L.A. hotel owners warn wage hike would scuttle Olympics room deal

Workers in red union shirts protesting outside Los Angeles International Airport

Nov. 20, 2024 Updated 3:51 PM PT

The Los Angeles City Council on Wednesday postponed a vote on a major boost to wages for hotel and airport workers, voicing concerns that the pay hike could damage the city’s tourism industry.

The council’s decision to put off the vote until Dec. 11 came as hotel owners were threatening to pull out of a deal to provide tens of thousands of rooms during the 2028 Olympic Games if the pay increase is approved, saying it would decimate their bottom line.

The council had been scheduled to vote Wednesday on whether to finalize changes to an existing city ordinance that would raise the minimum hourly wage for workers at large hotels and Los Angeles International Airport from the current $20.32 to $25 on Feb. 1. The minimum pay would then climb incrementally each year to reach $30 an hour by July 1, 2028, as the Olympics are set to open.

During a heated discussion of the proposed wage boosts, several council members questioned whether an analysis of the economic impact of the wage hike that was commissioned by the city had been thorough enough.

“People are going to lose their job if we do this as currently proposed,” Councilmember Traci Park said during the meeting.

Doane Liu, executive director of the City Tourism Department, warned the council that the report understated the effect the proposed minimum wage increases would have on the prices of hotel room rates. Higher wages, he said, would lead to “unintended consequences” as hotels would have to increase rates or cut back on staff and services, which would hurt the luxury and convention business.

As Wednesday’s meeting went on, council members introduced several amendments that, if adopted, would narrow the scope of the proposal and slow down its implementation. One amendment suggested by Councilmember John Lee would delay the jump to a $25 hourly minimum wage until six months after occupancy rates at hotels and LAX passenger traffic had returned to pre-pandemic levels. Lee also proposed slowing down the annual increases to $1 each year — a pace that probably would mean not reaching the $30 hourly wage until after the Olympics.

Marqueece Harris-Dawson, the council’s president, directed the city’s chief legislative analyst to answer questions raised by council members in advance of the council’s Dec. 11 meeting. If the council votes at that meeting to have city lawyers rewrite the ordinance, it would still need to vote at a later date on whether to formally approve and implement the wage increases.

After the council moved to table the discussion, dozens of hotel and airport workers represented by unions that backed the wage boosts filed out of council chambers, chanting, “We’ll be back” and waving red and purple signs that read, “Stands with tourism workers” and “Olympic wage now.”

In City Hall’s cavernous lobby, Kurt Petersen, co-president of a union that represents hotel workers, told workers the council had been swayed by pressure from the tourism industry.

“Today some of our council members unfortunately listened to the CEOs,” Petersen said.

Nelly Hernandez, 57, an employee at airline catering company Flying Food Group, said she currently makes $20 per hour, and a wage increase would help her achieve economic stability.

She sends money back home to her sister in El Salvador and wants to be able to save for retirement. “Everything is so expensive right now,” she said.

In a last-ditch effort to sway the council, the board of directors of the Hotel Assn. of Los Angeles sent a letter this month to the city’s Olympic organizing committee arguing the proposed ordinance would jeopardize contracts requiring the hotels to provide the committee with about 40,000 rooms during the Games at prices that were negotiated in 2020 with a lower minimum wage in mind. The higher wages, it said, would balloon hotels’ labor costs so much that sticking to the terms of the deal would be untenable.

“Renting rooms under these circumstances would result in devastating financial losses that could not be recouped under any reasonable scenario,” the letter said. “To put it plainly, this staggering increase in costs makes it unfeasible for most if not all signatory hotels to participate in LA28’s hotel room block.”

If the wage hike goes through, the letter said, “many if not all” the hotels represented by the group would use a clause in the contracts to back out of the deal. The rooms were to be used to house thousands of people associated with the International Olympic Committee, the U.S. Olympic Committee, corporate sponsors, journalists and others during the Olympics and Paralympics, the letter said.

Even if the council doesn’t abandon the pay hike altogether, the hotel association said it hoped to be able to persuade the council to amend its terms in order to lessen the financial impact on hotels. Particularly worrisome was a provision in the proposed ordinance that would require hotels to cover an hourly $8.35 “health payment” for workers on top of the wage hikes.

The ordinance was first proposed last year by Councilmembers Curren Price and Katy Yaroslavsky, with Hugo Soto-Martínez and several other council members supporting the measure. Movement forward on the law was stalled for more than a year as contract negotiations between scores of local hotels and Unite Here Local 11, the politically powerful union that represents their workers, were underway.

The push for the increased wages for hotel workers is the latest demonstration of Unite Here Local 11‘s political muscle. A decade ago, the union successfully got elected officials to approve a minimum wage for hotel workers that is higher than the one that covers most other workers in the city, which currently is $17.28.

While the council’s support for the wage hike aligns with the progressive tack elected officials in the city have typically taken, the wage increase proposal comes at a time when voters across the state have been somewhat more ambivalent, rejecting a statewide measure to boost the minimum wage and booting out progressive Los Angeles County Dist. Atty. George Gascón in the November election.

Workers in the city’s tourism industry have for years raised alarms about the cost of living in Los Angeles, and amid concerns the Olympics will drive up housing costs even more, unions backing the proposed pay hike have said increased pay is necessary to keep workers from being priced out of the city.

An estimated 23,000 workers would be covered by the proposed increases, and about two-thirds of them live in the city of L.A., according to the report released in September, which was commissioned by the city’s chief legislative analyst. Although the majority of those affected by the pay raises would be airport workers, hotel workers’ wages tend to be lower and those employees would therefore receive a bigger boost, according to the report. Airport workers would see average hourly increases of $3.87 and pay for hotel workers would climb on average $6.24, the report finds.

Petersen said the wage proposal is a fair way to improve workers’ lives as hotels and other businesses stand to reap the benefits of the city hosting the Olympics.

“Right now the way it’s set up is a corporate giveaway,” Petersen said of the Olympics. “L.A. should be loud and proud about doing this.”

Times staff writer David Zahniser contributed to this report.