In Brief: The American Hotel & Lodging Association has released a report stating that recent Los Angeles City Council policies and rising operational costs are contributing to financial pressures on hotels, affecting employment, investment, and economic activity in the city.
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AHLA Report Details Economic Impact and Challenges Facing Los Angeles Hotels – Image Credit Unsplash
The American Hotel & Lodging Association (AHLA) released a report on April 9, 2026, detailing the economic contributions of hotels in Los Angeles and outlining concerns about the effects of recent city council policies and increased operational costs.
The report states that hotels in Los Angeles are experiencing financial and operational pressures as labor and operating costs rise faster than revenue growth. These conditions have led to a slowdown in hotel development, a shift in investment to other markets, staff layoffs, reduced employee hours, and the closure or delay of some hotel expansion plans.
Survey findings from Los Angeles hotel stakeholders indicate that 97% believe repealing recent labor regulations would make the city a more attractive market for hotel investment. Additionally, 88% reported reducing staffing or hours in the past year due to city council policies; 80% indicated that Los Angeles is not a good place for long-term hotel investment; and none described the city’s hotel investment environment as very favorable.
The report states that policies passed by the Los Angeles City Council, including wage mandates and operational requirements, are increasing hotel costs without flexibility to reflect market conditions and demand. The Los Angeles hospitality market has not returned to its pre-pandemic peak occupancy rate of 84% or the 2.8 million monthly room nights in demand. The report finds these policies are contributing to reduced hiring, fewer hours for workers, delayed or canceled hotel investment and development, and related impacts such as reduced airline operations and restaurant closures.
As Los Angeles prepares to host the 2026 FIFA World Cup and the 2028 Summer Olympics, the report states that hotels are struggling to manage rising operating costs alongside declining demand. Survey data shows that 86% of Los Angeles hotel owners and operators rank rising labor costs as their top challenge. In the past year, 88% of hotels reported layoffs or hour reductions for their workforce, 59% reduced overtime availability, and 59% closed or limited employee benefits or amenities. The report attributes these staffing changes to increased labor costs (93%), increased operating costs (91%), reduced demand and room cancellations (58%), and the broader economic environment (55%).
According to the report, Los Angeles hotels generate $12.5 billion in annual economic activity, support nearly 64,000 jobs, and produce more than $1.1 billion in state and local tax revenue. Economic impact data, commissioned in partnership with Oxford Economics, states that hotel guest spending in Los Angeles totals $7.2 billion, supporting local restaurants, retailers, and arts and entertainment venues.
The AHLA is calling on the Los Angeles City Council to revisit and amend policies contributing to rising costs and declining investment, and to work with industry stakeholders on measures that support both workers and economic growth.
View the full report here.
