Times are tough right now for Los Angeles-area hotels, but upcoming major events may shift things in the right direction.

By Sherry Karabin | September 22, 2025

With its proximity to the Getty Museum and University of California, Los Angeles, the iconic 16-story Hotel Angeleno in Brentwood draws leisure and business travelers from around the world.

During an average summer, the full service 210-room boutique hotel would normally be bustling with customers. But there’s a cloud hanging over the establishment and many other hotels in Los Angeles County, which have seen fewer tourists and rising costs.

“We’re struggling,” said Hotel Angeleno Partner Mark Beccaria. “Our numbers have improved since the pandemic, but we are still a lot lower than we were in 2019. … At the same time, our housekeeping costs continue to increase due to ongoing wage hikes and expanded health benefits for workers.”

Beccaria added that he expects the interest rate on the hotel’s mortgage to soar, rising “by 40% next summer resulting in a much higher payment … My profit is not going up, so it’s a very challenging time.”

Beccaria isn’t alone in his struggles. According to Alan Reay, president of the hotel brokerage firm Newport Beach-based Atlas Hospitality Group, revenue for the entire hotel industry has essentially remained flat at 0.4% during the first seven months of 2025.

By the numbers

Reay’s organization measures performance based on revenue per available room or RevPAR, using this metric to generate a topline revenue figure based on the availability of rooms at a property. While RevPAR is up 2.4% in California in 2025, L.A. County has seen a decline of 0.8% this year.

In July, L.A. County hotels as a whole saw their biggest drop this year, with an average 10% decline in RevPAR.

“The hotels that are the most negatively impacted appear to be the larger full-service convention and business hotels,” said Reay. “Downtown L.A. has seen an increase in the number of hotels in foreclosure, including the LINE Hotel.”

Reay added that the smaller boutique hotels seem to be faring better, “largely because they are benefiting from an influx of younger people who are moving away from brand names in search of more unique experiences.”

Michael DiPrima, co-head of National Hotel Partners and executive vice president overseeing the West Region of CBRE Hotels, said hotel trades also are down in the city of Los Angeles – partially due to hospitality worker wage hikes. He said they’re also contending with new thresholds set under Measure ULA (United to House L.A.), a controversial real estate transfer tax that’s often referred to as the “mansion tax.”

Rising slightly this summer, the new thresholds will impact transactions closing after June 30 – imposing a 4% tax on sales above $5.3 million and a 5.5% tax on transactions of $10.6 million and above. Those dollar amounts are up from $5.15 million and $10.3 million.

“Unfortunately, many hotels owe more in debt than what they are actually worth,” said DiPrima.

According to Atlas Hospitality Group’s Mid-Year California Hotel Sales Survey, individual hotel sales volume is down by 7.4% in the state, but the dollar volume has increased by 17%. The largest hotel transactions in Los Angeles, Alameda and Santa Clara counties during the first half of 2025 were all lender foreclosure sales. The three REO deals alone accounted for 15.7% of the total dollar volume, totaling $218.2 million.

When it comes to RevPAR, DiPrima said some submarkets in L.A. are doing better than others.

“According to Smith Travel Research (STR), RevPAR in the Pasadena-Glendale-Burbank submarket is up over 14.1% for 2025 year to date,” said DiPrima. “This is largely due to the wildfires, which displaced thousands of residents in early 2025.”

However, he said the Hollywood-Beverly Hills and Santa Monica-Marina Del Rey submarkets, which rely heavily on international travel, have declined by approximately 3%, signaling stress in two of Los Angeles’ flagship leisure corridors.

“I am optimistic that things will turn around,” said DiPrima. “We have a number of big events coming up, including the Super Bowl, FIFA and of course the Summer Olympics, and I expect the hotel sector and L.A. as a whole will see a rise in revenue.”

A perfect storm

Jackie Filla, president and chief executive officer of the Hotel Association of Los Angeles said the recent wildfires, combined with the high-profile ICE raids and deployment of the military on the streets of L.A. have created a perfect storm. Together, these events have likely discouraged travelers from coming to L.A., especially those visiting from Canada and Europe.

“We were not back to pre-pandemic numbers when the wildfires hit, and unfortunately the portrayal of the wildfires in the media made it seem as though the fires were everywhere, when it was actually only 2% of the region,” said Filla.

Filla noted that Los Angeles has typically been a “top travel destination, but the rhetoric surrounding the raids has discouraged international travelers, even to a place like Los Angeles where we celebrate our diversity and embrace our neighbors.”

She added: “We have largely been able to hang on to our convention business, but the market has been soft in general with business and leisure travelers booking later based on what is currently happening.”

As hotel operators work to revive the bottom line, Filla said many are unveiling new food and beverage campaigns and offering special stay packages to draw people in.

“The success of such efforts will be strained by the adoption of recent regulations that have steeply escalated labor costs for hotels and the hundreds of small businesses within them,” she said.

A lost battle

While the wildfires and other high-profile incidents are playing a role in the loss of tourism dollars, many hotel operators in the city are now grappling with incremental wage and health benefit increases for their workers.

This after the L.A. Alliance for Tourism, Jobs and Progress lost a battle to overturn a new citywide wage ordinance – signed by Mayor Karen Bass in late May – that will increase the minimum wage to $30 an hour for hotel workers on July 1, 2028, just as the Summer Olympics gets underway.

Backed by the powerful UNITE HERE Local 11 Union, the ordinance was the culmination of a years-long effort to boost wages and health benefits for its workers. 

The L.A. Alliance for Tourism, Jobs and Progress, which is made up of hoteliers, airlines and private airport sector companies and business groups, failed to gather the necessary signatures for a referendum that would have placed the ordinance on a citywide ballot next year.

The ordinance, known as the Olympic Wage, was on hold and took effect on Sept. 8. The new minimum wage is now $22.50. In addition, hotel employees must receive a $7.65 an hour health benefit effective July 1, 2026.

If an employer offers coverage that translates into less than $7.65 an hour, the hotel must pay the difference between the $7.65 and the value of its healthcare, which is added to the minimum hourly wage.

Kurt Petersen, co-president of UNITE HERE Local 11 championed the defeat of the referendum.

“The ruthless greed of Delta, United (and) Marriott was matched only by their arrogance,” said Petersen. “They thought millions of dollars and lies could overturn the Olympic Wage. They were wrong. In an unprecedented victory, workers defeated a $3 million billionaire-backed campaign designed to cut wages and deceive Angelenos.”

Petersen said most hotels covered by the ordinance have already signed union contracts.

“The economic package in our contract today is more than $40 an hour,” said Petersen. “Room attendants earn $31 an hour. Our members enjoy one of the best health care plans in the nation. … Eligibility requires 60 hours per month, and it is free – no deductible, no monthly co-pay.”

He said so far, no union hotel has said it could not afford the package and added: “This is a myth perpetuated by a few greedy bottom feeder hotels.”

The fallout

In the case of Beccaria, he’s concerned about the wage increases and the potential expansion of rules that limit the square footage each housekeeper is required to clean.

As part of the 2022 Hotel Worker Protection Ordinance (HWPO), housekeepers who work in a hotel with 60 or more guest rooms are not required to clean more than 3,500 square feet of space in an eight-hour shift, unless the employer pays double time for the entire day. For hotels with 45 to 59 rooms, the regulation is not more than 4,000 square feet.

“We already pay workers higher than the minimum wage,” said Beccaria. “But the square footage limit means we’ve had to hire double the number of housekeepers, which has hurt us. I’ve heard that the union is looking to reduce the square footage numbers even further. … I would like to spend $10 million on a renovation, but that plan is on hold.”

Beccaria isn’t the only one who has seen expenses rise due to the square footage regulations.

Mark Davis, president and chief executive officer of Sun Hill Properties Inc., which owns and manages the 495-room Hilton Los Angeles Universal City said the current HWPO regulation has added up to approximately $150,000 to $200,000 more per month.

“The restriction of the square footage to a maximum of 3,500 square feet means any area/room that is cleaned in excess of this maximum requires double pay for the entire shift,” said Davis, adding that hotels “must clean every room every day,” unless a guest requests that their room not be disturbed during their stay.

“For us that rule means that if a housekeeper cleans more than eight rooms, we have to pay double wages for the entire day,” said Davis. “Most union hotels do not have any square footage cleaning limits.

Davis added: “The ordinance was passed to keep workers safer, and this component does not do that; if anything, it has cost jobs.”

Not so, said Petersen.

“This of course is precious coming from the industry that eliminated daily room cleaning during the pandemic,” said Petersen. “They said it was about safety – but once it was clear that Covid wasn’t spread on surfaces and that daily cleaning made hotels safer, they refused to bring it back. Why? To cut labor costs.”

Petersen said that hotels “killed thousands of jobs” when they eliminated daily room cleaning. The 2022 HWPO fixed the issue and thus saved those jobs, he said.

For Davis, who is already facing a drop in revenue, the ongoing restrictions continue to place burdens on operators “without telling us where the additional revenue is supposed to come (from).”

Revenue boosting strategies

While the city and local businesses anticipate potential revenue boosts from the Super Bowl, the 2026 FIFA World Cup and LA28 (Paralympics and Olympic Games), hoteliers like Beccaria expect the impact will be minimal.

“These are not year-long events, so we are talking about a small temporary boost at best,” said Beccaria. “I need a full year of strong results.”

While Beccaria is not relying on large one-off events, he has been running specials and other campaigns to draw in visitors, which include offering discounted room rates to those guests who book directly with the hotel.

The online travel sites “are cutting into our bottom line as well since you have to provide higher commissions to get good placement on their websites,” said Beccaria. “We are also talking about bringing in entertainment … My question is what do I do a year from now when my mortgage increases if my bottom line is the same?”

Davis has also added a few perks. “We participate in value-added bookings which don’t allow for cancellations and offer extra bonus points for our Hilton Honors members. … Given that we rely on the transient market and tourism is down, our occupancy is soft, so we have had to lower rates.”

With the new wage ordinance taking effect, Davis has notified the LA28 Olympic organizing committee that he intends to pull out of its previous agreement to provide a block of rooms at contracted rates for athletes, media and others.

“There are a number of other properties that are following suit,” Davis said.

The hotel does have agreements with some small individual FIFA fan clubs that will provide contracted room blocks during the World Cup.

“These events are small moments in time, and we run full almost always, so for us participating was more about showing up for the city than our bottom line,” said Davis. “However, given that these agreements were made prior to the new hotel minimum wage and the city council has changed the numbers, it no longer makes sense for us to participate not having been given the benefit of knowing the new escalated labor components prior to contracting.”

Staying the course

While the current market conditions are presenting challenges, not all operators are altering their business models.

Britten Shuford, co-founder and managing partner of Common Thread Hotels and PRG Investment & Management, which owns the four-star 24-room luxury boutique Prospect Hollywood Hotel, said his establishment is focused on catering to its loyal guest base of creative business and leisure travelers.

“We have a lot of repeat guests from New York, London and other parts of the world,” said Shuford. “While it’s been a challenging five years for the L.A. market as a whole, we’ve been fortunate to maintain a healthy occupancy in the 80% range at strong room rates. The macro issues of the recent fires, a decline in international travelers, and the overall climate in L.A. have not made for an ideal lodging environment.”

Though he is optimistic that revenue will return to pre-pandemic levels down the road, he’s not tying those hopes to the upcoming World Cup or 2028 Olympics.

“We expect to see some benefit from those events, but the real boost for L.A.’s tourism will be to the city’s image and economy, which helps all businesses,” said Shuford. “These mega sporting events are a great incentive for the city to focus on initiatives that keep the city safe and clean.” 

The limited-service sector

While the new wage ordinance applies to establishments with 60 rooms and above, Ray Patel, owner of the 24-room Welcome Inn and president of the Northeast Los Angeles Hotel Owners Association, said the regulations would still negatively impact limited-service operators who will be forced to raise their pay rates to attract and retain housekeepers.

“We have to compete for the same labor pool, whether we have 59 rooms or are a 150 limited-service guest room hotel,” said Patel, whose organization represents limited-service hotel operators in the city of L.A. “We do not charge anywhere near the same room rates as the full-service hotels, so this places an additional hardship on our industry, which has already seen bookings go down.”

Patel added that his organization requested “a carve out of 150 guest rooms and below, which we obviously did not get.” In the city of Long Beach, limited-service hotels with fewer than 100 guest rooms are exempt from a similar wage ordinance.

Many, including Patel’s establishment, have been utilizing more technology to reduce overhead – and they incorporated this option in anticipation of the citywide wage ordinance. 

The Welcome Inn, located in Eagle Rock, has a kiosk in the lobby where guests can check in and out, with the assistance of a dedicated hotel call-center employee who appears on a screen from a remote location.

“Our group is doing what it can to stay afloat as new regulations continue to make survival even more difficult,” said Patel.

Troubled waters ahead?

Though the battle over the wage ordinance may have been settled, UNITE HERE and its allies are stepping up their demands ahead of LA28, with the threat of strikes looming.

Dubbing it the “New Deal for Our Future,” it includes calls for funding 50,000 units of housing for working families, a ban on Airbnb-style, short-term rentals and “safe and dignified” treatment of immigrant communities.

They do have a strong bargaining chip as Petersen points out that dozens of UNITE HERE’s contracts with local hotels, airports and stadiums will expire in 2028 ahead of the Olympics.

“It is clear the city council is allowing UNITE HERE unchecked to weaponize organization efforts over welcoming the world visitors to the most prominent global event,” said Davis.