To the relief of hoteliers, a union-sponsored measure that would have forced hotel operators in the city of Los Angeles to fill their vacant rooms with homeless individuals each night is expected to be removed from the March ballot.

However, several hotel owners are upset that the Los Angeles City Council last week approved new regulations, including one that would require hotels and short-term rental operators, such as those who use platforms such as Airbnb, to get annual permits from the police. That’s to crack down on “party houses.”

“The police have no business regulating the hotel industry,” said Ray Patel, who owns the 24-unit Welcome Inn in the Eagle Rock neighborhood of L.A. “It creates additional red tape for businesses, and it will require additional staffing at the police department.”

But Patel is relieved the City Council last week voted to delete from the March election the initiative that could have led to hotels being forced to take in homeless people each night.

Under the original Unite Here Local 11 proposal, hotel operators would have been required to inform municipal officials of their nightly vacancies and allow those rooms to be filled with homeless individuals in exchange for government housing vouchers that covered their daily published rack rates.

There were no restrictions on individuals with mental illness or substance use disorders, and security and care for those housed would not have been provided by the city.

“Mixing the unhoused with corporate travelers and tourists without wraparound services would hurt everyone’s business, especially those in the limited-service market, which would likely see a larger influx of homeless individuals than the big hotels,” said Patel.

Limited-service hotels like Patel’s are generally smaller, less expensive and offer few amenities.

Patel is also president of the Northeast Los Angeles Hotel Owners Association, and he advocates for others who own and operate limited-service hotels in Los Angeles.

“Many limited-service hotels are located in underserved neighborhoods,” said Patel. “Given the lower rates charged, our operations would be more attractive to the city than other locations where officials might have to pay hundreds of dollars a night.”

On the other end of spectrum is the 495-room Hilton Los Angeles Universal City Hotel, owned by Sun Hill Properties. Sun Hill’s president and chief executive, Mark Davis, also raised numerous concerns about the measure’s impact.

“A number of studies were done in which potential guests stated that they would not be comfortable if the measure were to be adopted,” said Davis. “Our hundreds of team members at the hotel would also be at risk since no screening measures would be put in place to prevent mentally ill people and/or drug users from receiving vouchers.

“We are a family hotel next to a theme park, and housing the homeless would cause many of our guests to think twice about taking a room here.

“The previous initiative known as Project Roomkey wreaked havoc on many hotels and I know of at least one that’s no longer in business because of it,” Davis added.

Last-minute solution

On Nov. 1, City Council President Paul Krekorian, whose district is in the Valley, proposed a draft ordinance as an alternative to the union initiative, with Unite Here agreeing to remove the original measure from the ballot if it was adopted. 

The ordinance, which is scheduled to take effect on July 1, underwent a number of changes prior to the Nov. 28 vote by the council.

The draft that was approved last week includes a voluntary hotel voucher program for operators who wish to house the homeless.

Additionally, hotel developers will be required to fully replace any housing that is lost due to construction.

Projects will undergo public review, with factors such as a proposal’s impact on existing housing stock, public transit, social services and employee compensation taken into account.

Owners and operators will also be screened for prior criminal activity or a history of creating a public nuisance, such as “party houses.”

A major point of contention among owners is the mandate requiring all hotel and short-term rental operators to obtain annual permits from the Los Angeles Board of Police Commissioners, which can be revoked due to public nuisance and safety complaints.

Prior to the vote, a last-minute amendment was added by Councilman Marqueece Harris-Dawson instructing officials to report back in 45 days on possible alternatives to police permits for those operating short-term rentals.

Patel is vowing to continue to fight the provision requiring them to obtain operating permits from police.

“If a limited service operator like myself has its permit pulled, it could potentially put us out of business completely.”

That said, Patel does expect there will be a period in which existing owners will be exempt from applying for the permits.

“We will be meeting with city officials in the coming days to work out the time frame,” said Patel.

Differing perspectives

Kurt Petersen, co-president of Unite Here Local 11, which represents over 32,000 hospitality workers in Southern California and Arizona, said the ordinance accomplishes the union’s goals of protecting housing and preserving a living wage while holding “hotels accountable for helping to solve the housing crisis.

“L.A. is experiencing a dramatic increase in hotel development, with over 100 hotels under construction or in planning stages,” said Petersen. “Many of our members already can’t find housing they can afford near their jobs and are forced to travel long distances.

This proposal ensures that any housing lost due to hotel construction will be replaced. Petersen added that it’s “a step in the right direction, but clearly much more is needed to solve the city’s growing homeless crisis.”

Sarah Wiltfong, director of advocacy and policy at the Los Angeles County Business Federation said the ordinance is a “victory” for Los Angeles hotels as the ballot initiative risked hotel employees’ safety, making them “the first line of care for temporary homeless shelters.

“The council’s ordinance, and the anticipated pulling of the ballot measure, ensure that our hotel community can thrive and continue to provide excellent careers and economic benefits to Los Angeles.”

Still, she admits it’s not a perfect solution.

“The ordinance contains a number of regulations that will make it harder for hotels to be built in the area and may cause developers to look elsewhere,” said Wiltfong.

Fred Gaines, founding and managing partner of the law firm Gaines & Stacey in Woodland Hills, said the revised ordinance contains a number of wins for the union.

“While hotel owners will no longer be forced to house the homeless, the new rules for hotel construction will likely mean most developers will have to agree to unionize in order to get their projects approved,” said Gaines.

Trend to regulation

While operators appear to have dodged a major bullet, the initiative is far from the first one to be aimed at the industry. In fact, in recent years a series of potentially business-strangling regulations have been proposed, and in many cases imposed, with Unite Here often leading the charge.

Higher wages, employee retention requirements, and square footage limits on the amount of space that an individual employee can clean each day without receiving double time for the entire shift are just some of the mandates owners have been grappling with.

In many cases, union hotels covered by collective bargaining agreements are exempt from the new rules, with opponents arguing the ordinances are nothing more than a tool to force hotels to unionize.

“The tactic of lobbying for regulations that squeeze the hotel industry is a longtime practice utilized by Unite Here in which they propose something egregious in which the only way out is to unionize,” said Wiltfong.

In the case of the new square footage cleaning limits contained in the Hotel Worker Protection Ordinance, Patel said it has hurt housekeepers, hotels and the city’s bottom line.

“The policy has resulted in housekeepers getting fewer hours in many cases,” said Patel. “For owners, it means they may have rooms that they can’t rent because they could not pay the overtime necessary to clean them, which at the end of the day costs the city tax money.”

“On average this costs us an extra $120,000 to $150,000 in labor costs each month,” said Davis.

Strikes

In the meantime, the union continues to conduct a series of rolling strike actions at hotels around the city, with members calling for higher wages and better working conditions.

Litigation has also been a common mechanism employed to thwart the approval of nonunion projects, said Gaines.

“I have represented several developers over the years in which lawsuits were filed and dropped in exchange for agreements to unionize workers,” said Gaines.

“L.A. is seeing a lot of hotel activity as the 2028 Olympics gets closer, but these roving strikes and other regulations advocated for by the unions certainly don’t make L.A. attractive to developers or visitors.”