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DearCity Councilmembers:

As a member of the San Fernando Valley Business Community, I strongly urge you to oppose the Bonin/Koretz motion to increase the minimum wage for employees of hotels with over 125 rooms to $15.37 an hour. This change would have adverse effects not only to LA’s vital tourism industry but to the entire LA economy, despite its admirable intentions to lower the poverty rate.

Approval of an industry-specific minimum wage aimed at LA’s hospitality industry remains bad policy for the City of Los Angeles.In light of the Mayor’s recent and simultaneous proposal for a city-wide increase in minimum wage, I ask that you oppose any further calls for an increase in hotel wage rates, above and beyond what is established for the City’s minimum wage.

While I appreciate that the City adhered to the public’s repeated calls for additional study of the impacts of the proposed hotel minimum wage increase, I am appalled to learn that City-contracted reports were just released this morning- giving less than 24 hours for the City’s Economic Development Committee to review before holding its hearing on the issue (scheduled for Tuesday, September 23rd). Adding further insult the full City Council is scheduled to hear this item on Wednesday, September 24th – less than 48 hours following the release of the consultant’s reports.It is disheartening that the Committee and City Council would act on a decision of such importance to the LA Economy without adequate time to fully digest the findings of the consultant’s reports.

According to a Los Angeles Economic Roundtable study on a hypothetical $15 citywide minimum wage, the hotel industry would have to reallocate a full 14 percent of their revenue to raise employee wages. For an industry that generally takes home a 10 percent profit margin from overall revenue, reallocating 14 percent will be devastating if not impossible. This will lead to job cuts and the exodus of the hotel industry, which could relocate just outside of city borders. Additionally, the City’s previously commissioned independent report by Blue Sky Consulting, reported that a hike in minimum wage would most likely reduce employment in the affected hotels, reduce hotel profits, impact room rates, reduce local spending by hotels on services or improvements, negatively affect new hotel development, and/or cause disruptions in employment for hotel workers.

This motion is coming just months after your own CLA reported that there is a shortage of lodging in LA, the result of which will cause visitors to necessarily stay in hotels outside the market, reducing the larger economic benefits to the City. The CLA further reported that visitors may ultimately not come to Los Angeles because they could not obtain lodging, and that the same holds for convention business - with LA potentially losing both short-term and long-term bookings because convention planners are not likely to book where there are an insufficient number of rooms available for their clients.

Again, I implore you to oppose this motion and allow future minimum wage discussions to take place at a city-wide level. The Bonin/Koretz Motion will only serve to be a detriment to the City’s vital hospitality and tourism industry. Thank you for your time and consideration of this very important matter.

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