- Los Angeles hotels are facing financial strain from January’s fires, sluggish tourism recovery, and a looming minimum wage increase for hospitality workers.
- Despite upcoming high-profile events like the FIFA Club World Cup, hotel leaders warn of potential closures, with at least 20 properties on loan default watchlists.
- Industry leaders argue the minimum wage hike will further burden struggling hotels, but union representatives say ownership groups are exaggerating the crisis.
Los Angeles’ hotel industry, once set for a comeback, now fights to survive amid disasters and economic strain, reports Bisnow. With a lineup of major events like the FIFA Club World Cup on the horizon, hotel owners and operators are sounding alarms about their future viability.
A Tough Year Gets Tougher
After January’s fires devastated parts of Los Angeles and dampened its tourism rebound, hotel executives anticipated modest recovery in 2025. Instead, the sector has been hit by a slew of issues, including lower-than-expected international travel, worsened airport traffic rankings, and broader economic turbulence.
Los Angeles International Airport, once among the world’s busiest, dropped out of the global top 10 for passenger traffic earlier this month, a sign of the broader decline affecting the city’s travel industry.
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The Details
So far in 2025, only two hotels have opened in LA County, while two others, including the Four Points by Sheraton near the airport, have closed. At least 20 hotels are reportedly on default watchlists for major loans, signaling more potential closures ahead.
Meanwhile, despite an expected wave of international events — including the 2026 FIFA World Cup and the 2028 Olympics — hotel bookings have not yet shown the anticipated bump.
Wage Hike Sparks Debate
Adding to hotel owners’ concerns is a pending minimum wage increase that will lift hospitality worker pay to $30 per hour by 2028. Industry leaders argue the wage hike could cripple already vulnerable properties. On Tuesday, hoteliers gathered at City Hall to protest the ordinance.
However, Unite Here Local 11, the union representing many hotel workers, pushed back, accusing hotel owners of overstating the industry’s struggles to resist worker pay increases.
Why It Matters
LA’s tourism and hospitality sectors are critical to the city’s economy. If more hotels close or halt hiring, it could damage the city’s ability to accommodate visitors during its highly anticipated run of global sporting events, further stalling recovery.
What’s Next
Industry watchers will be looking closely at hotel occupancy rates this summer and fall, as the FIFA Club World Cup kicks off and more international travelers potentially return. However, continued economic uncertainty and contentious labor battles could shape the industry’s fortunes well into 2028.
