Hotel industry grapples with minimum-wage hikes

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Source: Hotel Management
By Elliot Mest
March 14, 2019

The federal minimum wage in the U.S. is $7.25 an hour, but that doesn’t mean everyone adheres to that amount. In fact, 29 states and the District of Columbia pay a minimum wage that is higher than the federal one. Because these plans already are set in stone, and other states are at the bargaining table to follow suit, hoteliers are wondering how these increases will impact the overall industry and their ability to pay their employees—or even keep their doors open.

The Illinois Hotel & Lodging Association voiced its opposition to one such minimum-wage increase in February. Illinois passed an initiative to increase the state’s minimum wage to $15 an hour by 2025, which is in line with the targets set by a number of states. IH&LA President/CEO Michael Jacobson said that such an increase may be necessary in large cities such as Chicago, but he expressed concern that many hotels throughout rural Illinois will be burdened by the increase and may face financial hardship going forward.

“There is a common misconception that hotels are cash cows and are generating huge profits. If you look property by property, the profit individual hotels generate is razor thin,” Jacobson said. “If you decrease that profit margin … many may have to consider cutting back or even closing their doors.”

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