LA Hotels Face Olympic Hurdles: Labor Costs, Global Tourism Slump Cast Shadows
Los Angeles is gearing up for a massive spotlight moment in 2028, hosting both the Summer Olympics and the Super Bowl. But behind the excitement, the city’s hotel industry is facing a mounting storm of challenges, ranging from escalating construction costs to a slow recovery in international tourism and rising labor costs.
Currently, there are 105 hotel projects in various stages of development in Greater Los Angeles, according to Christopher Henry, CEO of Majestic Hospitality Group. While approximately 2,600 rooms are expected to open before the 2028 games, the path to completion is fraught with obstacles.
"We were hoping to be building when interest rates were 3%, now it’s 7 or 8%, so it’s tough to pencil in LA these days," expresses Mark Davis, CEO & President of Sun Hill Properties, who’s been battling for almost nine years to secure approvals for a 400-room hotel expansion project near Universal Studios.
These difficulties are compounded by soaring construction costs – up 40% since the project’s inception – and the slow crawl of project approvals.
Adding to the complexity is the issue of labor costs.
"It’s going to devastate the food and beverage business in hotels," says Davis. "It’s going to turn LA into New York or San Francisco, where you have full-service hotels with no restaurants because they’re pushing the wage high. You know, I already charged $34 for my cheeseburger. I can’t charge $65. "
A proposed ordinance to raise the minimum wage for hotel and airport workers to $30 by July 2028 has been met with fierce resistance from hotel owners, citing the potential for crippling financial impact. This, coupled with the city’s strong hotel worker unions, puts a squeeze on developers and investors eyeing new projects.
Further complicating matters is the slow recovery of international tourism. Despite a bounce back in domestic visitors, the slimy chasm of international traveler numbers looms large.
"Talk to your Congresspeople," urges Henry. "Push to get the State Department to move a little faster on international arrival processing, and that would help business quite a bit, I think.”
While Los Angeles is poised to host a successful Olympics and Super Bowl, the road ahead for its hotel industry is anything but smooth. Rising construction costs, uncertain labor laws, and the stagnation of international travel casts a shadow over the city’s hospitality sector.
