As Los Angeles gears up to welcome the world for the 2028 Olympic Games, a new challenge is emerging for the city’s hotel industry — a proposed minimum wage hike that has many hospitality businesses worried about their future.
Hotels Face Pressure from a $30 Minimum Wage Proposal
The city council is considering a proposal that would gradually raise the minimum hourly wage for hotel and airport workers to $30 by the time the Olympics kick off in 2028.
This is a significant jump from current wages and has many hotel operators in the region scrambling to rethink their expansion plans and partnerships tied to the Games.
Olympic Boom Meets Rising Costs and Business Anxiety
With the Olympics expected to bring an influx of tourists and fans from all over the world, hotels typically stand to benefit from increased bookings and business opportunities.
The organizing committee, LA28, boasts a $6.9 billion budget funded by sponsorships and the International Olympic Committee, aiming to make the event a huge success.
Yet, some hoteliers fear that soaring labor costs could force them to pull out of Olympic deals or even cancel major projects.
Major Hotel Group Warns of Cancelled Expansions
Sun Hill Properties, a major player in the local hospitality scene, recently sent a warning to city leaders.
If the wage increase moves forward unchanged, they say they will back out of reserving hundreds of rooms for Olympic visitors and scrap a planned $250 million expansion for a new 18-story hotel tower.
Their CEO, Mark Davis, made it clear that the board is prepared to relocate their project outside Los Angeles if the council pushes ahead with the proposal.
Health Care Costs and Highest Minimum Wage in the Nation
The proposed increase also includes an additional healthcare payment of $8.35 per hour, making it one of the highest minimum wages in the country.
Supporters argue that hotel workers, who often struggle to cover basic living costs, deserve a fair share of the Olympic prosperity.
However, critics point to nearby hotels already paying higher wages and argue that economic factors like interest rates and tariffs present bigger threats to development than wage hikes.
Recent Hotel Closures Highlight Industry Challenges
The local hotel market has already felt the strain, with closures like the Four Points and Mama Shelter leading to hundreds of lost jobs over the past year.
Business owners say that ongoing trade tensions and tariffs have reduced tourism, and that the wage increase proposal could further jeopardize their ability to compete, especially against standalone restaurants with lower labor costs.
Impact on On-Site Hotel Restaurants
Some hotel chains, like Pebblebrook Hotel Trust, are already planning to adjust their dining services to cope.
Changes may include shifting to self-service breakfasts or closing some restaurant spaces entirely, moves that could reshape the guest experience as hotels try to survive rising costs.
Local Hotels Voice Concerns Over Business Viability
Other hotels in Los Angeles have warned city leaders about potential closures of key amenities, including restaurants and valet services, which could lead to significant job losses.
The common argument among hotel operators is that raising wages by such a large margin in a short time frame is unrealistic given their current financial pressures.
Investors Losing Interest in Los Angeles Market
Executives like Jon Bortz of Pebblebrook have noted that the combination of wage hikes and regulations has made LA a less attractive market for investors.
According to him, many buyers have removed Los Angeles from their list of potential investments due to these challenges.
Unions Push Back Against Business Complaints
On the flip side, labor advocates argue that hotel owners exaggerate their financial struggles to avoid sharing profits with their workers.
Union leaders insist that while rents and healthcare costs continue to rise, workers still aren’t earning enough to live comfortably in the city, and this imbalance isn’t sustainable.
Mayor Karen Bass Calls for Balance Between Workers and Industry
Mayor Karen Bass has weighed in on the debate, emphasizing the need to find a middle ground that ensures hotel employees earn a decent wage while keeping the industry viable.
She stresses that addressing the needs of both workers and employers is crucial for the city’s economic health as it prepares for the Olympic spotlight.