As a lessee of Los Angeles World Airports, in August of 2000 the Travelodge Hotel at LAX was subject to the City of Los Angeles' living wage ordinance.
Our concerns were several.
How would we manage the increase in expense since raising room rates was not feasible? Competitive markets El Segundo, Culver City, and Inglewood all paid substantially lower wages and city bed tax. Then 9/11 occurred and the substantial drop in occupancy exacerbated the financial challenge.
Guess what? We survived and are entering our seventh year of paying the living wage. Our average daily rate is considerably less than other Century Boulevard hotels and our salary expense is 46 percent of income. The typical percent of wage cost to income is approximately 33 percent to 36 percent for a small hotel whose only source of revenue is room sales.
But there are positives under the living wage that we have experienced. Our employee turnover rate is 2 percent to 3 percent a year, which minimizes training costs and maximizes employees' knowledge of their work assignments and job skills. And the increase in wages provides a small financial safety net for employees who had been living from paycheck to paycheck, therefore improving the morale of the staff.
But there are negatives too. With an entry level starting salary of $10.64 consuming a larger share of revenue dollars, the money to proportionately compensate an employee for his or her tenure of employment, experience and job responsibilities is not
available. Prior to the living wage, a new employee with no work experience earned $3 an hour to $4 an hour less than an employee with seniority and training. Now the differential is $2.
Travelodge is an advocate of the living wage in concept. We understand the political logic of selecting a large, visible employment base such as hotels to move forward the living wage agenda. However, if fair play is a component of the new philosophy, then the car-rental agencies, parking structures and hotels in the immediate area surrounding the airport need to be included. The ordinance is not an equitable solution to address the issue of increasing entry level wages for all industries. Consequently, we support the ballot referendum to overturn the ordinance.
The airport hotel industry has always been rate sensitive. The City of Los Angeles' bed tax of 14.5 percent and the living wage ordinance that has been applied to the Century Corridor 12 gives a favorable advantage to lodging facilities in the cities and communities that benefit from their proximity to LAX Airport but operate outside the jurisdictional arm of Los Angeles City Council.
Hopefully, the offer of better working conditions in the City of Los Angeles hotels covered by the ordinance will create an employment situation that will require other hotel owners to raise salaries or encourage the labor union Unite HERE to work for improved wages for employee groups whose more limited numbers makes their voices very hard to hear.
Lance Lipscomb is owner and general manager of the Travelodge Hotel at LAX. Lipscomb sold the land under his hotel to the city in 2000 and then leased it back, making his hotel subject to the city's living wage ordinance.
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