*The $30 minimum wage would apply to hotels with 60 or more guest rooms, and Los Angeles International Airport concessionaires with more than 50 employees, with an additional health benefit payment — redeemable as cash wages for employees with separate healthcare — at $8.35 per hour for employees at covered hotels, and $5.95 per hour for covered LAX concessionaires. *
*The current minimum wage at impacted hotels is $20.32 per hour, while the minimum wage at LAX is $19.28 per hour. The Los Angeles citywide minimum wage is $17.28 per hour. *
The benefits payments and first wage hike to $22.50 per hour would come into effect in full on July 1, 2025, rising to $30 per hour on July 1, 2028.
The wildfires were the big reason for the job losses. There was a decline in tourism to LA.
But why waste a good shot at innocent people making a living?
In 2024, California, including Los Angeles, experienced a total of 8,024 wildfires. These fires burned a combined 1,050,012 acres, leading to the destruction of 1,716 structures and the damaging of 432 others. One civilian fatality was reported.
Several factors contributed to hotel closures in Los Angeles in 2024, creating a challenging environment for the hospitality industry
.
1. Economic Headwinds:
Sluggish Tourism Recovery: Los Angeles, like many destinations, experienced a slower than anticipated recovery in tourism following the pandemic, impacting hotel occupancy rates.
Rising Operating Costs: Hotels faced increasing expenses, including labor costs, insurance premiums, and the price of goods and services.
Interest Rate Hikes: Increased interest rates made borrowing more expensive, affecting hotel owners’ ability to refinance loans or invest in renovations, according to CBRE.
2. Legislative and Labor Issues:
Minimum Wage Ordinance: A proposed increase in the minimum wage for hospitality workers, although aimed at improving worker livelihoods, raised concerns among hotel owners about its impact on operating costs and profitability.
Labor Strikes: The hospitality industry in Los Angeles experienced labor strikes, which disrupted operations and potentially led to lost revenue for hotels.
3. Other Contributing Factors:
Increased Competition: The rise of alternative lodging options like Airbnb and vacation rentals created a more competitive landscape for traditional hotels.
Geopolitical and Trade Tensions: International travel patterns were influenced by geopolitical tensions and trade policies, affecting the influx of international tourists and impacting hotel revenues.
Wildfires: Wildfires in the Los Angeles area not only caused physical damage but also deterred tourists and disrupted travel plans, further impacting the hotel industry.
In summary, a combination of economic challenges, legislative changes, labor disputes, and external factors like wildfires contributed to hotel closures in Los Angeles during 2024.
So the hotels in LA are struggling with a slow recovery from the pandemic and then fires this January. So why not hit the industry again? “The beatings will continue until morale improves.”
On a related note…
At least eight Los Angeles hotels are poised to withdraw from an agreement to provide discounted rooms for the 2028 Olympics if the city finalizes a plan to raise the minimum wage for tourism workers to $30 an hour…
The move threatens to complicate LA28’s lodging plans for Olympic officials, media and sponsors, who were expected to rely on the thousands of pre-negotiated hotel rooms across the city. Hoteliers say those rates were agreed to under very different labor cost assumptions and can no longer be sustained under the new wage mandate.
“We agreed to certain rates at the hotels at that time, and it’s not viable for us to be able to agree to charge the same rates that we calculated based upon a $17 minimum wage that’s now going to be almost double that,” said Mitchell Hochberg…
A couple of observations.
Most hotel/motels pay their maids by the rooms cleaned not by the hour. So the maids rush through the rooms as fast as possible maybe not doing as a thorough job as before. A reduced customer experience.
A younger friend of mine travels a fair amount in retirement. He is seeing check-in kiosks now at lodging. Reducing a traveler’s experience.
Travelers here in New Mexico pay about double the sales tax on lodging & car rentals. They ain’t local taxpayers and they have the money to travel. So the state gouges them a little bit.
So it seems travelers to Los Angeles will be paying for the increased wages. Is the wage increase significant enough to reduce travel to Los Angeles? Quién Sabe.
Business travelers will of course continue to travel there.
Did you use AI to generate your response? If you look at your response above, you will see that increasing labor costs are mentioned twice as a reason for the challenges facing LA hotels.
However, these hospitality wage increases tell only part of the story. There is a serious ripple effect as workers in related businesses (independent ice cream stores, restaurants, small hotels, etc.) not covered by these LA ordinances are going to expect higher wages and benefits. I suspect you probably know that the profit margin in family owned restaurants and related food businesses is minimal and labor costs are a major component of one’s expenses. Did LA’s politicians take the ripple effect into consideration? Perhaps reading some of the business related comments of the city council will soften your critical comments in your reply to DB2.
Admittedly, there are over four million hotel rooms in the US and a percentage of those could use more attention, but autonomous cleaning robots are not yet a thing.
Politicians devalue the currency which erodes purchasing power and adds to inflationary pressures. In order to fix the problem, they force wages higher further increasing the cost of living and repeating the cycle all over. California will eventually at this rate completely hollow out the middle class, it will simply be two ends of the economic spectrum, those too poor that the policies do little to to help and those too rich to care.
Lots of places. Hilton, Marriott, IHG, etc. Obviously, the room is clean when you check in, but the default is there is no maid service until after you check out. You have to ask for it.