The Los Angeles City Council is set to vote on a proposal to raise the minimum wage for hospitality workers to $30 an hour by 2028. This decision is expected to negatively impact hotel sales and deter investors and developers amidst an already struggling market. Hotel owners report a significant number of hotels for sale without buyers due to increased operational costs from higher wages. The proposal, which affects larger hotels and entities at Los Angeles International Airport, could become a critical issue for an industry still recovering from the pandemic, raising concerns about future developments and investments.
If it passes, which most expect it will, and Mayor Karen Bass signs it, distressed hotel sales and skittish investors and developers could follow.
Sellers want to sell at what they believe the hotels are worth, but buyers can't purchase at that price while considering operating costs.
The proposal requires hotels with more than 60 rooms and companies that do business at Los Angeles International Airport to increase wages over a three year period ending 2028.
For hotel workers, it's a 48-percent increase. But for hotel owners, developers, brokers and investors, it's the last nail in the coffin.
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