA, on Jan. 1, 2017 all organizations with 50 or more fulltime equivalent (FTE) employees must insure 95 percent of their full-time employees or face penalties. In 2015 and 2016 penalties were waived for these employers, but compliance in 2017 gets serious.

Employers must provide employees with 1095-Cs by the end of January 2017. These forms show month-by-month coverage for 2016. If you're printing forms, Jan. 20 is about when they need to go to the printer in order to get mailed

by Jan. 31.

The “95 percent-insured” rate is calculated month over month. If your business exceeds the 50 or more FTE threshold and had just one month in 2016 with less than 95 percent of your FTE employees insured, you are exposed to liability. In 2017, any of your full-time employees seeking coverage through the ACA marketplace will also trigger potential penalties for the months you were under the 95 percent threshold. If your business was close to the 50 or more full-time employee threshold at the end of 2015, you should run the math for each month in 2016 to determine whether or not you’ll be subject to shared responsibility for tax year 2016.

Maintain a robust reporting system and watch for any “exchange subsidy notices.” Large employers should also be on the lookout for notices alleging that a full-time employee received subsidized coverage on an exchange because the employer failed to provide qualifying coverage. These notices are now being sent from the ACA's Health Insurance Marketplace.

To contest a notice, you must submit an appeal request form within 90 days of the date of the notice. To avoid penalties, an employer must be able to show that qualifying coverage was indeed offered to the employee. This is why it is critical to have a robust system for recording communications with employees about health-care coverage.

Review the tactics you use to ensure ACA compliance. Reporting strategies vary greatly from employer to employer. Some fill out hundreds of forms by hand, others use third-party services to get the job done.

Regardless of the strategy, many employers remain unsure of exactly what is required and how to fulfill any obligations they may have under the Affordable Care Act. In 2017, not understanding your responsibilities may get expensive.

Fortunately, the Washington Hospitality Association stands ready to help members navigate the Affordable Care Act. We have crafted a range of healthcare solutions from tailored insurance products to consulting services.

Whatever your specific needs, Washington Hospitality has the network and expertise to help you comply with the often changing requirements of the ACA. For more information, contact Washington Hospitality Benefits Specialist Lesley Webb-Henry at 877.246.0545 or visit www.wahospitality.org/wise-buy/health-care-solutions.

ACA Information Reporting Forms

2016 Tax Year Deadlines

Forms 1095-B and 1095-C due to employees (to be postmarked if mailed, or sent by email if applicable conditions are met).

Jan. 31, 2017

Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing on paper.

Feb. 28, 2017

Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing electronically. *

March 31, 2017

*Any employer filing 250 or more information returns during the calendar year must file these returns electronically. For employers with fewer than 250 returns, electronic filing is voluntary.

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LOCAL GOVERNMENT AFFAIRS

By Jillian Henze and Wendy Hughes

SEATTLE

Gear Up for Restaurant Grading Seattle and King County’s combined public health department is continuing its work on restaurant grading to expand how restaurant inspection scores are communicated and made available to the public. The new system will include placarding.

In October, Public Health - Seattle & King County held focus groups in different languages to evaluate grading and various placard designs. Close to 150 King County residents participated in the sessions, and an online survey to gather feedback was also available. Our local government affairs team has been engaged throughout the three-year process and will continue its work.

Secure Scheduling Ordinance The Seattle City Council passed its Secure Scheduling Ordinance on Sept. 19 with a vote of 9-0. The law, which impacts food service establishments with 500 or more employees worldwide, goes into effect July 1, 2017. We have posted a Secure Scheduling Ordinance Toolkit on WAhospitality.org and will keep members updated on the rulemaking process, which is expected to start in January. That process will likely mirror the minimum wage rulemaking and include input from business and labor stakeholders.

Seattle’s Minimum Wage Jumps Again On Jan. 1, 2017, large employers in Seattle who do not pay towards an employee’s medical benefits plan must increase their hourly minimum wage to $15. Large employers who make payments toward an employee’s medical benefits plan have an extra year to reach $15. In 2017, they must pay $13.50 an hour to comply with the city’s minimum wage ordinance.

Seattle voters approve hotel initiative.

Learn more about what this means for hoteliers on page 25.

Small employers will need to increase minimum compensation from $12 to $13 per hour on Jan. 1. If an employee receives tips and/or employer contributions toward a medical benefits plan, the minimum wage for small employers will increase from $10.50 per hour to $11 per hour.

Legislation on Homeless Encampments Increasing homelessness and an explosion in unsanctioned homeless encampments are a significant issue for Seattle.

In September, a coalition of organizations, which included the ACLU and Columbia Legal Services, proposed legislation which would have severely limited the City of Seattle’s ability to manage and clean up illegal homeless encampments.

Hospitality, business and community representatives worked closely with the City Council to improve the legislation. The final proposal is intended as a shortterm solution to immediately address homelessness and encampments, and it calls for assessing the ordinance’s effectiveness every six months for 24 months. After 24 months, a new course of action is supposed to be proposed. Mayor Ed Murray and the City Council have also acknowledged the need for longer-term solutions.

In late October as we go to press, there was considerable opposition from residents and other groups, but our local government affairs team anticipates a homeless encampment ordinance to be in place by Jan. 1, 2017.

Discussion of additional short- and long-term solutions will continue in the coming months.

Pierce County:

Health Department Fees May Rise Increases of six to seven percent were proposed by the Pierce County Food Advisory Board on Oct. 27 at its monthly meeting. The Washington Hospitality Association attended a public forum Oct. 20 to address member concerns of the proposed increase. The Association’s suggestion was put in place to have a raise of three to five percent, historically aligning with other cost increases, to give members the ability to adjust. Because of the rise in health department costs an increase is understood, but Washington Hospitality recommended the release of an invoice stating where the increases were used.

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Walla Walla and Port Townsend:

Efforts to Regulate Short-Term Rentals Continue The Walla Walla Planning Commission has been drafting regulations to govern short-term vacation rentals. In October, it voted 5-1 to send the City Council an optional resolution that would only allow individuals to rent out their home or property if they lived on that same property.

This would reduce the ability of non-residents to buy housing to use solely as short-term rentals. The regulation would also increase lodging tax revenues.

Port Townsend has also been working to address short-term rentals. In September, the Planning Commission voted 6-0 to approve regulations that limit short-term rentals to resident-owned properties. The rules would apply to both single-family homes and multi-unit properties, making possible for owners of duplex, triplex or quadruplex units to rent out as many as two rooms for fewer than 29 days. The City Council will vote on the regulations early next year.

Spokane:

Association Members Hold First Step Climb Restaurant and hotel members converged on the Spokane City Hall in October for in-person meeting with their City Council members. This “Step Climb” ended with a group

meeting with Mayor David Condon and Council President Ben Stuckart. They addressed topics effecting the entire hospitality industry, including Initiative 1433, and local issues such as the impact of downtown construction on businesses. President Stuckart and Mayor Condon voiced a willingness to work with businesses to make the construction processes more streamlined. Participating members and President Stuckart want Step Climb meetings to be held every six months. To get involved in future meetings, email Zach Lindahl at ZacharyL@wahospitality.org.

Ellensburg:

Plastic Bag Ban is a Possibility The Ellensburg City Council is addressing a proposal to create a plastic bag ordinance. It would ban the use of plastic bags in most locations and would impose a 5 cent fee on the use of paper bags. The Washington Hospitality Association is working to ensure Ellensburg matches other ordinances across the state by excluding food service locations from this ruling because of concerns of food safety. For more information on plastic bag bans around the state, email Samantha Louderback at SamanthaL@ wahospitality.org, or check the Tacoma advocacy page at wahospitality.org/government-affairs/Tacoma.

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ELECTION 2016 A QUICK OVERVIEW November’s national election results came as a surprise to much of the country — as almost every projection, poll, and data set was off the mark. The widely anticipated “blue tidal wave” failed to materialize.

In Washington state, however, the Majority Coalition Caucus may have lost one member and will lead by a single seat. Voters also passed Initiative 1433, which will usher in a $13.50 per hour statewide minimum wage by 2020.

National Level

Donald Trump will be our next president, and Republicans will have a significant majority in the U.S. House of Representatives and a slim majority in the U.S. Senate. We are interested in seeing how the Trump administration’s appointments impact recent Department of Labor rulings.

State Level

Gov. Jay Inslee was re-elected to a second term, and we will look forward to our continued

work and partnership with his administration. Two of the Washington Hospitality Association endorsements for statewide offices also fared well. Republican Secretary of State Kim Wyman, was reelected, and at press time Rep. Chris Rykdal, D-Tumwater, is leading in the race for superintendent of public instruction.

Senate

The Senate in 2016 was controlled by the Majority Coalition Caucus (MCC) with a 26-23 margin. The MCC consists of 25 Republicans and one Democrat. There were four toss-up seats up for election, and Democrats needed to gain three of these seats to regain a majority. More than $10 million was spent on these four hotly contested races.

As of press time, control of the Senate appears to have narrowly remained with the MCC by a 25-24 margin.

The MCC has picked up more hospitality industry champions. Sen. Mark Mullet, D-Issaquah, has a comfortable lead over his opponent Rep. Chad Magendanz, R-Issaquah. Sen. Mullet is a member of our Association and an outspoken champion of industry issues in his caucus. Rep. Lynda Wilson, R-Vancouver, also has a comfortable lead over her Democratic challenger Tim Probst. Finally, Sen. Steve O’Ban, R-Tacoma, is leading in his race and is likely to win.

The Senate Democratic caucus has another industry champion with the election of Bothell Democrat Guy Palumbo, a small business owner we endorsed and will now represent the 1st Legislative District

House of Representatives

As we go to press, we expect the House to remain under a Democratic majority, although there are several races still too close to call. In 2016, the 98-member House had 50 Democrats and 48 Republicans. Thirteen races were toss ups in the general election, with nine held by or being vacated by Republicans; four are held by or being vacated by a Democrat. We will update you with House results when tallying is complete.

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Minimum Wage and Paid Sick Leave Initiative Passes: What’s in Store for Employers Voters approved I-1433, which will raise the statewide minimum wage to $13.50 by 2020 and impose mandatory paid sick leave benefits starting in 2018. The first wage jump will go into effect on Jan. 1, 2017, with an increase from the current $9.47 to $11. Here’s a quick cheat sheet on what the passage of the initiative will mean for employers: Washington’s Hourly Minimum Wage Increase Schedule: Jan. 1, 2017

$11

Jan. 1, 2018

$11.50

Jan. 1, 2019

$12

Jan. 1, 2020

$13.50

Businesses in cities with higher minimum wage laws must pay the higher wage.

Service charges do not count towards the statewide minimum wage.

Washington’s Paid Sick Leave Requirement:

 Paid sick leave accrues at 1 hour per 40 hours worked starting in 2018.  Employees are entitled to use paid leave after 90 days of employment.  Unused paid leave can be carried over into the following year.

The Washington Hospitality Association has worked tirelessly to find a middle ground on minimum wage and paid sick leave, and was opposed to Initiative 1433. With its passage, we stand ready with programs and resources to help you adjust to higher costs. Programs include our RETRO, which helps participants secure significant savings on workers’ compensation premiums, our low-cost health insurance solutions, and the new Elavon (US Bank) credit card processing program. Contact your area coordinator for information on these and other programs or call 800.225.7166. Additional resources will be posted at wahospitality.org/blog/i1433-minimum-wage-and-paid-leave-initiative.

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KEY DATES

THAT SHOULD BE ON

YOUR RADAR Employers in Washington State need to be more vigilant than ever to ensure they are in compliance with local, state and federal employer rules and regulations. Here’s a cheat sheet of some key deadlines coming our way over the next six months.

29

Earliest possible date Seattle’s hotel ordinance could go into effect. Initiative 124 called for new regulations to go into effect between Nov. 29 and Dec. 6.

1

Washington state minimum wage increases to $11 per hour under I-1433. Businesses in Seattle, SeaTac and Tacoma must adjust to higher minimum wages as set by local ordinances.

(See page 15)

9

Washington State Legislature convenes regular session.

31

ACA reporting information deadline for large employers: Forms 1095-B and 1095-C must be sent or emailed to employees. (See p. 11)

1

Seattle’s secure scheduling ordinance goes into effect, impacting food services establishments with 500 or more employees worldwide. (Learn more at wahospitality.org)

1

New federal overtime rules go into effect, raising the threshold for overtime exempt status to $47,476 annually or $913 a week. (Congress has yet to act on legislation that would delay implementation. Learn more at http://wahospitality.org/blog/ eye-on-hospitality-new-federalovertime-rule-still-on-track-fordec-1/)

5

Federal rules on mandated tip pools apply to Washington businesses. (See p. 22)

6

Washington Hospitality Association’s Annual Hill Climb & Taste 0ur Best. (See p. 4)

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Hospitality Goes

By Paul Schlienz

Technology is not likely to be the first thing on your mind when you think of what you need to do to grow your hospitality business. Creating a hospitable environment, pleasing your guests, attracting new customers and developing great new menu items or special getaway packages are more typically at the top of mind for hoteliers and restaurateurs.

These are, however, times of rapid technological innovation, and hospitality leaders are embracing new technologies. The speed of technological adoption, however, depends on the technology and the sector of the industry.

Satisfiers, Not Motivators

delivery through Uber and Amazon and you can access the restaurant's WiFi if you're a guest.

Beyond that, however, Kong has no definite plans to add any more new technology.

"I think I'm going to leave it up to my kids who are smarter with things like cell phones," said Kong.

"Technology is good, but for a lot of people like my husband and me, it's confusing. Leave it to younger people."

Other operators are, however, much more bullish on technology.

According to the National Restaurant Association's 2016 Mapping the Restaurant Technology Landscape survey of more than 500 restaurateurs, approximately one third of restaurant operators consider their operations to be lagging in technology use. By contrast, a mere 10 percent feel their operations are leading edge when it comes to technology.

If you want to see a truly futuristic quick-service restaurant, check out Burgerville's outlet at Portland International Airport. For starters, you'll know this is a different kind of restaurant concept when you notice there is no counter separating the staff from the public, Seattle's Perché No Pasta & Vino is typical of many and there are none of those lines that are among small, independently owned restaurants that have been the most annoying aspects of many airports. Instead, cautious in their embrace of employees called “Burgerville technology. ambassadors” carry handheld e-tablets, mingle with "My restaurant is very old "We have to figure out how we're the customers and take school," said Lily Kong, coand submit their orders owner of Perché No along going to get more money to pay electronically. with her husband David.

Burgerville is also working on "I don't do a lot of new higher labor costs." developing a mobile phone technology." presence.

Nevertheless, even Perché No is not the same restaurant it might have been 30 years ago. Although it hasn't jumped headlong into technology, it has been touched by the tech revolution. It has its own website, you can order online for

"We have created our own mobile app," said Jack Graves, chief cultural officer at the Vancouver, Washington-based quick-service chain that is a fixture in Southwestern Washington and Northwestern Oregon. "It's actually

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functional, but we haven't launched it yet. We've been working on online ordering, but that hasn't made much impact so far. We think with our free app, this will pick up.

We'll be marketing it shortly."

The average hotel technology budget is expected to top six percent of revenue this year.

Kiosk-ordering technology may be the next big thing in quick-service. Already, these systems are appearing in quick-service chains, especially overseas. With rising labor costs heavily on their minds, many restaurant operators are watching these developments with great interest.

"We have to figure out how we're going to get more money to pay higher labor costs," said Phil Costello, owner of Spokane's Stop N Go Drive-In and co-chair of the Washington Hospitality Association's Board of Directors. He notes that the reliability of kiosks will have a strong appeal for employers.

Costello also feels that customer acceptance of innovations like kiosks may break down along generational lines with Millennials embracing the technology while Gen Xers and Baby Boomers may prefer placing orders with human beings.

“I'm sure Millennials will embrace kiosk technology,” said Costello. “My guess is that the days of human beings serving customers in quickservice restaurants will come to an end in 10 years."

Quick and Seamless Hospitality's lodging sector, too, is poised to see big technological changes in the future. Although, like restaurant operators, hoteliers are being careful and deliberate in what they choose, the trend toward technology is clear.

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Indeed, according to Hospitality Technology’s 2016 Lodging Technology Study, 54 percent of hotels were planning to invest more in technology this year than they did in previous years. The average hotel technology budget is expected to top six percent of revenue this year.

Foremost on the minds of hoteliers: security, guest room technology and mobility.

"The convenience of mobile applications allows the guest to customize their stays on the go or at home," Van Der Peet said. "The use of these new technologies will continue to improve the overall communication between our guest and associates and create an enhanced guest experience."

Talk to any hotelier, and you're likely to hear about the importance of mobile technology.

Building a strong social media presence is also of major concern to hoteliers.

"The utilization of mobile technology continues to enhance the guest experience by providing them more options to tailor their stays," said Matt Van Der Peet, general manager at the Westin Bellevue and W Bellevue.

"Improved hotel mobile apps allow guests to create and customize their current and future reservations."

"All Marriotts have mobile check-in," commented Matt Jensen, corporate director of sales at Spokane's Davenport Hotels, which are now affiliated with Marriott. "You don't see the lines that you once did with people checking in.

It's a quick and seamless process."

The Davenport Hotels, including the Historic Davenport Hotel, Davenport Grand, Davenport Lusso and Davenport Tower, may also see further upgrading of their check-in process.

"We're looking at a new system where our employees can come out from behind their desk and check-in the guests via an iPad that is equipped with a credit card reader," said Jensen. "Since it's an iPad, guests can actually see what the rooms look like, providing opportunities for the employees to sell them on rooms with more amenities."

According to Van Der Peet, current and future enhanced technology will allow guests to use mobile devices to book hotel reservations and check into hotel rooms without stopping by the registration desk by utilizing their personal smart phone or tablet.

"One of the biggest things for us is social media," said Warren Beach, vice president of operations for hotel management at SMJ Management Inc., which operates several Holiday Inns in the Puget Sound region. "Medallia, which encompasses all of our customer reviews in one place, is really critical to our success."

Room service is also about to get an upgrade.

Van Der Peet reports that the Westin is looking to eventually add an online housekeeping scheduling tool.

This application will allow the housekeeping leadership team to communicate with their staff instantaneously and make changes based on the needs of the guests and hotel. This tool strengthens the communication between the front desk and housekeeping by improving the room readiness for guests.

Through it all, however, one thing never seems to change no matter how much new technology transforms many aspects of the hospitality industry. First and foremost on the minds of hoteliers and restaurateurs is the guest experience. Hospitality is, after all, the industry that serves its customers. In an increasingly digital world, some of the very best traditional values underpinning this industry are likely to remain as strong as ever.

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TODAY’S TECH

Restaurants that currently offer the following:

Wi-Fi for guests

64%

Touch-screen ordering kiosks

42%

Online ordering

49%

Mobile Payment

49%

Online reservations

25%

SOURCE: National Restaurant Association’s Restaurant Technology Survey 2016.

LEADING-EDGE TECH

Restaurant operators who say they would implement the following technologies if they were available:

53%

Predictive ordering

36%

Automatic menu-price adjustment based on demand Drone food delivery off-premises Automatic food preparation system Automated onsite drink or food delivery

16% 13% 9%

SOURCE: National Restaurant Association’s Restaurant Technology Survey 2016.

Customer-Facing Technology at Lodging Establishments in 2016

Currently Use

Plan to Adopt Within 18 Months

Tablets at the front desk

18%

27%

Point of sale technology

87%

7%

Location-based technology

24%

30%

Mobile app for customer use

63%

21%

Mobile website

81%

7%

Kiosks

31%

11%

Customer relationship management program

65%

15%

Loyalty program

73%

9%

From the 2016 Lodging Technology Study published by Hospitality Technology, www.htmagazine.com.

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FULL SERVICE RESTAURANTS

DOL’s Mandatory Tip Pool Regulations Now in Effect: Are You in Compliance?

In September, when it denied our petition to reconsider an earlier ruling in Oregon Rest. & Lodging Ass’n v.

Perez, the Ninth Circuit Court of Appeals upheld the U.S. Department of Labor’s (DOL) rule prohibiting employers from including non-tipped employees in mandatory tip pools. The Washington Restaurant Association was one of the plaintiffs in the suit, and the Washington Hospitality Association secured a stay to give members until Dec. 5, 2016, to comply with this DOL rule. With the passing of that date, mandatory tip pools in violation of the regulation leave the door open to penalties.

and are sometimes challenged as not being truly voluntary.

An employee, for example, may allege that he or she was coerced into making “suggested” contributions.

This is a big shift for full-service restaurant employers. If you haven’t already removed tip pooling from your payroll structure, now is the time to do it. Here is a recap of three options that full-service restaurants have adopted:

MANDATORY SERVICE CHARGES

MANDATORY TIP POOLS LIMITED TO “CUSTOMARILY AND REGULARLY TIPPED” EMPLOYEES.

The DOL’s Wage & Hour Division identifies “customarily and regularly tipped employees” as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and service bartenders. It also notes “A valid tip pool may not include employees who do not customarily and regularly receive tips, such as dishwashers, cooks, chefs and janitors.”

Management should not be included, and this may also mean hourly managers, depending on their managerial duties.

VOLUNTARY TIP POOLS

A truly voluntary tip pool may include employees who would be ineligible for inclusion in a mandatory tip pool. Voluntary systems, however, frequently come under legal or regulatory scrutiny

If there is a voluntary tip pool system at your business that includes employees who would be ineligible for inclusion in a mandatory tip pool and it is challenged, it will be your burden to prove that the system was, in fact, voluntary.

Consider how you will establish its voluntary nature and take proactive measures to reduce the risk of your system being deemed involuntary.

Mandatory service fees are not considered “tips” and are therefore not impacted by DOL tip pool regulations.

Generally speaking, employers may distribute service fees however the employer chooses. Shifting to a mandatory service fee is a step that should be only taken after careful consideration, thoughtful employee communications and a full understanding of the laws that govern service charges.

If you’re considering switching from tipping to a service charge, it’s important to understand the financial and legal implications of that decision. Here are a few highlights to consider: 1. The percent of service charge directly payable to employees must be disclosed in an itemized receipt and on menus.

2. Service charges paid to employees are non-tip wages and subject to FICA and all wage-related taxes, but service charges under I-1433 cannot be used to offset the statewide minimum wage.

3. Service charges are part of an employer’s gross receipts and thus subject to taxes, including Washington state retail sales tax and Washington and City of Seattle B&O tax. Service charges cannot be used to qualify for the IRC Section 45B tax credit.

For the DOL fact sheet on tip pooling and in-depth resources, visit Washington Hospitality’s tip pooling page at www.wahospitality.org/tip-pooling-2016.

-Marianne Scholl

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FSA: Invested in Your Future The Business Solutions team at Food Services of America has a mission statement, “We are invested in our customer’s future. By delivering solutions, we empower our Customers to feed their American Dream.” Our industry is changing, causing constricting profit margins. We must define a new business model in order to stay profitable. We are here to partner with the hospitality industry to help maximize profits by implementing attainable solutions.

The Business Solutions team partners with businesses for long-term success by working with them to understand the needs of their business and provide practical solutions to drive success and increase profitability. We work together to customize meetings, focusing on any part of business from operations and technology to menu engineering and new menu ideas. Our group of industry specialists has the knowledge and passion to help make businesses grow.

Our philosophy is to provide operators with the tools they need to build sustainable success for their businesses. Long-term growth can be achieved by training operators to provide consistent, reliable service to all guests. We believe this is done by providing training on three fundamentals: business principles, systems & processes as well as creating and maintaining a strong company culture.  Solid business acumen can assist in decreasing expenses as sales and profits are raised.  Systems and processes are necessary to provide consistent service to guests each and every day.  A strong company culture creates engaged staff that will form memorable experiences for guests and grow with the organization.

We hope to help reenergize the industry by working closely with operators to improve and find new ways to grow their business. Working in an industry with increasingly difficult regulations means we have to find new ways to partner to help increase the growth and sustainably in the restaurant and hospitality industry. If you are interested in learning more about the Business Solutions team at Food Services of America and want to see how we can partner together, please reach out to: Nathan Stromberg Business Solutions Manager nathan_stromberg@fsafood.com

Meghan Berry Business Solutions Advisor meghan_berry@fsafood.com

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Fight Back Against Norovirus Remember last year about this time when a norovirus outbreak at a popular restaurant chain was making national headlines?

We’re back in the peak outbreak season for this easily transmitted, exceedingly unpleasant illness that can waylay your guest, your employees and your brand. Smart operators are paying attention to reduce the possibility of norovirus transmission and the risk of ending up in the news.

Norovirus is linked to 58 percent of all foodborne illnesses, and it takes only 18 norovirus particles to make someone ill. To keep your customers and employees safe, you should establish a clear set of procedures to combat this contagious virus. Fortunately, the National Restaurant Association

and SafeServ have partnered with Ecolab to provide a wide array of actionable, educational materials to help restaurateurs effectively prevent the spread of norovirus.

These resources include “Norovirus: The Notorious Dangers,” a white paper which provides a clear blueprint for an action plan to prevent and combat the virus.

It reminds managers and owners that “without quick, thorough, and informed action from leadership, norovirus can spread very quickly, causing major harm in a short amount of time. This is not a matter of simply reacting to an outbreak if one happens, but rather of being prepared at all levels.”

Here are some highlights from the white paper and other tools provided by the National Restaurant Association, SafeServ and Ecolab.

Training and monitoring for employee illness:  Have an illness policy that requires food service employees to report to their manager when they have vomiting, diarrhea, jaundice or sore throat with fever or infected lesions. All employees should sign off that they are aware of this responsibility.  What people call “stomach flu” is generally norovirus. This can spread through families, coworkers and guests can bring it in the front door.

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SYMPTOMS OF NOROVIRUS It takes only 18 norovirus particles to make someone ill with gastroenteritis, which is an inflammation of the stomach and intestines. Symptoms include:    

Nausea Vomiting Diarrhea Stomach cramping

People can feel very ill and may vomit violently many times a day. Other symptoms may include a low grade fever, chills, headache, muscle aches and a general feeling of tiredness. Symptoms usually begin 24 to 48 hours after ingestion of the virus, but they can appear as early as 12 hours after exposure. There is no treatment for norovirus. Most people feel better after one to two days.

Often called, “stomach flu,” employees with norovirus or stomach flu should stay home for two days after symptoms stop. The peak outbreak season is from November through March.

 Employees with “stomach flu” should stay home for two days after symptoms stop.  Handwashing is especially vital after using the restroom and in the kitchen.

Keep “touch points” clean – thoroughly clean daily or if infection is suspected (if an employee reports or goes home with any gastrointestinal symptoms). Pay special attention to surfaces that your guests and associates touch, such as:

 Understand and practice thorough cleaning procedures using proper disinfectants  Do not grab any cleaning equipment from the kitchen like brooms and mops—not only will these also become contaminated, but they will send norovirus particles into the air For more norovirus resources, go to www.servsafe.com/ states/norovirus-campaign/norovirus. There you will find checklists and fact sheets for prevention, segregation and cleaning and sanitizing.

 Door handles—front doors, foyers, restrooms  Tables and chairs including the back of chairs and side surfaces  Elevator buttons  Kitchen equipment—not only the usual wash, rinse, sanitize but also when you are moving it and putting it away with clean hands  Drinking fountains  Railings  Counters and condiment stands Understand proper cleaning if there is a vomiting or diarrhea incident  Every kitchen should have a biohazard clean up kit  Don’t just hang biohazard kits on the wall—conduct periodic trainings

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FAQ: Complying with Seattle’s New Hotel Regulations Seattle voters passed Initiative 124 on Nov. 8 with more than 76 percent of the vote.

This initiative requires hotels to further protect employees against assault, sexual harassment and injury, provide gold-level health care, limit workloads and provide job security for employees upon hotel ownership transfer. It is anticipated the law will go into effect between Nov. 29 and Dec. 6, 2016.

Here are the basics on how to get in compliance with the new law.

Is your hotel covered?

Seattle hotels and motels with 60 or more guest rooms must comply with the initiative’s provisions on protecting employees from violent assault, sexual harassment and injury, and providing job security.

Large hotels, which are defined as having 100 or more guest rooms suitable for providing lodging to members of the public for a fee, must comply with all provisions in the initiative.

Which employees are impacted?

The ordinance applies to any non-managerial, supervisory individual employed by the hotel, directly or via contract, who performs at least two hours of work within the City of Seattle.

Assault and sexual harassment provisions

Hotel employers must provide a safety alert system to all employees who work by themselves in a guest room. Hotels also must place a sign on the back of guest room doors in font size 18+ informing guests of the law.

If there is a complaint about a guest for sexual assault or harassment: For five years hotels must record and retain all employee accusations against guests for a report of violence and must alert employees if an accused guest is staying at the hotel.

For three years hotels must ban a guest from overnight stays IF the employee has provided a written statement about that guest incident.

Injury prevention and the square-footage requirement

employees regarding hazardous chemicals in their work areas.

Large hotels must limit housekeeper workloads to no more than 5,000 square feet of room space and 10 plus strenuous room cleanings during an eight-hour shift.

Gold-level health care provision

For low-wage employees (with household income at 400 percent or less of the federal poverty line), hotels must pay $200 or more each month in wages for health care costs.

Alternatively, they must pay the difference between the monthly premium for the lowest-cost, gold-level policy on the Washington Health Benefit Exchange and 7.5 percent of the amount by which the employee’s pay exceeds 100 percent of the federal poverty line.

Preferential hiring requirement

In the event of a transfer of ownership, outgoing hotel employers must provide the incoming hotel employer with employment information for each worker after the execution of the transfer document and post notice of the change in control.

The incoming hotel employer must maintain a preferential hiring list and hire from that list for six months after the hotel is open to the public.

What will non-compliance cost?

For each violation, hotels will be assessed a penalty of at least $100 per day per employee, and not more than $1,000 per day per employee.

Who will be checking?

The city’s Office of Labor Standards may investigate charges alleging violations of this initiative.

But don’t forget, most of the provisions of this new law can be waived in collective bargaining.

Questions?

Of course you have questions! Seek the input of your legal counsel or contact the association at info@wahospitality.org.

You’ll also find all the nitty-gritty details in our in-depth I-124 summary at wahospitality.org/government-affairs/seattle-2.

-Morgan Hickel and Jillian Henze

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Ask the Expert | Restaurant Profit Coach

Five Sales Building Tactics that Won’t Break the Bank

Q: A:

By Rick Braa, CHAE

As we head into the quieter time of the year for our restaurant, what are some ways we can build sales and not spend much money?

Building and maintaining sales in seasonal markets is a challenge. There is one area that is rarely exploited and it’s absolutely free: infrequent and new guests that are dining in your restaurant.

Statistically, 60 to 80 percent of sales come from repeat guests. What about the other 20 to 40 percent? Those sales are comprised of infrequent and new guests. Yet few have a strategy to convert infrequent or new guests into passionate, lifelong customers. If your restaurant has sales of $1 million per year and a $25 per guest check average, you have about 40,000 guest visits in one year. Twenty percent of those visits would be from 8,000 infrequent or new guests. Get just one more visit from each of these and you’ll produce an additional $200,000 in annual sales (8,000 guests multiplied by $25 per guest).

Here are five ways to increase sales and turn infrequent or new guests into lifelong advocates of your restaurant.

1. Have an on-floor sales plan every shift.

There is only one place to generate sales at your restaurant: the point of contact between the server and the guest. Each manager should have a sales plan for every server or bartender for each shift. The plan should include, but not be limited to, increasing performance, guest check average, sales of appetizers, desserts, beverages, specials and guest comments.

manager believes and what the guest knows to be true.

Every interaction at your restaurant is judged through the same lens. Inconsistent messaging between other members of the team and the guest creates a variance (gap) in the level of service. Bussers, front desk, kitchen staff and managers have the same impact on the guest experience as the server at the table. Focus the entire team on flawless execution to be truly superior.

3. Ensure every employee creates a memorable

experience. According to Gallup, an engaged guest provides a 23 percent premium, while a disengaged guest provides a 13 percent discount. Profits double with engaged guests. The startling fact is that it’s not about the food.

Guests are five times more likely to return if they have a memorable experience with an employee.

4. Give your guests something to talk about.

Ninety-three percent of those asked say that word of mouth is one of the most reliable information sources. In an average week, an individual has 10 conversations about food and dining and eight conversations about beverage. What story do you want the guest that dined in your restaurant to tell? Craft a message that everyone can customize to fit the restaurant.

5. Say “Thank you!” and invite the guest back.

Guests are 75 percent more likely to return to your restaurant if they receive a legitimate, heartfelt “Thank you.”

Focus on the return visit. By the time your guests leave, everyone should have acknowledged them and invited them back.

Use these free ways to drive sales and you’ll see your sales grow exponentially.

2. Provide a superior guest experience.

Research shows 93.9 percent of companies believe guest service has a direct impact on sales. Eighty percent of companies believe they deliver a superior guest experience.

There is one big problem: only 8 percent of guests agree with this. There is a gap between what the owner or

For a more information on improving profitability and driving sales, contact AMP Services at rbraa@ampservices.com. Rick Braa is the co-founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability.

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www.wahospitality.org

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• Offer not valid if customer’s current rates are set to be competitive for a large franchise or association members under corporate pricing, government or non-profit entity pricing, warehouse pricing, petroleum merchants, merchants processing through a third party network, Elavon or U.S. Bank Partner, or other U.S. Bank group offers. Offer requires merchant processing a minimum of $50,000 in annual credit card sales.

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