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The 24-storey Hilton Los Angeles Universal City Hotel is located above Kafuenga Pass and will be a great gathering place for visitors arriving at the 2028 Summer Olympics and Paralympic games.
Sun Hill Properties Inc., which manages the 495-room hotel, has already signed a “room block” agreement with the LA28 Organising Committee and has booked hundreds of rooms for Olympic fans. The city council recently approved plans to have Hilton add a second 18-storey tower.
The future of the $250 million expansion is currently doubtful. On Wednesday, Los Angeles City Council will vote for a requirement that hotels with more than 60 rooms pay workers at least $30 per hour by 2028, plus at least $30 per hour of medical expenses of at least $8.35 per hour.
If the council approves the proposal without any major changes, Sunhill will “be absolutely withdrawn from the Olympic Room block,” said Mark Davis, the company’s president and CEO. He said hotel investors would also kill the 395 room expansion.
“Our board was very stubborn [council members] Davis said. “They’ll move the project elsewhere,” Davis said.
The council voted 12-3 last year to direct City Atti. Hydee Feldstein Soto drafts a package of minimum wage increases. This applies not only to hotels, but also to private companies at Los Angeles International Airport, such as airlines and concessions. Here, the minimum wage will be the highest in the country, according to Unite Local 11, a hotel and restaurant union that supports the proposal.
Mark Davis, president and CEO of Sun Hill Properties, said the proposal to hike LA’s minimum wage for hotel workers would kill plans for the new 18-storey hotel tower unless reworked.
(Marcus Ubungen/Los Angeles Times)
LA tourism workers say LA tourism workers are struggling to pay for food and rent and deserve financially profits from the Olympics as private companies do. They dismiss the disastrous warnings of the hospitality industry, including the notion that wage increases will abandon new hotel developments.
City Councilman Hugo Soto Martinez said the Sheraton Universal Hotel, a competitor near Hilton, is already paying high wages to its members. He said the real threat to the development of new hotels is the economic uncertainty surrounding higher interest rates and President Trump’s trade policy.
“So I just don’t buy it,” former hotel association organizer Soto Martinez said of Davis’ warning.
Under the city’s proposal, the minimum wage for hotels and airports will reach $22.50 on July 1st. It will be $25 in July 2026, $27.50 in July 2027, and $30 in July 2028. In addition to these increases, medical expenses of $8.35 on January 1st will be effective on January 1st.
The business group notes that two hotels have been closed in the past year. Losing 4 points, 270 jobs by Sheraton next to Lax and Mama Shelter in Hollywood. They say that Trump’s trade war has pushed tourist activities down from other countries, and visitors from Canada are particularly delayed.
Business leaders say hotels with on-site dining will no longer be able to compete with non-hotel restaurants, resulting in a much lower minimum wage.
Jon Bortz, chairman and chief executive of Pebblebrook Hotel Trust, said his company is already considering operating a scaling back restaurant at two facilities, the Kimpton Hotel Palomar and W Los Angeles West Beverly Hills in Westwood, near UCLA.
Palomar could offset the cost of higher minimum wages by converting restaurants into self-service breakfast operations, but W will likely close at least one of the two restaurants, Bortz said. “We must change the business model for these properties to expect to survive,” he added.
Bortz said the proposed wage increases, along with other hotel regulations approved by the city council in recent years, spurred Pebblebrook to look to other markets for new hotel projects.
“Frankly, [L.A.] From a broad buyer perspective, the market is being crossed off the map by investors,” he said.
Hotels in other parts of LA are considering similar cuts. An executive at Lightstone Group, which owns a 727-room Moxy + AC hotel near the convention center, told city council members last year that the minimum wage proposal would likely lead to the closure of Level 8, a collection of restaurants on the eighth floor of the hotel.
Mark Beccaria, a partner at Hotel Angeleno near the 405 Freeway, said in another letter to the city leader that not only the hotel’s restaurants but also the valet parking lot would have to be closed, eliminating 39 jobs.
“Common sense says you can’t raise wages more than 50% in a year when incomes drop,” he said.
Here Unite co-chairman Kurt Petersen said the Hotels were accusing Hotels of Fear Mongering and misrepresenting the potential impact of planned wage increases. The hotel owner “behaves like the sky is falling every time we have to share profits with the workers,” he said.
“This ‘Chicken Little’ has to end. Every time, the hotel screams poverty, and then a day later, they are fine. It’s always the same routine,” Petersen said. “What’s not falling is rent and healthcare. What’s not sustainable is workers who aren’t making enough money to live in Los Angeles.”
The hospitality industry issued a similar warning 10 years ago when the council approved the minimum wage for the current hotel – said Víctor Sánchez, executive director of New Economy, advocacy group for Proraball, who produced reports on the phenomenon to see tourists thriving in the years that followed.
In Long Beach, where residents voted to raise the hotel’s minimum wage last year, revenue per room available rose 15.7% in March compared to the same month last year, Sanchez cites data from real estate group Costar.
L.A. political leaders have enacted many wage laws over the past decades. The minimum wage for a hotel, approved by the council in 2014, is currently $20.32 per hour. The minimum wage for private sector employees at LAX is $25.23 per hour, including the required hourly medical costs. After that, there is a minimum wage for almost everyone in LA. This is $17.28 per hour, which is 78 cents more than the state.
The hourly minimum wage for hotel and airport workers was scheduled to rise this year as part of a regularly scheduled increase in the city’s wage laws. After the council expressed interest in a much larger increase, business leaders began warning hotel developers that they would steal business elsewhere.
Few people were as dramatic as Davis. Davis said their proposal could “kill” the expansion of Universal City Hilton’s 395th Room, as drafted.
Davis, who owns a hotel in Simi Valley in Colorado Springs, Colorado, said last year his board instructed him to consider acquiring non-California property in a market that “makes financially meaningful with a $250 million investment.”
“Owners investing this money have to look at the numbers,” he said in an interview. “Every project will only survive by that number.”
Universal City Hilton already offers healthcare coverage while paying most of its workers over $25 an hour, Davis said. If these health plans have a financial value lower than $8.35 an hour, the company needs to make up for the difference, he said.
Davis said he is also considering scaling the restaurant.
At one point, Davis’s project gained support from city political leaders.
Universal City Hilton has reached an early agreement with the Construction Workers Union, pledging to pay a higher general wage to the estimated 1,000 construction workers working in the new tower.
In August, the council voted unanimously to seek an economic analysis that would determine whether the city should provide taxpayer support to the project. The analysis requested by Councillors Nithya Raman and Soto-Martínez would have looked into whether the hotel would be able to retain its share of tax revenue generated by the new tower.
Raman, a district that includes parts of Universal City, did not respond to questions from the time about the project or the potential impact of higher tourism wages.
Recently, hotel assn. Los Angeles has appealed directly to Mayor Karen Bass and is buying digital ads that ask them to intervene in the issue of minimum wage.
Bass said in an interview earlier this year that hotel workers want to “live a decent life” while also hoping that their employers can “survive.”
“We need to be able to make sure we can meet the needs of our workers without compromising the industry,” she said.
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