LA hotel owners sound alarm as $30 minimum wage threatens to crush industry

Los Angeles hotel operators are fighting a $30 minimum wage hike that was passed by the city council, amid a struggle with “profitability.”

“Hotels don’t just fuel tourism. They support local workers and their families. These new regulations will force so many of us to fight to keep our businesses alive, putting thousands of those jobs and our livelihoods in jeopardy,” Beccaria said in a press release sent to FOX Business by the American Hotel and Lodging Association (AHLA), a coalition of airline, tourism, and hospitality businesses.

Beccaria is a partner of Hotel Angeleno in West Los Angeles. 

“My hotel is a family-owned business. We have been an important local economic driver for the community. Our hope is we can keep our doors open and survive this new challenge for the next generation,” he added in the release.

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The recently passed municipal ordinance mandates that hotels in the city must raise their hourly wage by $2.50 each year until they reach $30 in 2028.

Hotel operators who were looking forward to major sporting events to help them bounce back after Los Angeles’ drop in tourism and travel are fed up with the mandate. L.A. is set to host the Olympics, Super Bowl, FIFA World Cup matches, and the NBA All-Star game.

But the upcoming sporting epics won’t be enough to offset the increase in labor costs, Beccaria told the Wall Street Journal.

“You’re going to have a lot of hotels in Los Angeles that will become run down,” Beccaria said. He also told the WSJ that he put a hold on a $10 million planned renovation of his hotel due to the wage increase.

“We would love to sell,” Jon Bortz, chief executive of Pebblebrook Hotel Trust, told the WSJ, referring to his hotels. Bortz owns about 9 hotels, two of which are located in the city and seven others in the greater-L.A. area. 

“But nobody will buy them,” Bortz added.

The projected downfall of the hotel industry in Los Angeles prompted the AHLA to launch a petition to block the wage hike. 

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The petition, which has garnered more than 140,000 signatures, exceeds the 93,000 threshold to put the initiative on the state’s 2026 ballot. Voters will now be able to vote to repeal the ordinance next year.

The wage increase was proposed and passed despite negotiations between AHLA and the city council, according to a letter the AHLA sent in May to Los Angeles Mayor Karen Bass asking her to veto the ordinance.

“Our industry was largely ignored,” AHLA wrote.

AHLA cited “dire economic” consequences issued by Los Angeles’ chief administrative officer and the CEO of the Los Angeles World Airports amid the “city’s already-fragile travel, tourism, and hospitality sector.”

The letter explained that an “economic tsunami” would impact the industry with the minimum wage hike, citing declining occupancy rates, layoffs, a loss of more than $169 million in tax revenue, derailing of new hotel developments and the elimination of special room rates for the 2028 Olympic and Paralympic Games.

The AHLA reported that the tourism industry has been one of Los Angeles’ most profitable industries, generating over $40 billion in local business sales and employing more than 540,000 people. 

“However, the compounded effects of lagging post-pandemic recovery, devastating wildfires, international travel declines, inflation, high interest rates, and many more issues outside of our control have pushed the city’s hospitality industry to the brink,” AHLA’s letter to the Los Angeles city council stated.

Bass did not immediately respond to FOX Business’ request for comment.