At least eight Los Angeles hotels are poised to withdraw from an agreement to provide discounted rooms for the 2028 Olympics if the city finalizes a plan to raise the minimum wage for tourism workers to $30 an hour.

The hotels have notified LA28, the Olympics organizing committee, of their decision to pull out of the Olympic room block agreement, according to the Hotel Association of Los Angeles. More hotels may follow if the City Council approves the Olympic Wage Ordinance in a final vote this Friday, May 23, and the mayor signs it into law.

The move threatens to complicate LA28’s lodging plans for Olympic officials, media and sponsors, who were expected to rely on the thousands of pre-negotiated hotel rooms across the city. Hoteliers say those rates were agreed to under very different labor cost assumptions and can no longer be sustained under the new wage mandate.

“We agreed to certain rates at the hotels at that time, and it’s not viable for us to be able to agree to charge the same rates that we calculated based upon a $17 minimum wage that’s now going to be almost double that,” said Mitchell Hochberg, president of real estate investment firm Lightstone Group, which operates the Moxy and AC hotels in downtown Los Angeles—one of the properties withdrawing from the agreement.

The Moxy and AC Hotels account for 380 and 347 rooms respectively, totalling more than 17,000 room nights committed to LA28. He said fulfilling that commitment, which he signed with the committee in 2020, would likely result in a financial loss, especially when the industry continues to recover from the pandemic, ongoing impacts from the January wildfires and weaker than expected international travel.

“When you lay all this together it’s a struggle operating hotels in Los Angeles,” he said. “And why it’s necessary to have a special minimum wage and have it at such a high level in an industry that has such heavy headwinds is something that just doesn’t make sense to us.”

In addition to the Moxy and AC Hotels, the other hotels that have submitted formal withdrawal letters to LA28 include: Los Angeles Airport Marriott, Los Angeles Airport Renaissance, Hyatt Place & Hyatt House LAX, W Los Angeles West Beverly Hills, and The Garland Hotel, according to records reviewed by SCNG.

Industry leaders said Hochberg’s concerns reflect wider anxiety among hotel operators citywide.

The LA28 room block program was created to guarantee affordable lodging for Olympic stakeholders during the Games. The agreements vary by hotel, but in most cases, they reserve blocks of rooms at below-market rates for Olympic officials, sponsors, and media.

LA28 has sought to set aside around 41,000 hotel rooms for the 2028 Games, according to Jackie Filla, president and CEO of the Hotel Association of Los Angeles. While the first agreements began going out roughly a decade ago, hotels have signed on at different times, she said. This effort involved multiple rounds of recruitment, and it’s still ongoing.

Room rates under the agreement are based on average hotel prices from the summers of 2023, 2024 and 2025, with a modest inflation adjustment, Filla said. She noted that those summers are not expected to reflect strong revenue years for hotels, and the wage hike has fundamentally changed the math.

“It’s not losing money for one day, two days — it’s losing money essentially for an entire month,” Filla said. “The financial calculation on this has flipped upside down for a lot of hotels.”

Labor organizers say the ordinance is a necessary step to ensure hotel workers — many of whom kept the industry running through the pandemic — can share in the economic boom expected from the Olympics and other major events. They also argued that hotels choosing to exit the room block might actually boost city revenue, since higher room rates means more tax dollars.

“It sounds like they want to charge more for guests for the Olympics which will mean more tax revenue for the city, which sounds like a good thing now, and that’s their prerogative,” said Kurt Petersen, co-president of UNITED HERE Local 11.

He also criticized the operators of the Moxy and AC Hotels, which are withdrawing from the room block, for opposing the ordinance after receiving public support for their development.

Under a deal approved by the City Council in 2017, the city agreed to give Lightstone a share of the room tax revenue over 25 years, which is up to $103.3 million, to encourage hotel construction near the Convention Center.

“It’s precious that the owner of the AC and Moxie Hotel is talking about city policies because that hotel received a $100 million subsidy from the taxpayers of the City of Los Angeles,” Petersen said. “We gave them $100 million, and now somehow they’re protesting that Angelenos would make $30 an hour.”

Petersen also dismissed the hotel industry’s warnings of financial strain, saying similar arguments surface anytime workers push for better pay, even as the industry stands to benefit from an unprecedented stretch of major global events.

“They are Chicken Little,” he said. “They complain the sky is falling every time they have to share with their workers. It rings hollow. When the World Cup, the Super Bowl and the Olympics and Paralympics are coming to Los Angeles, they are going to make an extraordinary amount of money. They need to share it with their workers.”

Councilmember John Lee, who voted against the Olympic Wage Ordinance, said the fallout from the hotels was one of the reasons why he opposed the measure.

“This should not be a surprise as our local business community repeatedly warned Los Angeles’ elected leaders that the extreme increase the Council approved would negatively impact the City’s tourism industry,” Lee said in a statement Wednesday.

Lee added that the City Council’s decision could have broader consequences.

“By pushing through drastic wage increases without a balanced analysis of their long-term impact, the City has now put critical hotel room block agreements for the 2028 Olympic Games at risk,” he said. “These decisions don’t happen in a vacuum—the actions of the City Council carry real consequences for our economy, our global standing, and the success of this once-in-a-generation opportunity.”

In a statement to SCNG Wednesday afternoon, LA28 said it is reviewing correspondence that hotels have received about the Olympic Wage ordinance.

“We respect the key stakeholders and decision makers in the process of workers and businesses advocating for themselves and their futures,” LA28 said. “In collaboration with the City of Los Angeles, we look forward to our partnerships with local hotels and unions, and remain confident the Games will bring positive economic impact to the region.”