Today, we’re thrilled to sit down with Katarina Railko, a seasoned expert in hospitality and tourism policy. With years of experience in the travel and tourism industry, Katarina has honed her expertise in navigating the complex landscape of labor regulations and their impact on hotels and entertainment sectors. Her insights are particularly valuable as a key voice in events and expos, where she often addresses the intersection of policy and industry challenges. In this interview, we’ll explore the nuances of San Diego’s recently passed Hospitality Minimum Wage Ordinance, diving into its implications for tourism workers, hotel owners, and other businesses. We’ll discuss the motivations behind the policy, the exemptions for smaller establishments, the phased implementation, and the broader economic context shaping these changes.
Can you walk us through the core elements of San Diego’s Hospitality Minimum Wage Ordinance?
Absolutely. The ordinance, recently passed by the San Diego City Council, sets a minimum wage of $25 per hour for tourism workers, specifically targeting larger hotels with 150 rooms or more. It’s a significant step aimed at improving wages for those in the hospitality sector, but it also extends beyond hotels to include workers at amusement parks, event centers, and zoos. The idea is to ensure a living wage for employees in an industry that’s often underpaid despite being a cornerstone of San Diego’s economy.
What prompted the city council to establish such a high minimum wage for tourism workers?
The primary motivation was to address the wage disparity in the tourism industry, where many workers struggle to make ends meet despite the high cost of living in San Diego. The council, led by voices like Sean Elo-Rivera, wanted to create a benchmark that reflects the value of these workers to the local economy. They believe this will not only improve quality of life for employees but also reduce turnover and boost morale, ultimately benefiting the businesses through a more stable workforce.
Why was there an exemption for smaller hotels with fewer than 150 rooms?
Smaller hotels often operate on tighter budgets compared to larger, full-service properties. The exemption was included to protect these businesses from financial strain that could force closures or layoffs. Advocacy from groups like the Asian American Hotel Owners Association played a big role here. They argued that economy and limited-service hotels simply don’t have the revenue streams to absorb such dramatic wage hikes, and this carve-out was seen as a way to balance worker benefits with business sustainability.
How does the phased implementation of the wage increase work, and why was this approach chosen?
The ordinance doesn’t jump straight to $25 per hour. It starts at $19 per hour on July 1, 2026, and increases by $1.50 each year until it reaches $25 in 2030. This gradual rollout was chosen to give businesses time to adjust their budgets and operations. A sudden increase could have been a shock to the system, especially for family-owned or smaller-scale operations still recovering from economic challenges. The phased approach provides some breathing room to plan and adapt.
What are some of the reactions from hotel owners in San Diego regarding this new wage requirement?
There’s a mix of concern and frustration among hotel owners, particularly those running family-owned businesses or mid-sized properties. Many feel that while the intent behind the ordinance is noble, the added labor costs could strain their finances significantly. There’s worry about staying competitive, especially when compared to nearby cities without similar mandates. Some fear they might have to raise room rates or cut other expenses, which could impact guest satisfaction or staffing levels.
Can you elaborate on the economic challenges hotel owners are facing, as mentioned by industry leaders?
Certainly. The hospitality industry in San Diego, like much of the country, is still grappling with the fallout from the global pandemic. Many hotels saw massive revenue drops during lockdowns and are still working to rebuild occupancy rates. On top of that, broader economic headwinds like inflation, rising insurance costs, and supply chain issues are driving up operational expenses. These challenges make any additional cost, like a significant wage increase, feel like a heavy burden for owners trying to keep their doors open.
Why was the exemption for smaller hotels described as a ‘victory’ by advocacy groups?
For smaller hotel owners, this exemption is a lifeline. Unlike larger, full-service hotels that might have diverse revenue streams from restaurants, spas, or events, economy hotels often rely solely on room bookings. A mandated wage hike could push their slim margins to the breaking point. Advocacy groups saw this carve-out as a recognition of those differences, protecting jobs and ensuring these businesses can continue serving their communities without facing insurmountable financial pressure.
How might this ordinance impact other tourism businesses like amusement parks and zoos in San Diego?
The ripple effects on other tourism sectors could be significant. Amusement parks, zoos, and event centers are also subject to this wage mandate, and they face similar concerns about rising operational costs. These businesses often operate seasonally or with fluctuating attendance, so a fixed wage increase might strain budgets during slower periods. While workers in these sectors will likely benefit from higher pay, there’s a real question about whether these businesses will need to pass costs onto consumers through higher ticket prices, potentially affecting visitor numbers.
What is your forecast for the future of wage policies in the hospitality and tourism industry across California and beyond?
I think we’re at the beginning of a broader trend. What happens in cities like San Diego and Los Angeles often sets a precedent for other regions. We’re already seeing similar wage mandates in LA, and I expect more cities in California—and potentially across the country—to explore comparable policies as cost-of-living concerns grow. The challenge will be striking a balance between fair wages for workers and sustainable operations for businesses. I anticipate more nuanced policies, like phased increases or exemptions, becoming standard to address the diverse needs within the industry.
