A new minimum wage proposal has Los Angeles hotels in a panic ahead of the 2028 Olympics, as it may drive businesses to discard deals or shutter plans completely.
The proposal of a $30 minimum hourly wage has hospitality corporations in the area preparing to slash expansion plans as well as deals in the works for the next Games.
The Olympics holds the potential for the hosting city to draw in thousands of tourists and spectators who come to watch the games from across the globe.
LA28, the private, non-profit company organizing the Games, has a budget of $6.9billion funded by corporate sponsorships, licensing agreements and a large contribution from the International Olympic Committee.
But fears are already looming that a hefty bill may end up in the hands of Los Angeles taxpayers, and the minimum wage proposal furthers worries as hotels threaten to move or cut business from the area.
This week it was decided that the council will deliberate on the proposal of hotel and airport minimum wage increases by July 1.
Wage increases were already set to happen this year, but the proposal details an increase to $25 by July 2026, $27.50 by July 2027 and $30 by July 2028 – in time for the Games.
Sun Hill Properties Inc. warned the council ahead of the vote that, should it be approved without significant changes, they ‘absolutely will be pulling out of the room block for the Olympics’.
The hotel’s room block agreement with the LA28 committee reserves hundreds of rooms for Olympic fans.
But the proposal’s approval would also mean the company would scrap a $250million expansion for a second 18-story tower ahead of the Games.
Mark Davis, Sun Hill’s president and chief executive, told the LA Times: ‘Our board was very adamant that if [council members] go forward with this nonsense, that it’s dead.
‘They’re going to move the project somewhere else.’
The council’s proposal would hike up minimum wage to the highest in the country, as well as add an $8.35 per hour healthcare payment.
Supporters of the proposal have said LA’s tourism workers, who are struggling to pay for basic necessities, also deserve to benefit from the Olympics as private companies are expected to, the LA Times reported.
But City Councilmember Hugo Soto-Martínez said a nearby competitor of the Hilton, the Sheraton Universal Hotel, already pays their employees a wage higher than the minimum.
‘So, I just don’t buy it,’ said Soto-Martínez in response to Davis’s threats to pull the hotels business plans.
To Soto-Martínez, the real threat to hotel development lies with higher interest rates and President Trump’s tariffs.
Just within the past year, the Four Points and Mama Shelter hotels have closed resulting in the loss of 270 jobs.
Businesses said that Trump’s trade wars have already caused a significant decrease in tourism, and the proposal’s effects would only further hurt hotel business.
According to business leaders, the proposal would cause hotel’s with on-site dining to be unable to compete with restaurants with a lower minimum wage not attached to hotels.
Jon Bortz, chairman and chief executive of the Pebblebrook Hotel Trust, told the outlet that his company was already looking at reducing restaurant operations at two of its Southern California hotels.
‘We have to change the business model of these properties to have any hope of surviving,’ he said, detailing that one of the hotels would likely switch to self-service breakfast operation while the other would shut one of its two restaurant spaces.
Other hotels in Los Angeles have already told the council that the decision would hurt their business too.
Last year, one warned that the wage increase would lead to the closure of Level 8, a collection of restaurants on the eighth floor of the 727-room Moxy + AC Hotels near the convention center.
A partner with the Hotel Angeleno said in a letter to city leaders that they would have to close down the hotel’s restaurant as well as it’s valet parking, causing the loss of 39 jobs.
‘Common sense says you cannot raise wages over 50 percent in a year when revenues are down,’ said the hotel’s partner Mark Beccaria.
Bortz has said the proposed increased wages, as well as other regulations passed in recent years, has led Pebblebrook to explore business elsewhere.
‘Frankly, the [LA] market, from a broad-based buyer perspective, has been crossed off the map by investors,’ he said.
Others, however, have accused certain business owners of opposing the motion over fears of having to share more of the business profit’s with employees.
Kurt Petersen, co-president of Unite Here Local 11, said that hotel owners ‘act like the sky is falling every time they have to share profits with their workers’.
‘This “Chicken Little” stuff has got to end. Every single tie, hotels cry poverty, and then a day later, they’re doing fine. It’s always the same routine,’ he said.
‘What’s not falling is rent and healthcare. What’s not sustainable is workers not earning enough to live in Los Angeles.’
Mayor Karen Bass said in an interview earlier this year that hotel workers must ‘make a decent living wage’ while ensuring that their employers ‘are able to survive’, the LA Times reported.
‘We have to make sure that we can address both – that we can address the needs of the workers without crippling the industry.’