During the Los Angeles City Council meeting on November 20, 2024, a critical discussion emerged regarding the potential impact of proposed salary increases on the hotel industry and tourism in the city. Council members expressed deep concerns about the unintended consequences of raising salaries by 32%, emphasizing that such a move could lead to increased hotel rates or reduced services, ultimately harming the luxury and convention sectors.

Mr. Liu, representing the city’s tourism department, highlighted that salaries account for over 30% of hotel expenses. He warned that arbitrary salary hikes could force hotels to either raise prices or cut back on services, which would significantly affect the convention business. Liu pointed out that families might opt out of traveling to Los Angeles if costs rise, suggesting that alternatives like camping or visiting other cities could become more appealing.

The discussion also revealed troubling statistics about the current state of LA tourism. Liu noted that visitation levels remain below pre-pandemic figures, with international travel still less than half of what it was in 2019. This decline poses a significant threat to the city’s economy, as tourism is a major revenue source through Transient Occupancy Taxes (TOT). Liu stressed that the city is currently lagging behind other major cities in tourism recovery, ranking second to last among large cities in the U.S.

Council members raised concerns about the lack of consultation with industry experts during the preparation of the economic analysis related to the proposed salary increases. They emphasized the need for a more thorough understanding of how these changes could affect hotel construction, service levels, and overall tourism competitiveness, especially with the upcoming 2028 Olympics.

The meeting concluded with a call for more comprehensive studies to ensure that any policy decisions made would not inadvertently harm the very workers they aim to support or the broader economic landscape of Los Angeles. The council members underscored the importance of balancing fair wages for workers with the need to maintain a thriving tourism industry that supports jobs and local businesses.