After a recent Los Angeles City Council vote, big properties in LA are gearing up for big changes. The council voted 12 - 3 in favor of a measure to increase the minimum wage for employees at hotels with more than 300 rooms to $15.37. Mid-size properties will be impacted soon, too. Starting in 2016, the minimum wage will rise to an equal level at properties with more than 150 rooms. It’s quite the hike from the current statewide minimum wage of $9. Since the vote was not unanimous, there will be a second vote on October 1. However, that vote is somewhat of a formality. Los Angeles Mayor Eric Garcetti has already said that he will sign the measure, too.
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Not surprisingly, some members of the hotel industry are opposed to paying workers more money. Katherine Lugar, President and CEO of the American Hotel and Lodging Association, issued a statement warning of the potential dangers of such a wage hike. Citing figures from a new report from PFK Consulting, Lugar forecasts a sub-par future for the industry in Los Angeles.
“If the plan is implemented, there will be a negative impact on job creation, future development will be at risk and the under-supply of hotels in the area will continue,” Lugar wrote.
Lugar predicts that the long-term outlook for hotels in Los Angeles will suffer, too.
“The unfair targeting of the industry would drive hotel development outside city limits and jeopardize revenue the city already depends upon,” Lugar added.
Bob Amano, executive director of the Hotel Association of Los Angeles, echoed Lugar’s stance.
“This is not fair,” Amano said of the measure. “Where does it say in the city’s charter that they [the City Council] now become the HR department for private enterprise?”
While Lugar, Amano and others voice concerns about the measure, some economists believe the wage hike will pay off for workers and the city alike. According to a study conducted by California-based think tank the Economic Policy Roundtable, the wage increases could generation $70 million for the local economy.
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Wages and compensation for hotel employees have been a hot topic in other parts of the country, too. A $15 minimum wage for employees at hotels near the Seattle-Tacoma International Airport went into effect earlier this year. In San Francisco, residents will vote whether to approve a proposed increase to $15 for all employees in the city, not strictly hospitality workers.
The minimum wage isn’t the only headline on the minds of many hoteliers. Click here to learn how peer-to-peer rental service Airbnb is disrupting the traditional hospitality business.