Concerned West Hollywood residents, workers and businesses today announced the formation of Save Our Services West Hollywood (S.O.S. WeHo) as a response to the City Council’s refusal to conduct an economic study of the proposed hotel tourism cap ordinance while considering its budget which was approved 3-1. The newly formed group plans to engage in extensive community conversation as well as social media efforts and a press conference to be scheduled in July.
At the city council meeting last night, the anti-business councilmembers led by Mayor Lindsey Horvath passed the flawed budget and disregarded multiple calls for study from Mayor Pro Tempore Lauren Meister as well as West Hollywood residents and members of the business community. Incoming City Manager David Wilson, who at the previous council meeting on June 5 strongly recommended a study session on the hotel ordinance, confirmed that the budget contained no financial impacts related to the item, which are estimated to be as high as $20 million dollars.
The ordinance places arbitrary restrictions on WeHo’s hotel industry, which is historically the largest single source of tax income for the city. Hotel guests are also a large percentage of visitors to the city’s renowned dining, shopping, and nightlife scene, so the related sales tax impact by restricting tourism would be devastating to those small businesses. With the combined losses of both hotel tax and sales tax, the city government revenues would be significantly reduced, resulting in severe cuts to funding for essential city services including combatting homelessness, treating substance abuse, supporting seniors, and promoting post-pandemic recovery.
The alternative to cutting city staff and resident services is running deficits that draw down the city’s financial reserves, which were built over decades of successful leadership by prior city councils. Two years of deficits have taken a heavy toll, however, with an estimated reduction of $37 million (or 27% of available cash) from the beginning of COVID through the end of the coming fiscal year. Further reductions, exasperated by the hotel ordinance, could also result in a negative change to the city’s credit rating of AAA, which allows borrowing for capital projects such as the West Hollywood Park.
“Poorly disguised as a safety measure for hotel workers, the proposed tourism cap would devastate the economic engine that helps fund critical government programs we all rely on,” said Genevieve Morrill, president of the West Hollywood Chamber of Commerce. “By effectively capping overnight visitors to our city, this dangerous measure would have a ripple effect across West Hollywood businesses – making a full recovery from these devastating times nearly impossible for struggling small business owners.”
The tourism cap under consideration is deceptively dubbed a safety measure for hotel workers, but the ordinance doesn’t add any new protections. Instead, it places an arbitrary cap on work assignments at hotels, reducing capacity and taking away hours from workers when working families need a regular income the most. Instead of helping workers, the ordinance would result in less dollars earned and fewer job opportunities for essential workers that are most dependent on a strong economic boost from the post-pandemic tourism recovery.
The impact on the hotels, local businesses, workers, and resident services is significant just as businesses begin recovery. During the pandemic, hotel tax revenues dropped over 40%, creating a multi-million-dollar deficit for the city government. Specifically, a recent hotel survey found the following potential impacts that will result from the proposed tourism cap impacting not only hotel taxes but also sales tax generated by hotel guests who support local restaurants, bars, and shops:
- Potential losses in Hotel Taxes (TOT): $9.9 million
- Potential losses in WeHo Tourism Assessments: $2.4 million
- Potential losses in Sales Tax $8.2 million
- Potential losses in City tax revenues from Ordinance: $20.4 million
To put this into context, this rushed proposed ordinance could cost the city up to $20 million in the first year alone including the impact to sales tax. That’s more than the entire city budget for social services, including all funds put towards Rent Stabilization, homeless services, senior services, HIV prevention, and many others.
The survey further found that up to $2.1 million in current overtime paid to housekeepers will be eliminated and that opportunities for gratuities will be cut in half, limiting the opportunity for interested housekeepers to earn more for themselves and their families.
West Hollywood hotels already comply with and exceed regulations for worker safety, including State of California Recall & Retention laws, and mandatory sexual harassment and human trafficking prevention training. Hotels offer annual safety training, worksite evaluations, and provide personal protection devices – also known as “panic buttons” – for every employee who works alone. Furthermore, all West Hollywood hotels coordinate with the Sheriff’s Department for safety protocols and even provide health services such as free cholesterol and blood pressure testing, flu shot programs, regular on-site doctor availability, and even engagement with ergonomics professionals – well above and beyond the redundant safety measures proposed within the misleading council ordinance.
Instead of protecting workers, the arbitrary regulations to be imposed by the ordinance create a tourism cap that would limit job opportunities, dampen West Hollywood’s economic recovery, and reduce funding for essential city services. Hotel costs would increase while hotel capacity would decrease, leading to a tourist exodus towards competing cities, like Beverly Hills and Los Angeles.
“We are gravely concerned that the majority of the West Hollywood City Council refused to approve a sorely needed economic impact study of the proposed ordinance before approving it’s budget, which we believe constitutes violations of the city’s plan as it pertains to PSG-3: Fiscal Sustainability and other goals in the city plan,” according to a joint statement issued by the West Hollywood Hotel Council which is comprised of 18 West Hollywood hotels. “The consequences of the proposed ordinance would be far-reaching, reducing full-time jobs and earnings for many hospitality workers and slashing tax revenue that West Hollywood desperately needs to support its social services and spending programs. This ultimately means that the residents of West Hollywood will have to make up the shortfalls with higher taxes or fewer services.”
Save Our Services West Hollywood is urging the City Council to oppose this misleading hotel tourism cap. Residents, business leaders, and hospitality workers all demand that West Hollywood Save Our Services.