LA Hotels Revolt as City Approves $38 Minimum Wage

Los Angeles is hosting the 2028 Summer Olympics. The games were awarded to the city back in 2017 and since then it is preparing for the arrival of tens of thousands of visitors. They city was already struggling a bit because of the deadly wildfires which destroyed significant portions of two neighborhoods in January.

No one is suggesting that the Games be postponed or canceled in response to the fires. But there is rising concern that an already difficult endeavor for both Los Angeles, the main host city, and LA2028, the private committee in charge of raising most of the money and running the Games, has become staggeringly complicated.

Mike Bonin, a former City Council member who voted in support of the Olympics when the effort came before the Los Angeles governing body for approval in 2017, said the wildfires posed a “nightmare scenario.”

“It calls into question the city’s ability to deliver the Olympics,” he said in an interview. “This is cause for elected officials to ask themselves the question: Is this something we can handle?”

Now the city is facing a new challenge. The city council today approved a new minimum wage law that would apply to airports and hotels past a certain size.

The Los Angeles City Council gave final approval Friday to an ordinance that will increase the minimum wage for Los Angeles hotel and airport workers…

The vote authorized updates to the city’s Living Wage and Hotel Workers Minimum Wage ordinances, which regulate the minimum wage for such workers. Hotel and airport employees would receive $22.50 an hour starting in July under the amendments, followed by an annual $2.50 increase over three years…

Workers are expected to earn $25 an hour beginning July 2026, $27.50 an hour in July 2027 and $30 an hour in July 2028, as well as receive a new $8.35 per hour healthcare payment, which will begin July 2026.

The new ordinance will now go to Mayor Bass for her signature. If she approves it, the sudden spike in labor costs presents a real problem for the hotels that were already struggling with a slow recovery from the pandemic.

“The proposed ordinance calls for a dramatic increase in hotel wages within 60 days of adoption. Increasing hourly wages to $24.40 with an additional $8.35 for health benefits would result in a 69% increase in payroll in just two months,” wrote the Hotel Association of Los Angeles in opposition. “No industry can afford that financial uptick in such a short period of time.”

According to an April report from the American Hotel and Lodging Association, LA ranks last among major U.S. cities in post-COVID recovery, and with current visitor levels at just 79% of what they were in 2019. 

A CUF analysis of state data found the city lost 11,000 hotel jobs in 2024 as a result, and warned in a full-page advertisement on Thursday, the day before an anticipated final vote approving the new wage and benefit ordinance, that “this new proposal will kill more jobs and raise costs for visitors.” 

And that brings us back to the 2028 Olympics. In a last ditch effort to warn the city against this, a group of hotels have threatened to pull out of an agreement to provide discounted rooms for the Olympics.

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 hotels have notified LA28, the Olympics organizing committee, of their decision to pull out of the Olympic room block agreement, according to the Hotel Association of Los Angeles. More hotels may follow if the City Council approves the Olympic Wage Ordinance in a final vote this Friday, May 23, and the mayor signs it into law.

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, president of real estate investment firm Lightstone Group, which operates the Moxy and AC hotels in downtown Los Angeles—one of the properties withdrawing from the agreement.

The city obviously can’t expect hotels to stick to rates negotiated when labor costs were half of what they will now be by 2028. If Bass approves this, she’s effectively asking the hotels to lose money on one of the biggest events in the city’s recent history.

“It’s not losing money for one day, two days — it’s losing money essentially for an entire month,” Filla said. “The financial calculation on this has flipped upside down for a lot of hotels.”

Presumably other hotels are now doing the math and could decide to back out of the deal. Will this lead to new negotiations for higher room rates? That seems like the most likely outcome but you never really know what might happen in LA.