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Hotels in Los Angeles, California are struggling, industry researchers say in a new report.
“Hotels are struggling to meet rising operating costs coupled with declining demand,” said researchers at the American Hotel and Lodging Association (AHLA) last week.
According to the AHLA, the city’s minimum wage mandate and other policies have led to an increase in “costs without flexibility to reflect market conditions and demand levels.”
A phased increase in the minimum wage Los Angeles authorized up to $30 an hour for airport and hotel workers. The law was signed into law last year by Mayor Karen Bass, mandating that their hourly wages must be raised by $2.50 each year until they reach $30 by 2028.
According to the American Hotel and Lodging Association, the city’s minimum wage mandate and other policies have led to “cost increases without adjusting to reflect market conditions and demand levels.” (Stock)
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AHLA is America’s largest hotel association, representing more than 30,000 members from all parts of the industry nationwide. Its methodology said it was a “member survey of Los Angeles hoteliers” that included “16 questions in a multiple-choice, multiple-choice, and ranking format.”
The report says these policies have led to a decline in employment and reduced working hours. Other issues that have arisen include delayed or canceled hotel investments, reduced airline operations and restaurant closures.
“The report finds that hotels throughout Los Angeles are facing increasing financial and operational pressures as increases in staffing and operating costs outpace revenue growth, indicating that growth is slowing, investment is shifting to other markets, and some hotels are closing or delaying expansion plans,” the report said.
The report found that none of the members believed that Los Angeles was a good place to invest and 80% said that the city was not a good place for long-term hotel investments. Almost all members of the survey said that loosening the rules would make the city market more attractive.
A phased minimum wage increase in Los Angeles authorized 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 every 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 revenues that fund vital community services,” according to the report.
This is not the first time AHLA has released a report showing the negative effects of the minimum wage mandate after Bass signed it into law. AHLA previously released another study that found that hotels have eliminated or expect to eliminate 6% of positions, about 650 jobs, since the Hotel Worker Minimum Wage Ordinance went into effect in September.
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Los Angeles Mayor Karen Bass.
The City of Los Angeles office and Mayor Bass’ office did not respond to Fox News Digital’s requests for comment.
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