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Hotels in Los Angeles, California are struggling, a new report from industry researchers claimed in a new report.
“Hotels are struggling to keep up with rising operating costs coupled with falling demand,” the American Hotel and Lodging Association (AHLA) researchers said last week.
According to AHLA, the city’s minimum wage mandate and other policies led to increased “costs without flexibility to reflect market conditions and demand levels.”
A phased-in minimum wage hike in Los Angeles mandated up to $30 per hour for airport and hotel workers. The law was signed into law last year by Mayor Karen Bass, mandating that their hourly wage must be raised 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 led to increased “costs without flexibility to reflect market conditions and demand levels.” (iStock)
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The AHLA is the largest hotel association in America, representing more than 30,000 members from all segments of the industry nationwide. Its methodology stated it was a “member survey of Los Angeles hotel operators and owners” that featured “16 questions in multiple-choice, select-all-that-apply, and ranking formats.”
The report claimed that the policies led to reduced hiring and cuts in labor hours. Other issues that arose included delayed or canceled 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, noting that development is slowing, investment is shifting to other markets, and some hotels have closed or delayed expansion plans,” the report stated.
The report found that none of the members believe Los Angeles is a favorable environment to make investments and 80% said that the city is not a good place for long-term hotel investment. Almost all the members surveyed said that rolling back the regulations would make the city’s market more attractive.
A phased-in minimum wage hike in Los Angeles mandated up to $30 per hour for airport and hotel workers. (Getty)
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AHLA said that hotels are the backbone of Los Angeles’ tourism economy, investing millions of dollars in the city every year.
“Los Angeles hotels generate $12.5 billion in annual economic activity, support nearly 64,000 jobs, and produce more than $1.1 billion in state and local tax revenue that funds essential public services,” according to the report.
This isn’t the first time the AHLA has released a report showing adverse effects of the minimum wage mandate after Bass signed it into law. The AHLA previously commissioned another study that found hotels have eliminated or expect to eliminate 6% of positions, roughly 650 jobs, since the Hotel Worker Minimum Wage Ordinance took effect in September.
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Los Angeles Mayor Karen Bass.
The Los Angeles City Council and Mayor Bass’ office did not respond to Digital’s requests for comment.
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