Los Angeles Hoteliers Consider Selling Amid Wage Hike

With less than a week before Los Angeles’ minimum wage increase ordinance goes into effect, some local hotel owners are panicking.

Pebblebrook Hotel Trust CEO Jon Bortz is among those considering selling properties, The Wall Street Journal reported. “We would love to sell [our L.A. hotels],” Bortz said. “But nobody will buy them.”

Hotel Angeleno owner Mark Beccaria testified to this phenomenon last month in an interview with The Real Deal. “I’ve never seen so many hotels on the market right now, and none of them are selling,” Beccaria told TRD. “No one wants to pay anywhere close to what they’re worth.”

Beccaria is pausing a $10 million planned renovation of his boutique hotel, he told WSJ. He’d hoped to complete it before the Olympics in 2028, which was the impetus for the hospitality wage hike ordinance in the first place.

“You’re going to have a lot of hotels in Los Angeles that will become run down,” Beccaria told WSJ. Bortz said that the hotel experience across the city would suffer, as would the city’s reputation at large. “That’s going to hurt tourism, and it’s going to leave L.A. in sort of an embarrassing situation when it comes to the World Cup and the Olympics,” Bortz said.

Pebblebrook owns two properties in the city of Los Angeles proper: The W Los Angeles and the Kimpton Hotel Palomar, both in Westwood. Still, Bortz told WSJ he will likely feel compelled to increase wages at Pebblebrook’s seven other properties in Greater Los Angeles to remain competitive for labor. In Long Beach, for example, voters approved a new minimum hourly wage of $29.50 by 2028.

Under the new ordinance, approved by the Los Angeles City Council last month, the minimum wage for hotel workers at properties with 60 or more rooms would rise from $20.32 to $22.50 and continue to increase by $2.50 annually before reaching $30 in July 2028. The World Cup kicks off across North America next June, and the Olympics arrive in Los Angeles a few weeks after the $30 wage would go into effect.

Industry trade group the American Hotel & Lodging Association is spearheading an effort to overturn the minimum wage ordinance. If opponents can collect 93,000 signatures by the end of June, the July 1 wage increase would be paused for a year and residents would vote on the ordinance in a referendum next June.

— Chris Malone Méndez