LA hotels face financial pressure from wage mandate, AHLA report claims
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Hotels in Los Angeles, California, are in trouble, according to a new report from industry researchers. new report.
“Hotels are struggling to keep up with rising operating costs along with falling demand,” researchers at the American Hotel and Lodging Association (AHLA) said last week.
According to AHLA, the city’s minimum wage mandate and other policies have led to “increased costs without flexibility to reflect market conditions and demand levels.”
Gradual increase in minimum wage Los Angeles Mandated up to $30 per hour for airport and hotel workers. The law, signed by Mayor Karen Bass last year, mandates that hourly wages increase by $2.50 each year until they reach $30 in 2028.
According to the American Hotel and Lodging Association, the city’s minimum wage mandate and other policies have led to “increased costs without flexibility to reflect market conditions and demand levels.” (iStock)
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AHLA is America’s largest hotel association, representing more than 30,000 members from all segments of the industry nationwide. Its methodology stated that it was a “member survey of Los Angeles hotel operators and owners that included “16 questions in multiple choice, select all that apply, and ranking formats.”
The report claimed the policies led to reduced hiring and cuts in working hours. Other issues that arose included the postponement or cancellation of hotel investment and development, reduced airline operations, and restaurant closures.
“The report finds that hotels across Los Angeles are facing increasing financial and operational pressure as rising labor and operating costs outpace revenue growth; development is slowing, investment is shifting to other markets, and some hotels are closing or delaying expansion plans,” the report said.
The report found that no members believe Los Angeles is a good environment for investing, and 80% say the city is not a good place for long-term hotel investment. Almost all surveyed members said rolling back regulations would make the city market more attractive.
Los Angeles has mandated a gradual minimum wage increase to $30 per hour for airport and hotel workers. (Getty)
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Hotels are the backbone of Los Angeles’ tourism economy, investing millions of dollars into the city each year, AHLA said.
“Los Angeles hotels generate $12.5 billion in annual economic activity, support nearly 64,000 jobs, and generate more than $1.1 billion in state and local tax revenues that fund essential public services,” according to the report.
This isn’t the first time AHLA has released a report showing the negative effects of a minimum wage mandate after Bass signed the law. AHLA before started another study It found that since the Hotel Employees Minimum Wage Regulation came into force in September, hotels have eliminated or expect to eliminate 6% of positions, or about 650 jobs.
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Los Angeles Mayor Karen Bass.
The Los Angeles City Council and Mayor Bass’ office did not respond to requests for comment from Fox News Digital.
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