Latest news with #Bortz
New York Post
02-07-2025
- Business
- New York Post
LA hotel owners sound alarm as $30 minimum wage threatens to cause mass closures
Los Angeles hotel operators are fighting a $30 minimum wage hike that was passed by the city council, amid a struggle with 'profitability.' 'Hotels don't just fuel tourism. They support local workers and their families. These new regulations will force so many of us to fight to keep our businesses alive, putting thousands of those jobs and our livelihoods in jeopardy,' Beccaria said in a press release sent to FOX Business by the American Hotel and Lodging Association (AHLA), a coalition of airline, tourism, and hospitality businesses. Advertisement Beccaria is a partner of Hotel Angeleno in West Los Angeles. 'My hotel is a family-owned business. We have been an important local economic driver for the community. Our hope is we can keep our doors open and survive this new challenge for the next generation,' he added in the release. 5 Los Angeles hotel operators are fighting a $30 minimum wage hike that was passed by the city council. Justin – The recently passed municipal ordinance mandates that hotels in the city must raise their hourly wage by $2.50 each year until they reach $30 in 2028. Advertisement Hotel operators who were looking forward to major sporting events to help them bounce back after Los Angeles' drop in tourism and travel are fed up with the mandate. L.A. is set to host the Olympics, Super Bowl, FIFA World Cup matches, and the NBA All-Star game. But the upcoming sporting epics won't be enough to offset the increase in labor costs, Beccaria told the Wall Street Journal. 5 The recently passed municipal ordinance mandates that hotels in the city must raise their hourly wage by $2.50 each year until they reach $30 in 2028. Getty Images 'You're going to have a lot of hotels in Los Angeles that will become run down,' Beccaria said. He also told the WSJ that he put a hold on a $10 million planned renovation of his hotel due to the wage increase. Advertisement 'We would love to sell,' Jon Bortz, chief executive of Pebblebrook Hotel Trust, told the WSJ, referring to his hotels. Bortz owns about 9 hotels, two of which are located in the city and seven others in the greater-L.A. area. 'But nobody will buy them,' Bortz added. 5 Hotel operators who were looking forward to major sporting events to help them bounce back after Los Angeles' drop in tourism and travel are fed up with the mandate. LA Alliance for Tourism The projected downfall of the hotel industry in Los Angeles prompted the AHLA to launch a petition to block the wage hike. Advertisement The petition, which has garnered more than 140,000 signatures, exceeds the 93,000 threshold to put the initiative on the state's 2026 ballot. Voters will now be able to vote to repeal the ordinance next year. The wage increase was proposed and passed despite negotiations between AHLA and the city council, according to a letter the AHLA sent in May to Los Angeles Mayor Karen Bass asking her to veto the ordinance. 5 The projected downfall of the hotel industry in Los Angeles prompted the AHLA to launch a petition to block the wage hike. Los Angeles Times via Getty Images 'Our industry was largely ignored,' AHLA wrote. AHLA cited 'dire economic' consequences issued by Los Angeles' chief administrative officer and the CEO of the Los Angeles World Airports amid the 'city's already-fragile travel, tourism, and hospitality sector.' The letter explained that an 'economic tsunami' would impact the industry with the minimum wage hike, citing declining occupancy rates, layoffs, a loss of more than $169 million in tax revenue, derailing of new hotel developments and the elimination of special room rates for the 2028 Olympic and Paralympic Games. 5 The petition, which has garnered more than 140,000 signatures, exceeds the 93,000 threshold to put the initiative on the state's 2026 ballot. Getty Images The AHLA reported that the tourism industry has been one of Los Angeles' most profitable industries, generating over $40 billion in local business sales and employing more than 540,000 people. Advertisement 'However, the compounded effects of lagging post-pandemic recovery, devastating wildfires, international travel declines, inflation, high interest rates, and many more issues outside of our control have pushed the city's hospitality industry to the brink,' AHLA's letter to the Los Angeles city council stated. Bass did not immediately respond to FOX Business' request for comment.
Yahoo
22-05-2025
- Business
- Yahoo
Los Angeles hotel executives warn distress to follow wage hike
The Los Angeles City Council will hold a final vote on a proposal to increase minimum wage for hospitality workers to $30 an hour by 2028 on Friday, May 23. If it passes, which most expect it will, and Mayor Karen Bass signs it, distressed hotel sales and skittish investors and developers could follow. 'I've never seen so many hotels on the market right now, and none of them are selling,' Hotel Angeleno owner Mark Beccaria said. 'No one wants to pay anywhere close to what they're worth,' because they know the cost they'll incur owning a hotel in Los Angeles. One expansion has already been killed. Los Angeles' hotels suffered throughout the pandemic and haven't fully recovered. More labor costs mean more pain. Hotel sales will fall further, Atlas Hospitality Group president Alan Reay believes. 'The higher the wages, the lower the net operating income, the lower the net operating income, the lower the sales price,' Raey explained. Sellers want to sell at what they believe the hotels are worth, but buyers can't purchase at that price while considering operating costs. Increasing hotel costs when revenue is flat is a concern, Pebblebrook Hotel Trust chairman and CEO Jon Bortz said. Adding that he won't expand his Los Angeles portfolio. 'We won't make any further investment,' Bortz said. 'There's no return on that money…there'll be no transactions in the market other than lenders taking properties back. There'll be no new development—doesn't pencil, doesn't make any economic sense, and it's not financeable.' The proposal requires hotels with more than 60 rooms and companies that do business at Los Angeles International Airport to increase wages over a three year period ending 2028, the same year the Summer Olympics will be held in the city. For hotel workers, it's a 48-percent increase. But for hotel owners, developers, brokers and investors, it's the last nail in the coffin. Beccaria didn't mince words: 'It's only going to get worse once this goes into effect.' Hotels will have to reduce services and amenities, raise rates and lay off workers. And when hotels raise rates for stays, people go elsewhere, and they lose business, he said. In anticipation, his hotel has made layoffs. Beccaria's loan comes due next July. Hotel Angeleno has also already defaulted on that loan. He doesn't know that he'll secure another, so he is holding off on renovating. Beccaria may consider selling or choosing another location where he'd get a better return. Beccaria and Bortz mentioned an earlier piece of legislation that reduced hotel housekeepers' workloads, capping floor space cleaning. Bortz said that was the last straw, but that was before the current proposal. Bortz said he'll probably shrink or eliminate food and beverage at his hotels; Beccaria floated getting rid of valet. In either case, it appears jobs will be lost. Not to mention, it could hurt the Olympics atmosphere. Bortz suspects hotels will be in poor conditions and provide poor service once the Olympics come around. Beccaria said some hotels are attempting to pull out of their Summer Olympics stay agreements. 'The L.A. hotel industry is in a depression,' Bortz said. 'I'm not exaggerating. It's horrible.' At ICSC, retail smiles through headache of macro uncertainties Celebrity restaurants at hotels drive up average room rates, revenue Stream Realty OK'd for 100K sf warehouse in Cudahy This article originally appeared on The Real Deal. Click here to read the full story.
