TORONTO - Organizers of the Toronto International Film Festival have more than red carpets and galas to worry about as the host hotel deals with a labour dispute.

Just days before the most important film festival after Cannes begins, workers at the Hyatt Regency staged a one-day walkout Friday after contract talks failed to produce a deal overnight.

The hotel's 150 workers were in a legal strike position as of Friday morning.

With dozens of movie stars to begin arriving in the city over the next week, the sidewalk outside the hotel was the scene of more than 100 picketing workers -- and at least one large rodent.

Amarjeet Chhabra, an organizer for the union UNITE HERE, says a 4.5-metre inflatable rat was set afloat above the demonstration.

"The Hyatt is a rat," she said.

A rally set for Friday evening was to include employees from other hotels and film industry workers.

TIFF spokeswoman Jennifer Bell said the Hyatt Regency is "a hub of activity" for the 35th edition of the film fest.

It's where many of the movie industry and media activities are to take place, including news conferences and registration of delegates. She wouldn't say if any stars would be staying there.

"At this point we have been in regular contact obviously with the management of the Hyatt Regency. We are monitoring the situation," said Bell.

"At present we don't believe it will have an impact on the film festival," she said.

The workers' contact expired at the end of January. The two sides bargained for months.

Chhabra said key issues include efforts by the hotel to cut staff, benefits and hours. The owners are treating employees as if there is still a recession going on, she said, adding data shows hotel occupancy and rates increased countrywide during the first quarter of 2010.

She insisted the employees' dispute is with the hotel, not the film fest, which is expected to draw directors and actors such as Clint Eastwood, Robert Redford, Nicole Kidman, Clive Owen, Megan Fox and Matt Damon.

"We have no intention to disrupt the film festival. But it's the Hyatt that needs to come to its senses to make sure they negotiate a fair contract with us," said Chhabra.

"Hotel workers have always welcomed film festival attendees and we support the tourism and we support the cultural vibrancy that all of it brings," she added.

Hyatt Regency spokesman Celso Thompson said the hotel is ready to continue negotiations but the union doesn't want to.

"We are moving forward to provide a very equitable collective agreement. It is something that we have traditionally done," said Thompson.

Services are still being provided to guests despite the pickets, he said.

Festival organizers faced another bugaboo earlier this week after someone on the social media service Twitter said bedbugs might have bitten a moviegoer at one of the festival venues. A pest control company checked the theatre and found no bedbugs.