A new report from the American Hotel and Lodging Association (AHLA) indicates that hotels in Los Angeles are struggling to manage rising operating costs and declining demand, largely attributed to the city's minimum wage mandate and related policies signed into law by Mayor Karen Bass last year [1]. The phased-in wage hike requires airport and hotel workers' hourly pay to increase by $2.50 each year until it reaches $30 in 2028 [1].
The AHLA report highlights that these policies have resulted in reduced hiring, cuts in labor hours, delayed or canceled hotel investment and development, reduced airline operations, and restaurant closures [1]. The report specifically notes that development is slowing, investment is shifting to other markets, and some hotels have closed or postponed expansion plans due to the financial and operational pressures caused by rising labor and operating costs outpacing revenue growth [1].
Survey results show that none of the AHLA members believe Los Angeles is a favorable environment for investment, and 80% stated the city is not suitable for long-term hotel investment [1]. Nearly all surveyed members indicated that rolling back the regulations would make the market more attractive [1].
According to the AHLA, Los Angeles hotels generate $12.5 billion in annual economic activity, support nearly 64,000 jobs, and contribute over $1.1 billion in state and local tax revenue [1]. A previous AHLA-commissioned study found that hotels have eliminated or expect to eliminate 6% of positions, approximately 650 jobs, since the Hotel Worker Minimum Wage Ordinance took effect in September [1]. The Los Angeles City Council and Mayor Bass' office did not respond to requests for comment [1].
CONCLUSION
The AHLA report underscores significant financial and operational challenges for Los Angeles hotels following the city's minimum wage mandate. With investment and development slowing and job cuts reported, the market outlook remains negative unless regulatory changes are made.