WASHINGTON, D.C.—As Los Angeles continues to recover from the long-term effects of the pandemic and most recently the devastating wildfires, a new report released by the American Hotel & Lodging Association (AHLA) found that the city’s recovery of international visitors from 2019 levels lags behind every other major U.S. city. Coupled with the recent wildfires and the potential passage of legislation before the City Council, the tourism industry is facing significant challenges that have already led to hotel closures and job losses that are contributing to the city’s prolonged recovery and increasing budget shortfall.
The tourism industry is one of the top five employers in Los Angeles County, supporting more than 540,000 Angelenos. In 2023, the industry generated more than $40 billion in local business sales and $290 million in transient occupancy tax revenue (TOT). However, Los Angeles experienced a $14.3 million TOT budget shortfall in Fiscal Year 2023-2024. At midyear FY24-25, the TOT budget shortfall already stood at $13.9 million.
As the city prepares for the 2026 World Cup and the 2028 Olympics, new hotel operational restrictions before the City Council would further depress the industry and lead to increased TOT shortfalls.
“The Los Angeles tourism industry has historically been a top contributor to the city’s economy. However, several extreme measures proposed by the city council are threatening small business owners, bringing the hospitality industry to an inflection point,” said AHLA President & CEO Rosanna Maietta. “With Los Angeles facing a significant budget deficit, the City Council continues to advance legislation that will further reduce tax revenue generated by the tourism industry, while multiplying hotel operating costs, risking thousands of layoffs and forcing some small business hotel owners to shut their doors. We urge the city to delay further consideration of this effort and partner with us to ensure we can continue to create jobs and prepare the city to welcome thousands of visitors ahead of upcoming major sporting events.”
The report’s key trends and findings include:
- Los Angeles is at the bottom of the list of major cities recovering from the COVID-19 pandemic, reaching only 79 percent of 2019 levels. International visitors represent 23 percent of overnight visitation in Los Angeles but account for more than 49 percent of overnight visitor spending.
- Labor expenses account for approximately 50 percent of a hotel’s total costs and have consistently outpaced revenue growth since 2020.
- Legislation such as the Worker Minimum Wage Ordinance will exacerbate the city’s current dire economic situation, causing the elimination of nearly 15,000 hotel jobs, costing $169 million in state and local tax revenue, and discouraging $342 million in hotel construction spending.
