In response to a new wage hike for hotel and certain airport workers, a group of business leaders plan to bring the issue to voters.

By  Howard Fine | June 16, 2025

Employers in L.A.’s tourism sector are trying to overturn the city’s newly enacted hike in the minimum wage for hotel and private sector airport workers to $30 an hour by 2028.

A coalition of hoteliers, airlines and private airport sector companies and business groups are racing to gather 93,000 signatures by the end of the month to qualify a referendum on the wage ordinance on an upcoming citywide ballot with the aim to campaign against it.

If the coalition – called L.A. Alliance for Tourism, Jobs and Progress – is successful in their petition drive, the wage and health benefit law will be put on hold until voters have their say, likely in June of next year.

In the meantime, the prospect of the wage hike taking effect has already prompted the owners of the Universal Hilton Hotel property in Universal City to put expansion plans on pause. Other hoteliers are threatening to nix future investments in the city.

What’s more, a group of eight hotels is threatening to pull out of an agreement with the LA28 Olympic organizing committee to offer blocks of rooms at discounted rates for athletes, media and other attendees of the 2028 Summer Olympic and Paralympic Games. They claim the negotiated rates would no longer make sense if the wage hikes in the ordinance take effect.

Union drive to $30 an hour

The tourism wage ordinance, which City Council passed on May 23 and was signed by Mayor Karen Bass on May 28, was the culmination of a years-long drive by the powerful UNITE HERE Local 11 union representing hotel and restaurant employees to boost worker wages.

“Coming out of the pandemic, our members have not only been faced with inflation, but they have also faced huge rent increases and rising health care contributions,” said Kurt Petersen, co-president of UNITE HERE Local 11. “That’s why people need a raise (and) $30 an hour is nowhere near a living wage for a worker in Los Angeles. It’s just starting to catch up to the challenge.”

For hotels that had union agreements, the union led a series of strikes against hotel operators as part of its successful push for higher wages and benefits in renegotiated collective bargaining contracts. For other hotels, the union pushed for the citywide ordinance.

The current minimum wage for hotel workers in the city is $20.32 an hour, which is more than the $17.28 minimum wage that applies to most other employers in the city. Private-sector airport employers face a minimum wage of $25.23 an hour, which includes a $5.95-an-hour health care benefit.

The final ordinance raises the minimum wage for hotel and private airport workers mostly in increments of $2.50 an hour – starting on July 1 – until the wage reaches $30 an hour just before the 2028 Olympics.

It also applies the health care benefit for the first time to hotels, at $7.65 an hour per employee. For hotel owners or operators who offer health benefits, if those benefits translate to less than $7.65 an hour per employee, the owners must pay the difference in cash to the workers.

The ordinance exempts hotels with less than 60 rooms.

Declining revenues, soaring costs

Hotel owners and operators contend this ordinance will impose financial hardship that will force them to cut amenities and hold off on any expansion plans.

They point to a confluence of factors that have sliced revenues and pushed up costs. On the revenue front, the drop in tourism in the region has resulted in declining room revenues, according to Alan Reay, president of Atlas Hospitality Group, a Newport Beach consultancy.

Reay said in 2018, the average daily revenue per available room stood at $151 for hotels in Los Angeles County. By 2023, that had dropped to $142, and last year, it fell to $139.

Reay also pointed to a CoStar Group report released on June 9 that found the total labor cost per room in the Los Angeles hotel market reached a record $250 during the first four months of this year, an increase of 6% over the same period last year and 36% higher than the 2019 pre-pandemic benchmark of $184.

“Most hotels have debt service to pay and in the last year or two, we’ve seen a major increase in technical defaults, where the hotels have failed to maintain a certain level of revenue relative to debt service – generally a ratio of 1.5 to 1,” Reay said.

“We’ll see much more of this in Los Angeles if this ordinance is upheld,” he added.

Health care benefit concerns

Mark Davis, chief executive of Sun Hill Properties, the Universal Hilton owner, said the health care surcharge is the major concern, noting that it will put his labor costs close to $40 an hour per employee.

“We’re right across from Universal CityWalk and the restaurants there will only be paying half the wage we will have to pay when those health care benefit payments are factored in,” Davis said. “Who do you think will be able to charge less for their meals and draw in more customers?”

Davis said that if the ordinance takes effect, the previously approved $250 million, 395-room expansion project will no longer pencil out.

“We were hopeful the City Council would understand the impact of the ordinance,” he said. “But we’ve lost confidence in the willingness of the city to listen.”

At the Moxy and AC Hotels in downtown, skyrocketing restaurant labor costs are also a concern. Mitchell Hochberg, president of New York-based Lightstone Group, which developed and owns the 36-story tower housing the dual hotel brands, said that with the restaurant business as a whole struggling these days, raising the labor costs so much for the hotel restaurants is the wrong step.

“With this industry facing so much headwind, why not help the industry instead of increasing the operating cost?” Hochberg said.

He added that he is considering whether to scale back the current number of eight restaurants and bars at the iconic Level 8 dining terrace at the hotel building. In the longer run, he said if the ordinance is upheld, Lightstone would nix plans it is currently considering for additional hotel properties in Los Angeles.

Lightstone is also one of the eight hotel operators that has threatened to withdraw from the Olympics hotel room block agreement if the ordinance takes effect.

Hotel loan coming due

Mark Baccaria, a partner in the ownership group of Hotel Angeleno – the 17-story round hotel building next to the 405 Freeway at Sunset Boulevard in Brentwood – has a much more immediate concern if the ordinance takes effect as scheduled: his ability to refinance a loan that is coming due July 1 of next year.

“We are already in technical default and if this ordinance takes effect, it will only worsen that situation,” Baccaria said. “We would have to pay both the higher wages and roughly $4 an hour on top of that to cover the health benefit mandate.”

Baccaria said if the law takes effect, steps such as eliminating valet parking service and restaurant servers may not be enough.

The financial situation is exacerbated because the hotel is in a fire zone and its property insurance premium has tripled since 2018.

“If we can’t refinance that loan, we’re looking at selling the hotel, which probably means the hotel would be shut down and the property put to another use,” he added.

‘Hotels rolling in money’

Hotel union leader Petersen dismissed any assertions that hotel owners face financial difficulties.

“This is all just a smokescreen,” Petersen said. “Every time one of these living wage ordinances comes up, the hotel operators cry, ‘The sky is falling!’, yet each time, hotels rake in record profits and their stock prices hit all-time highs. These hotel operators are rolling in money.”

He added: “What’s especially galling now is that they are crying poverty when we’re about to see unprecedented increases in visitors for the (2026 FIFA) World Cup, the 2027 Super Bowl and the 2028 Olympics. The workers need to share in this bounty.”

This ordinance may not be the union’s last word on its living wage drive, he said. “We’re preparing (other) ordinance initiatives to put on the ballot. I’m not specifying whether they will compete with this one.”

Airport impact

Airport businesses, including airlines and concessionaires, are also leading the effort to overturn the ordinance. Chicago-based United Airlines and Atlanta-based Delta Air Lines are both named funders of the L.A. Alliance for Tourism, Jobs and Progress that is pushing the referendum. Washington D.C.-based American Hotel and Lodging Association is the other major funder.

Airlines for America, the Washington D.C.-based trade association for the major commercial carriers, said the timing of this ordinance is bad.

The group noted that passenger counts at Los Angeles International Airport have been lagging behind other airports. Passenger traffic at LAX was down 4% for January through April compared to same four-month period last year and down roughly 18% from the same period in pre-pandemic 2019.

“The city’s living wage ordinance is projected to cost airlines $1 billion over six years while passenger volume at LAX remains below pre-pandemic levels and terminal construction projects are currently on hold,” Airlines for America said in a statement.

The pain would not be limited to the airlines.

“We would have to upend our business model,” said Gregory Plummer, chief executive of Concord Collective Group, a concessions operator with 12 stores and 265 employees at several of the terminals at LAX. The group’s brands include Panda Express, P.F. Chang’s and Chick-fil-A.

Plummer said Concord is amid renegotiating its contract with UNITE HERE Local 11.

“Whatever the outcome of those negotiations, if this ordinance goes into effect, the first thing I will have to do is raise prices, which are already very high,” Plummer said. “Then, we would be looking to automate as much as possible to remove human servers.”

Plummer, who is one of the original signatories on the referendum petition, added that as a small, minority-owned business, Concord cannot absorb higher costs as much as its global competitors can.

“Our competitors can decide to operate at a loss at LAX and make up those costs elsewhere,” he said. “We can’t because LAX is all we have.”