Negotiation Game: It's been a difficult and tragic year for Los Angeles following the January wildfires that killed dozens, destroyed thousands of structures and caused billions of dollars in damage. As the city embarks on what is sure to be a lengthy recovery, visitation is down amid macroeconomic concerns and sluggish international demand. Meanwhile, a controversial new wage ordinance has dismayed city hoteliers. All this happens as Los Angeles prepares to host several 2026 FIFA World Cup matches, Super Bowl LXI and the 2028 Summer Olympics.
The Los Angeles Tourism Marketing District, a marketing alliance of all the city's hotels, in May said their year-to-date collective occupancy had increased 0.5 percentage points year over year to 72.5 percent, while the average daily rate increased 0.6 percent to $206. But some other data points to gloomier trends for business and leisure transient travel alike. Hotel analytics firm STR pointed to multiple July weeks when the city's hotel revenue per available room declined by 9 percent or more year over year, with declines in Los Angeles' central business district as deep as 30 percent. And while Los Angeles landed in the top five of Lodging Econometrics' quarterly roundup of U.S. cities' hotel pipelines as recently as the third quarter of 2024, there's concern that the new wage ordinance could turn some developers to look elsewhere—like California's Inland Empire, which landed in Lodging Econometrics' top five in the first quarter.
Los Angeles wasn't spared the softening in inbound international travel, either. According to the U.S. Department of Commerce's International Trade Administration, the number of international travelers arriving at Los Angeles International Airport this year through August declined 5.6 percent from 2024 levels.
The Approach: Signs of softening demand are beginning to emerge in the L.A. hotel rates in BTN's Corporate Travel Index, which represent aggregated hotel rates booked by corporates in multiple tiers. The second-quarter figure of $245 was down from the $254 calculated for the first quarter, and it's well shy of the $261 logged for the second quarter of 2024. As such, there's the possibility of a favorable market for buyers, but don't forget about the World Cup, for which L.A.'s SoFi stadium will host seven matches in June. SoFi will also host the Super Bowl LXI in February 2027, and the Summer Olympics are set to begin in July 2028.
Keep in Mind: Los Angeles in May passed an ordinance that would raise the minimum wage for workers in airports and hotels with at least 60 rooms first to $22.50 per hour, then to $30 per hour by 2028, over the fierce opposition of hotel groups. An attempt this month to garner enough signatures to place the ordinance on a ballot for a referendum failed, ensuring the ordinance would take effect. American Hotel & Lodging Association CEO Rosanna Maietta in a statement said that "it's clear that the ordinance will jeopardize jobs, push hotels to the brink of closure, severely cut tax revenue the city desperately needs, and leave the city grossly unprepared for the 2028 Olympic Games." AHLA also cited an Oxford Economics study that claimed the ordinance could cost 14,000 industry jobs and $169 million in revenue, and some developers have suggested some projects might not go forward. Tensions are high and fallout seems certain.
What's Happening in Los Angeles
Los Angeles this week approved a plan to expand the Los Angeles Convention Center, a move officials said would provide the city better ability to attract citywide conventions. Construction is set to begin this month on plans to join the center's South and West exhibit halls through the addition of 190,000 square feet of exhibit space, creating create one contiguous hall with over 750,000 square feet of space, according to the convention center. Construction is planned to be complete by March 2028, ahead of the Olympics.
A few new properties have opened their doors in Los Angeles this year, including the 132-room boutique Whisky Hotel in Hollywood in March and Marriott International's upscale 194-room AC Hotel Pasadena in April. Additionally, the 614-room Sonesta Los Angeles Airport LAX completed a $42 million renovation that includes redesigned guest rooms and additional event space.
Planned hotel openings include the 212-room Jordan San Gabriel in January 2026, a renovated former Hyatt Place property that will join Hilton Worldwide's upper-upscale Curio Collection. The 300-room Kali Hotel and Rooftop in Hollywood Park is planned to open in September 2026 adjacent to SoFi Stadium, and will join Marriott's upper-upscale Autograph Collection.