Hotels in Los Angeles are struggling amid rising operating costs and declining demand, according to a new report released last week by the American Hotel and Lodging Association (AHLA), the nation’s largest hotel trade group representing more than 30,000 members nationwide. The survey of Los Angeles hotel operators and owners found that city policies—particularly the phased-in minimum wage ordinance signed into law last year by Mayor Karen Bass—are driving up labor expenses without allowing businesses to adjust to market conditions. Under the law, hourly wages for hotel and airport workers will rise by $2.50 each year until reaching $30 in 2028.
The report highlights how these mandates have led to reduced hiring, cuts in labor hours, delayed or canceled investments and development projects, and even secondary effects such as reduced airline operations and restaurant closures. Hotels across the city face mounting financial pressure as labor and operating costs outpace revenue growth, with development slowing and investment shifting to more favorable markets. Some properties have closed or postponed expansion plans. None of the surveyed members view Los Angeles as a favorable environment for investment, and 80 percent said the city is not a good place for long-term hotel projects. Nearly all respondents indicated that rolling back the regulations would make the market far more attractive.
The AHLA emphasized that hotels remain the backbone of Los Angeles’s tourism economy, generating $12.5 billion in annual economic activity, supporting nearly 64,000 jobs, and contributing more than $1.1 billion in state and local tax revenue that funds public services. This is not the first time the association has warned of negative impacts from the wage mandate; a previous AHLA study found that hotels have already eliminated or plan to eliminate roughly 6 percent of positions—about 650 jobs—since the ordinance took effect in September.
