Imagine a city gearing up for the Olympics, only to face an economic storm that could shutter its hotels.
According to the New York Post, Los Angeles hotel operators are sounding the alarm over a new municipal ordinance that forces annual wage hikes of $2.50 per hour until reaching $30 by 2028, predicting dire financial consequences despite upcoming global sporting events.
This mandate, passed despite opposition from the hotel industry, has sparked frustration among operators. They had hoped major events like the 2028 Olympics, Super Bowl, FIFA World Cup matches, and NBA All-Star game would revive a struggling tourism sector. Instead, they now face a policy that could undermine their recovery.
The American Hotel & Lodging Association (AHLA) has fiercely opposed this wage increase. Negotiations with the Los Angeles City Council failed to halt the ordinance. AHLA even appealed directly to Mayor Karen Bass in May, urging a veto.
Their letter to the mayor warned of an “economic tsunami” if the policy stands. They cited predictions of falling occupancy rates, layoffs, and a staggering $169 million loss in tax revenue. New hotel projects could stall, and special rates for the 2028 Olympic and Paralympic Games might vanish.
AHLA also highlighted the broader fragility of LA’s hospitality sector, which generates over $40 billion in local sales and employs more than 540,000 people. Challenges like slow post-pandemic recovery, wildfires, declining international travel, and inflation already weigh heavily. This wage hike, they argue, could be the breaking point.
In response, AHLA launched a petition to block the wage increase, amassing over 140,000 signatures. This far exceeds the 93,000 needed to place the issue on the 2026 state ballot. If successful, voters could repeal the ordinance next year. Hotel owners are feeling the strain personally, too. Jon Bortz, CEO of Pebblebrook Hotel Trust, which operates nine hotels in the LA area, expressed despair. “We would love to sell,” he said.
“But nobody will buy them,” Bortz added, underscoring the market’s lack of confidence. The fear is that properties will deteriorate under financial pressure. As one industry voice warned, many hotels could become “run down.”
AHLA’s pleas seem to have fallen on deaf ears, as they wrote, “Our industry was largely ignored.” They pointed to cautionary notes from LA’s chief administrative officer and the CEO of Los Angeles World Airports about the policy’s fallout. Mayor Bass has yet to comment on the issue.
The association’s letter to the city council painted a grim picture of compounded crises. “The effects of lagging post-pandemic recovery, devastating wildfires, international travel declines, inflation, high interest rates, and many more issues outside of our control have pushed the city’s hospitality industry to the brink,” they stated. This mandate, they argue, ignores those realities.
From a free-market perspective, this ordinance exemplifies government overreach at its worst. Forcing wage hikes without regard for economic conditions distorts labor markets and punishes businesses already on thin ice. It’s a textbook case of policy ignoring efficiency for political optics.
For investors, the LA hotel sector now looks like a risky bet. Declining occupancy and stalled developments signal a shrinking opportunity for returns. If you’re eyeing real estate or hospitality stocks in the region, proceed with caution.
Hotel operators and workers alike deserve a system that balances fair pay with business viability. If this ordinance stands, LA risks losing jobs and tax revenue—hardly a win for anyone. The 2026 ballot initiative offers hope, but the fight is far from over.
Consider this a reminder: wealth-building thrives on smart policy, not heavy-handed mandates. Stay informed on this issue—your portfolio might depend on it. If you’re in LA, signing the petition or engaging with local leaders could help steer the city back toward economic sanity.