Cities around the world pay lip service to how valuable the travel industry is. But often it seems officials can’t wait to put their hands around the neck of the golden goose.
Recovery from the pandemic has been hard enough for the hotel industry. In Los Angeles, the industry just managed to dodge some government ‘help.’
A persistent idea is that hotels should house homeless people alongside paying guests. Such a proposal came before the LA City Council last week. The Los Angeles Responsible Hotel Ordinance would compel local hotel owners to provide a count of vacancies, submit the list to the city housing department by 2PM each day, and accept “fair market rate” vouchers to fill the rooms with homeless people. No funding source is set for the vouchers, but the Federal government is a likely candidate.
Councilman Joe Buscaino told KTLA he thought the plan was “the dumbest measure” he’s seen on the City Council. It “hurts our tourism industry, which we heavily rely on, in a time when we are getting ready for the  Olympics. It puts hotel workers in a position where they will become social workers.”
Heather Rozman, executive director of the Hotel Association of Los Angeles, told the City Council that organizers of large conferences have heard about the housing initiative and are already considering other cities.
Hotel insurance experts said insurers might raise rates or pull out. Richard Earle, a spokesman for insurance brokerage Petra Risk Solutions, told The Real Deal, “The business is underwritten with risks that involve guests and business travelers, not residents who bring a whole set of separate implications.”
After a day of hearings, the Council, perhaps swayed by a huge hotel industry turnout, voted down the initiative. But the Council then voted 12-0 to put the initiative, which had 126,000 signatures, on the ballot for March 2024.
Interestingly, the Responsible Hotel Ordinance was supported by the hotel union, Unite Here Local 11. Unite previously supported hotel owners on certain lobbying efforts, such as their efforts to restrict local growth of their common enemy, Airbnb.
But this time, the concern of Unite is a lack of affordable housing in Los Angeles. Some of Unite’s 32,000 members have experienced homelessness. Others are being forced out of the city by rising rents. Another part of the initiative calls for hotel development projects of 15 or more rooms to replace demolished or converted housing with an equivalent amount of affordable housing near the project.
Maria Hernandez, communications director of Unite Here Local 11 said. “If you have less luxury hotel development, you have more housing. That means that folks aren’t having to live super, super far away or be on the brink of homelessness.”
Hotels already play a major role in the local economy. In the City of Los Angeles, a 14% hotel tax, aka Transient Occupancy Tax, is collected for each room. (The tax also applies to Airbnb.) Cities love imposing hotel and rental car taxes, as travelers may complain, but can’t vote locally.
Hotels pay other local taxes and fees and employ people, who in turn are taxed. But would guests and employees keep coming to the improving hotel sector if rooms were provided to voucher recipients on a “non-discriminatory” basis?
None of this convinced the City Council to abandon the compulsory homeless voucher scheme. Instead, it will go on the ballot in a year and a half. A costly battle between the hotel industry and the union and its progressive allies will soon begin.
The initiative states, “The Los Angeles Responsible Hotel Ordinance will help ensure that new hotels do not contribute to the City’s lack of affordable housing, burden the City’s social services, or result in undue transportation and traffic impacts. New and already existing hotels will be required to adhere to responsible business practices, including making guest rooms available to unhoused Angelenos on a non-discriminatory basis, and be subject to City oversight.”
This raised the hackles of hotel owners, who felt the oversight and compulsory housing would burden hotels and drive away customers. Los Angeles is the sixth-largest hotel market in the U.S., with over 1,000 hotels with more than 98,600 hotel rooms.
At the City Council hearing, Stuart Waldman, president of the Valley Industry and Commerce Association, said “Hotels did not cause the homeless problem. Hotels are not the solution for the homeless problem.” On the radio, I heard wild cheering for this, from the hotel owners and operators who packed the hearing.
Others feared that the measure would drive away paying customers and hard-to-find workers. Hotel manager Juan Martinez told KTLA, “This is a bad idea. People are not going to feel safe. My staff is not going to feel safe, so I think this is wrong.”
This is dismissed by initiative proponents. “The hotel operators would have you believe that every person experiencing homelessness is so sick that they are a danger to the people around them,” said Carly Kirchen, a Unite Here organizer. “But this myth argument misrepresents who is actually experiencing homelessness.”
The initiative comes as Project Roomkey winds down. Project Roomkey was a federally funded California program that paid hotel owners to put homeless people up in their hotels to help prevent the spread of Covid-19.
Project Roomkey, unlike the Responsible Hotel Ordinance, was voluntary for hotel owners. As hotels experienced enormous vacancy rates during California’s lockdowns, the Project Roomkey vouchers helped many stay open.
The program housed 10,000 homeless people over two years of Covid. However, according to a Los Angeles real estate publication, there were 49 deaths at LA hotels among Project Roomkey guests by July 1, 2021. This total included eight at just one hotel, the Airtel Plaza Hotel at Van Nuys Airport.
Los Angeles motels/" 1376 target="_blank">motel owner Charles Chung was delighted the City Council voted down immediate implementation of the new plan. “This would have ruined us,” said Chung. “Project Roomkey really did a number on a lot of us, especially with all the damages we had left. And now being forced into it by the city?”
The City Council was dissuaded from adopting the Responsible Hotel Ordinance immediately. But like so many bad ideas, compulsory hotel homeless housing will get another look, this time by voters dealing with this seemingly intractable problem.
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