Hotel proprietors in Los Angeles are urgently seeking to exit the market, citing potential financial disaster due to escalating minimum wages and an absence of interested buyers.
Jon Bortz, whose company operates eight hotels in the area, is eager to divest. The challenge he faces? A lack of potential purchasers.
“We managed to sell one hotel last year and are keen to offload more in Los Angeles,” Bortz, the CEO of Pebblebrook Hotel Trust, a publicly traded real estate investment trust, revealed to The California Post.
“However, the market is devoid of interested buyers.”
Many other hotel owners echo this sentiment. One anonymous owner expressed his willingness to leave the state immediately, lamenting that no one is interested in acquiring hotels in the city.
The recent initiative from City Hall to raise the minimum wage for hotel employees to $30 an hour has been described as the “final nail in the coffin” by these owners.
“A lot of policy gets made without them even understanding the ramifications or even really knowing the details,” he said.
The ordinance, which passed in May, incrementally raises the minimum wage over the next several years until reaching $30 by 2028 for non-union hotels with 60 or more rooms.
Bortz said the minimum wage hike, compounded by the hotel worker protection ordinance — which requires hotels to provide personal security “panic buttons” to employees working alone, restricts daily room cleanings, and changes the overtime rules — has decimated the industry.
“In 2016 we valued our portfolio — then it was nine properties — we valued it a $1.5 billion, today we would value it at $500 million,” Bortz told The Post.
“So, we’ve lost a billion dollars in ten years.”
To make ends meet and cover the extra labor costs, hotel owners told The Post they’ve had to make some tough decisions.
“We laid off our host and an assistant manager from the restaurant,” he said, adding that he is now looking at eliminating valet parking.
Bortz told The Post he will also have to reduce labor to bring down costs at “probably 5%” per year for the next three to four years.
A hotel owner told The Post they have accelerated their use of artificial intelligence, including robotic cleaners, robotic delivery, and AI for customer relations due to the soaring labor costs.
Dr. Jackie Filla, CEO of the Hotel Association of Los Angeles (HALA), said she “fully expects things could get worse” for the industry come 2028 when the minimum wage hits $30-per-hour.
“We’re very concerned that there are hotels that won’t make it,” Filla told The Post, underscoring the need for lawmakers to revisit the ordinance.
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The HALA conducted a report in February, which highlighted the potentially devastating consequences that the minimum wage ordinance would have on the hotel business, including layoffs, reduction in services, and closures.
“Our report identifies several hotels that are on the public loan watch list, meaning that they’re in default of their loans.
”Several other hotels are up for sale, well below prices that many of them paid decades ago for the hotels,” Filla said.
It’s already happening.
After undergoing more than $70 million in improvements and being valued at $88 million, the iconic Hilton Checkers Hotel sold for just $12.5 million on Jan 29, 2026.
“Who wants to buy into a market where they dictate an unreasonable level of compensation, operating costs, workload limits, and operating standards that have absolutely nothing to do with safety and don’t have anything to do with good health,” Bortz said.
“It’s purely so that properties that are not union are so expensive that we go to the union and say we give up.”
Hotel owners said they have tried to have a dialogue with city leaders, but to no avail — if things don’t change soon, hospitality might look a little different in LA.
“If you don’t make any money, you can’t invest in your hotels, — you can’t maintain them,” Bortz said.
“The hotels will be open, but they’re not going to be in good condition. People aren’t gonna have a great experience over the Olympics.”
