The Los Angeles City Council on Wednesday voted to approve a sweeping proposal that it has considered for at least two years to raise wages and expand health benefits for hotel and airport workers, a move that could reshape the city’s tourism labor market as it prepares to host the 2028 Olympics.

The measure will gradually raise the minimum wage for hotel and airport workers to $30 an hour by 2028. It also includes a health care credit of $7.65 an hour—down from the originally proposed $8.35– which union leaders say will help close gaps in coverage for low-wage workers.

Supporters say the change is long overdue, especially as Los Angeles prepares to host the 2028 Olympics. They argue the city’s tourism economy relies on workers who often struggle to afford their rent and take care of their families, while opponents–including hotel industry leaders–warn the wage hike could lead to layoffs, reduced services, and a loss in hotel tax revenue at a time when the city faces a $1 billion budget deficit.

The City Council passed the measure on a 12-3 vote after several hours of public comment, debate and a closed session. A couple of proposed amendments failed, including one to raise the hotel size threshold to 150 rooms.

Councilmember Hugo Soto-Martinez, a supporter of the proposal, opposed efforts to narrow its scope.

“The current law right now is 60 rooms or more, and changing this law would have the same effect on a much larger level,” he said, noting that even luxury hotels like the Bel-Air fall under that number. “I don’t believe that people who right now are making the hotel worker minimum wage should get a pay decrease. … We’re not here to do pay cuts, we’re trying to improve people’s lives.”

The difference between 60 rooms and 150 rooms is key because it determines which hotels are covered by the wage law. Under the current ordinance, hotels with 60 or more rooms must comply. Raising the threshold to 150 rooms would exempt many smaller and independently owned hotels from the new wage and benefit requirements.

The council members who opposed the measure, however, cited concerns over timing, unintended consequences, and the city’s financial outlook.“Very simple math, guys, if we increase what it costs to keep people employed and we don’t have the level of tourism to support it, people will get laid off,” Councilmember Monica Rodriguez said. “And that’s already happened just on the natural from the already lack of tourism that the city is experiencing right now. So what we’re talking about is accelerating that.”

Earlier in the day, hundreds of union members rallied outside City Hall before the meeting, chanting and waving signs that read, “Olympic Wage Now” and “Vote Yes! Ensure we are healthy and housed.” Many packed into the Council Chamber for the lengthy discussion, while others waited outside after the room reached capacity.

“It’s hard, hard work–under 110 degree weather, when it was raining, when it was cold, and we deserve respect,” said Estuardo Mazariegos, a former LAX worker who is now a lead organizer with the Alliance of Californians for Community Empowerment.

Kurt Petersen, co-president of UNITE HERE Local 11, said workers should benefit as the city prepares to host global events like the World Cup and Olympics.

“We cannot have a tourism industry that thrives because it exploits workers,” he said. “And right now, this ordinance is about changing that dynamic, so that workers earn enough and have health insurance so that they can thrive, and so can the tourism industry,” he said.

Petersen also pushed back on warnings from hotel leaders.

“This is what the industry does every time they’re called to do right by their workers. ‘Sky is falling, things are going to get bad, industry is going to collapse,’ never happens,” he said. “All I know is that CEO salaries continue to rise, stock prices for all hotel companies have almost doubled since the pandemic, they’re doing great, the workers aren’t.”

But not all hoteliers see it that way.

Hoteliers and business leaders argued that the proposed jump in salary—including the added health care credit—will force many hotels to lay off staff, cut services, or even close altogether. They warned that those cuts will raise prices for consumers.

Ray Patel, who owns a 24-room hotel in L.A., said the wage hike would disproportionately affect neighborhood hotels that serve locals, not tourists.

“We’ve predominantly catered to Angelenos,” he said, noting that many of his guests are residents using transitional housing, emergency shelter programs or seeking temporary housing due to personal hardship.

A dramatic increase in wages, he warned, could push nightly rates from $65 to $110, pricing out local families and driving businesses to Pasadena, Burbank or other cities.

Patel also expressed concern that while the ordinance may exempt smaller hotels on paper, it won’t insulate them from the ripple effects of a rising labor market. Many of these small hotels are family owned and operated, including by immigrant families who come to the U.S. in pursuit of better opportunities.

“We don’t have anybody to bail us out,” Patel said. “On the campaign trail, the candidates always say, ‘We’re here for small businesses, women entrepreneurship, immigrant entrepreneurship, everything,’ but when it comes down to something like this, there’s a deaf ear.”

Jackie Filla, president and CEO of Hotel Association of Los Angeles, said the ordinance could have unintended consequences that ripple far beyond hotel workers’ paychecks–especially as the city gears up for the Olympics.

“The most expensive cost within a hotel … is labor, and so creating a 40% to 60% increase in labor is going to mean that hotels are just simply not going to be able to afford to have restaurants, to have parking, to have shops.”

She also warned that hotel closures or cutbacks could shrink one of the city’s most significant revenue streams, the hotel bed tax, which generates roughly $300 million annually.

“When you have these businesses saying we are at risk of layoffs … they’re also at risk of shutting down their businesses or businesses within their business,” she said. “And what that means is that the city can expect to see reductions in their own budget.”