Travel industry outlook has improved in recent months. High-income travelers are booking luxury flights and accommodations. But a full recovery remains uneven—particularly in segments serving middle- and lower-income travelers, who are scaling back spending amid persistent economic uncertainty. As we enter August 2025, the Los Angeles hotel industry—particularly properties near LAX—is facing a moment of both opportunity and pressure.
In 2025, occupancy rates, revenue, and rates are all up.
According to The Real Deal’s latest report, Los Angeles’ hotels have posted impressive performance metrics for the first half of 2020:
- In the same time period, occupancy increased from 70.4% to 72.3%.
- The average daily rate (ADR), which is the price charged to customers, has increased by 1.6% and now stands at $197.01.
- Revenue per Available Room (RevPAR), which measures revenue per available room, jumped by 4.3% to $142.46.1
These numbers reflect the continuing strength of demand from premium travelers—particularly international visitors and business-class customers—who are showing strong appetite for travel despite inflation and interest rate volatility.
LAX Corridor: High Occupancy, Lower Rates
The airport hotels along the LAX corridor have consistently posted some of the highest occupancy levels in Los Angeles County, sometimes exceeding 81%. However, they operate with some of the lowest ADRs—as low as $78 in early 2024.2 This pricing strategy has made LAX hotels resilient during downturns. Their guest mix—price-sensitive business travelers, airline crews, and transit passengers—remains stable, even as leisure trends fluctuate.
The Tipping point for Labor Mandates
The stability of the system is currently being tested. The City of Los Angeles will increase the minimum wage of hospitality and airport employees to $25/hour on July 1, 2025. This will be followed by a $30/hour hike in 2028.3 Early effects are very sharp.
- Renovations suspended or cancelled
- Hiring freezes
- Sale of multiple hotels in the LAX area
Industry groups warn that the new mandates may lead to hotel closures—particularly among independent, budget, and economy-tier operators. This isn’t just a wage issue—it’s a fundamental challenge to the economic model that’s kept airport-area hotels viable for decades: high occupancy, low rates, and lean operations.
What is Next for the Industry?
Three main factors will influence the path of progress.
- Labor Policy & Public Response: Already, a petition campaign is underway to put the wage mandate in the ballot for 2026. If successful, this could shift legislative momentum—or at least prompt compromise.
- Middle-Class Travel RecoverAs inflation and household loans rise, many Americans with middle-incomes are cutting their travel budgets. The fall and winter months could see a decrease in demand for airport hotels.
- Events-Driven Demand Increases: The 2026 FIFA World Cup as well as the 2028 Summer Olympics might bring temporary gains. Many operators will struggle to survive without sustainable margins.
Last Thought
LAX’s hotel corridor is at a critical crossroads. A strong performance in early 2025 proves that the sector is fundamentally strong. The steep wage mandates could derail its recovery. As someone deeply engaged in hospitality operations, I believe now is the time for collaboration—between hotel owners, labor leaders, policymakers, and investors. We need to create a model that is both sustainable and respects worker dignity. One without the other doesn’t make progress.
Sources
1 Los Angeles hotel performances (The Real Deal). https://therealdeal.com/la/2025/07/23/los-angeles-hotels-see-more-visitors-so-far-in-2025/
2 Airport hotel occupancy rates (LA Business Journal). https://labusinessjournal.com/news/hotel-rates-remain-grounded-at-lax-as-they-soar/
3 The impact of the wage mandate (NY Post). https://nypost.com/2025/07/02/business/la-hotel-owners-sound-alarm-over-new-30-minimum-wage-threaten-mass-closures/
Connect with Ajay here.
Ajay Jadhav
Front Office Manager at Sheraton Gateway LAX
BHG
