What’s a pandemic-plagued hotelier to do: Ride it out with a skeleton crew? Flip the circuit breakers and live with the losses? Furlough workers with the intention of rehiring them, or lay them off immediately?
As the economy tiptoes toward a reopening, André Balazs, the dashing figure behind the Chateau Marmont in West Hollywood, the Mercer Hotel in New York, Shelter Island’s Sunset Beach, and the Chiltern Firehouse in London, seems destined to emerge with a troubled legacy.
His mercurial management style played out most dramatically at the Chateau Marmont, which Balazs took over in 1990. Originally built in the style of a French château as a luxury apartment building in 1929, it has long held a rakish charm, an aura—well earned—of civilized debauchery. (For decades, its gatekeeper was a cutout billboard of the Marlboro Man.) Over the years, it has remained a sanctuary for in-residence novelists who had “gone Hollywood.” (In a kind of time line, Nathanael West, Gore Vidal, Dominick Dunne, Bruce Wagner, Jay McInerney.) Now, Netflix billboards are plastered on the wall that buffers the cottages from the discount Liquor Locker store below. Balazs, ex-husband of modeling-agency magnate Katie Ford and the onetime paramour of Uma Thurman and Chelsea Handler, has masterminded its public spaces as a clubhouse of sorts for Hollywood types.
As the city of Los Angeles headed toward lockdown, the Chateau Marmont’s 242 employees were informed by e-mail from the managing director on March 17 that they would remain on leave and unpaid, but that they would be temporarily retaining their health insurance, and would be welcomed back to working when restrictions were lifted. (The e-mail approximated “31 August.”) That was better-than-nothing news for $13-an-hour-wage housekeepers and groundskeepers.
One day later, though, they received an updated e-mail that all would be immediately terminated with no severance—even for those who had worked there for 40 years—and not even a vague promise of future employment at the Chateau. Employees at the Mercer and Chiltern Firehouse received the same news; in all, Balazs dismissed almost his entire payroll, retaining only skeleton crews to service a handful of the hotels’ long-term residents. At the moment, those at the Mercer include Marc Jacobs, who is renovating his home, and gallerist Tony Shafrazi, a longtime tenant; Courtney Love (under an alias) is at the Chiltern Firehouse; and Keanu Reeves’s mother, Patricia Taylor, of all people, is at the Chateau Marmont.
The Chateau Marmont staffers are a special sort.
It was only in early February that The Hollywood Reporter published an article featuring four valets as the “unsung heroes” of the hotel. There was Raymundo, Ray, Carlos, and Baltazar—30, 34, 39, and 43 years of service, respectively—who served as a testament of loyalty to its walls, guests, and proprietor.
According to five former employees at Balazs hotels, some of whom had risen in positions among the ranks, their boss exhibited little intimacy with veteran staffers. One of them said, “Even after someone has worked for 23 years at his hotel, he doesn’t know their name. He’d say, ‘You know, the old one with the dark hair.’”
Squeezed from All Sides
Balazs is thought to have left virus-besieged London (where sources say he had been spending most of his time until recently), and the West Coast entirely, to hole up at Locusts on Hudson, his 76-acre operating farm, manor, and event space in New York’s Hudson Valley. His girlfriend is the 32-year-old Cosima Vesey, daughter of Indian royalty (Sita-Maria Arabella de Breffny and the seventh Viscount de Vesci); the couple has a two-year-old son. “He’s in his Armageddon bunker—he thinks this is the zombie apocalypse,” said a high-level employee of two decades. “I’m told he has been ordering whole animals to live off as a food source.”
“André lacks emotional intelligence,” said the source. “Thinking about how his actions affect others is not his strong suit. He used to have people that protected him from himself, to run interference and damage control, such as Nadine Johnson.” The founder of a New York–based public-relations firm whose clients have included Chanel, the Whitney Museum of American Art, and the Gagosian galleries, Johnson was the longtime publicist for Balazs.
Though a source said that Balazs has always been “Draconian” about cost savings, “he was over-extended in borrowing against the Chateau. The margins for his refinancing were really tight.” In short, his net worth may not be nearly the $700 million he is often considered to have.
“André lacks emotional intelligence. Thinking about how his actions affect others is not his strong suit.”
When the press got wind of the Marmont’s staff wipeout, dozens of outlets from The New York Times to the Daily Mail jumped on the news. Fade in: Damage Control. A week after the termination, Balazs created a GoFundMe named the Chateau Marmont Family Fund. Fired staff waited for a $100,000 donation they’d heard Balazs was going to provide.
A few days later, the hotelier donated two $50,000 increments. A host of Marmont regulars chipped in, such as TV producer Ryan Murphy (to the tune of $5,000), Timothy Hutton, Griffin Dunne, Sam Rockwell, Walton Goggins, as well as one of the valet workers (Ray, who donated $100 to look out for his colleagues). But still, if 242 Chateau Marmont employees divided up $100,000, each would receive $413. Enter costly COBRA premiums to maintain their health insurance, throw in unemployment checks—still a devastating blow.
What’s more, Balazs, in a Web-site note, said he was handing over the Chateau’s nine cottages to Cedars-Sinai hospital workers. (According to a remaining staffer, only one physician has taken advantage of the lodgings.) And all proceeds from the sales of take-home wearables and keepsakes would go to the staff. That includes items ranging from a candle infused with the Chateau’s signature scent ($60) to cashmere sweaters that feature the hotel’s logo of the Greek god Pan ($550).
“André was very concerned about bad press,” says one worker, who had done a decade of service at both the Marmont and its so-called sister hotel, the Mercer. “It seems like it would be nicer to pay salaries and health insurance instead of asking the public to cover it. He hasn’t done any kind of GoFundMe for the Mercer, presumably because the bad press hadn’t spread to it.” It was reported three weeks ago that Balazs’s Shelter Island seasonal hotel, Sunset Beach, will remain shuttered this summer, its fate to be determined.
Following news stories last month initially reporting that the Chateau Marmont might be on the block (with no mention of the future of its fired staff), the New York Post’s “Page Six” followed up with a headline that read: Axed staff at Chateau Marmont furious over missing relief money. Said one source intimate with Balazs’s brand imaging: “André will never, never sell the Chateau. It’s his only platform.”
“It seems like it would be nicer to pay salaries and health insurance instead of asking the public to cover it.”
When contacted by the New York Post, a hotel spokesperson then responded that the following Monday it would begin distribution of the Chateau Family Fund, with “all employees” receiving “equitably divided financial support based on seniority ranging from $350 to over $5,000.” That news contradicted the Marmont’s Web site, which said that funds raised would be divided “equally” among the staff.
Perhaps it was the media pressure that elicited a response, because earlier this week at least five former employees confirmed to Air Mail that they had finally received paper checks of varying amounts that reflected their positions and seniority. Also earlier this week, the Chateau Marmont Family Fund was closed. It raised $168,612.
Room for Abuse
There are more, or equally, egregious examples of hoteliers and hotel-management companies missing the script. After dismissing around 1,500 hotel and country-club employees last month, the Trump Organization requested federal aid for its D.C. hotel.
Ashford Inc., one of the largest worldwide hospitality-management firms, laid off or furloughed 95 percent of its 7,000 workers in late March; one-third of its salaried staff were terminated permanently. Then its subsidiaries applied for $126 million in forgivable loans from the Paycheck Protection Program. By comparison, the average loan size in the program’s first round of loans was $206,000. Democrats in Congress—and the media—went ballistic. In early May, C.E.O. Monty Bennett announced that money received from the P.P.P., amounting to more than $58 million for his fold of 128 hotels, would be returned.
On April 29, the Los Angeles City Council ruled that hotels such as the Chateau Marmont must rehire senior-level staff upon fully reopening. When initially contacted by Air Mail on his mobile, besides a personal greeting, Balazs’s only comment was: “Check in to our hotels. They’re filling up. Defies all medical logic, but our favorite ‘short-fingered vulgarian’ can explain that one away.” He has not responded to a list of follow-up questions.
“In some degree of defense, I cut André some slack,” says Jason Pomeranc, owner of the Sixty Hotels brand of boutique inns in New York City and Los Angeles. “From an economic point of view, this is the most dire situation I have faced in my career.… The onus of how long you can carry all these employees is limited. When you go into a crisis situation, there are various ways of handling it, of course. And some are more gracious about it than others.”
The Sixty Hotels locations (among them Sixty SoHo and Sixty Beverly Hills) have all remained open. The majority of their staff of about 200 employees are furloughed but retain insurance benefits. Approximately a dozen staffers remain on payroll at each hotel. “Our executives are all multi-tasking—they want to stay open, too,” says Pomeranc. “We rotate others in to get shifts.”
At the Sunset Tower, located across Sunset Boulevard from the Chateau Marmont and easily its most formidable competitor, a top-level executive said that, similar to at Sixty Hotels, the staff of about 200 were placed on unpaid leave but have kept their health insurance. “We had staff meetings just as the pandemic worsened,” the executive said. “We met many [staffers] face-to-face, told them that this is about to happen. We advised them to collect their vacation pay. Some were owed as much as 12 weeks, most about 3 weeks. And then we sent out a formal letter that they were not fired but would be welcomed back when business levels. We simply had no customers.”
Several larger hotel chains with ample cash reserves, such as the Dorchester Collection, which includes the Beverly Hills Hotel and the Hotel Bel-Air, have managed to hold on to all their staff. The Hilton and Hyatt franchises furloughed and laid off tens of thousands of employees, while Marriott International, the world’s largest hotel company, is seeking massive federal funding. Corporate-level furloughs will last 60 to 90 days as of this month, and those employees will receive 20 percent of their salary. With nearly 7,300 locations globally, Marriott’s revenue per room was down 90 percent at press time. A spokesperson for Marriott predicts that every U.S. hotel will default on its principal debts in the coming two months.
Sean MacPherson, a co-owner of eight hotels and restaurants in New York and Montauk, says that he had to lay off about 2,000 employees. Swingers, his long-enduring L.A. restaurant, shut its doors for good last month.
“It was really painful,” says MacPherson. “Many of our staff have worked with us for three decades. It’s an impossible situation. Hotel staffs develop into families. You work very intimately with them—there is infighting, but absolute love, a kind of magic. Everyone wants to maintain, but what do you do when by law you are forced to shutter? We tried to keep as many key people as possible … and will rehire as many as we can. But everyone lost their jobs simultaneously, at the Ludlow, the Bowery, the Marlton, Lafayette House, the Maritime, the Jane, and the Chelsea … excruciating.” Employees were told of their situation face-to-face, MacPherson says, “but it was done in the fog of war.”
“Hotel staffs develop into families. You work very intimately with them—there is infighting, but absolute love, a kind of magic.”
The logic goes that if these hotels reopen at all, they will be instructed to do so with a fraction of their pre-coronavirus capacities, and the financials will simply not make sense. “That’s the $64 million question,” says MacPherson. “Fifty percent isn’t tenable to stay afloat.” And then factor in the disastrous effects on the restaurant business, which is where many hotels earn their profits … and the problems are compounded.
The Chateau Marmont and Balazs’s other hotels are welcoming guests, although many of the Chateau’s former staffers remain very much on standby. Still, the property’s Instagram account churns out moody photographs of its long-lost residents, a scrolling reminder about why this place retains an unshakable allure. And a clever copywriter continues to promise, at least in the Chateau’s social-media bio, “Always a safe haven.”
Steve Garbarino is a writer based in New Orleans