finance
LA Hotel Survey Shows Cost Increases, Demand Drop After Minimum Wage Hike
Hotels in Los Angeles are struggling with increased operating costs and reduced demand due to a phased-in minimum wage hike for airport and hotel workers. The American Hotel and Lodging Association reported these challenges in a survey of local operators. The law, signed by Mayor Karen Bass, raises wages by $2.50 annually to $30 per hour by 2028.
Apr 13, 9:30 PM·2m read1 source
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# Los Angeles Hotels Face Rising Costs and Falling Demand from Minimum Wage Mandate Hotels in Los Angeles, California are struggling due to rising operating costs and falling demand, according to the American Hotel and Lodging Association (AHLA). The city's minimum wage mandate and other policies led to increased costs without flexibility to reflect market conditions and demand levels.
Fox News reported on an AHLA report issued last week, based on a member survey of Los Angeles hotel operators and owners.
The survey featured 16 questions in multiple-choice, select-all-that-apply, and ranking formats. Hotels across Los Angeles are facing increasing financial and operational pressure as rising labor and operating costs outpace revenue growth. The policies led to reduced hiring and cuts in labor hours.
A phased-in minimum wage hike in Los Angeles mandates up to $30 per hour for airport and hotel workers.
The minimum wage law was signed into law last year by Mayor Karen Bass. 50 each year until reaching $30 in 2028. The Hotel Worker Minimum Wage Ordinance took effect in September. The AHLA previously commissioned a study after Mayor Bass signed the minimum wage mandate into law.
That previous AHLA study found that hotels have eliminated or expect to eliminate 6% of positions, roughly 650 jobs.
The policies resulted in delayed or canceled hotel investment and development.
Hotel development is slowing in Los Angeles. Hotel investment is shifting to other markets from Los Angeles. Some hotels in Los Angeles have closed or delayed expansion plans. The policies caused reduced airline operations and restaurant closures.
None of the AHLA survey members believe Los Angeles is a favorable environment to make investments. 80% of AHLA survey members said that Los Angeles is not a good place for long-term hotel investment. Almost all AHLA survey members said that rolling back the regulations would make Los Angeles’ market more attractive.
