LA hotels face financial pressure from wage mandate, AHLA report claims

Hotels in Los Angeles, California, are struggling, according to industry researchers in a new report.

“Hotels are struggling to cope with rising operating costs coupled with declining demand,” researchers at the American Hotel and Lodging Association (AHLA) said last week.

According to AHLA, the city’s minimum wage and other policies have led to increased “costs without flexibility to reflect market conditions and demand levels.”

A gradual increase in the minimum wage Los Angeles mandated up to $30 an hour for airport and hotel workers. The law was signed into law last year by Mayor Karen Bass, requiring their hourly wages to be increased by $2.50 each year until it reaches $30 in 2028.

According to the American Hotel and Lodging Association, the city’s minimum wage 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 hospitality association, representing more than 30,000 members from all segments of the industry nationwide. Its methodology stated that it was a “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 that these policies led to reduced hiring and work hours. Other problems have arisen, including delayed or canceled hotel investments and developments, reduced flight operations and restaurant closures.

“The report finds that Los Angeles hotels face increasing financial and operational pressure as rising labor and operating costs outpace revenue growth, noting that development is slowing, investments are shifting to other markets, and some hotels have closed or delayed expansion plans,” the report said.

The report found that none of the members consider Los Angeles to be a favorable environment for making investments and 80% of them say the city is not a good place to invest in hotels in the long term. Almost all members surveyed said easing regulations would make the city’s market more attractive.

A gradual increase in the minimum wage in Los Angeles mandated up to $30 an hour for airport and hotel workers. (Getty)

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AHLA said hotels are the backbone of Los Angeles’ tourism economy, investing millions of dollars in the city each year.

“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 revenue that funds essential public services,” according to the report.

This is not the first time the AHLA has released a report showing the negative effects of the minimum wage mandate after Bass signed it into law. The AHLA previously commissioned another study that found hotels had cut or planned to cut 6 percent of positions, or about 650 jobs, since the minimum wage order for hotel workers took effect in September.

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Karen Bass, Mayor of Los Angeles.

The Los Angeles City Council and Mayor Bass’ office did not respond to requests for comment from Fox News Digital.

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