- AHLA: Hotels are central to Los Angeles’ economy but policies are limiting jobs and tax revenue.
- Sentiment remains negative, with 80 percent calling Los Angeles a poor long-term hotel investment market.
- AHLA calls on the City Council to amend policies and work with industry stakeholders.
HOTELS ARE CENTRAL to Los Angeles’ economic strength, but restrictive policies are limiting hotel employment and tax revenue growth, according to the American Hotel & Lodging Association. Hotels across Los Angeles are facing financial and operational pressure as labor and operating costs rise faster than revenue growth.
The AHLA study, “Los Angeles Hotel Industry: A Perfect Storm of Policy, Market, and Economic Constraints,” found development is slowing and investment is shifting to other markets as hotels lay off staff and reduce hours, with some closing or delaying expansion plans. Long-term investment sentiment remains negative, with 80 percent saying Los Angeles is not a good market for hotel investment.
“Los Angeles is not hospitable to the hospitality industry,” said Rosanna Maietta, AHLA president and CEO. “Hotels are a major economic engine for Los Angeles—creating jobs, supporting small businesses and raising critical tax revenue for local services. But the current policy environment is making it increasingly difficult for hotels to operate, invest and create more jobs in the city. Unless there is a greater willingness to support the business community and ensure a thriving hotel industry, many more jobs will be lost and many more businesses will close, causing a significant ripple effect across the community.”
Los Angeles hotels generate $12.5 billion in annual economic activity, support nearly 64,000 jobs and produce more than $1.1 billion in state and local tax revenue, the study said. Hotel guest spending exceeds $7.2 billion, supporting restaurants, retailers and arts and entertainment businesses. However, the sentiment toward the investment climate is negative.
Labor rules affecting operations
Recent labor regulations have affected operations, with many hoteliers reporting staffing reductions over the past year, the study found. About 88 percent reported reducing staffing or operating hours over the past year due to city council policies.
The association said Los Angeles City Council policies, including wage mandates and operational requirements, are increasing costs without adjusting for market conditions and demand. About 97 percent of respondents said repealing recent labor regulations would improve the city’s investment appeal.
The association is calling on the City Council to amend policies contributing to rising costs and reduced investment and to work with industry stakeholders on measures supporting workers and long-term growth.
Maietta said the association shares the city’s goal of supporting workers and communities.
“But policies must also reflect economic realities,” she said. “We urge the City Council to revisit and amend these measures to ensure hotels remain viable and continue contributing to Los Angeles’ economy.”
Ahead of the 2026 FIFA World Cup and 2028 Summer Olympics, hotels face higher operating costs and weaker demand, the study found. Rising labor costs are the top challenge for 86 percent of owners and operators. About 59 percent cut overtime and reduced or eliminated benefits and amenities.
The LA hospitality market has not recovered to its pre-pandemic peak of 84 percent occupancy and 2.8 million monthly room nights, the report said. Current conditions are contributing to reduced hiring and hours, delayed or canceled investment and development and reduced airline operations and restaurant closures.
In February, a coalition of business and hospitality leaders submitted more than 79,300 signatures supporting a repeal of the city’s $742 million business tax for the November ballot, with AHLA backing the measure.
