Item 395/2026
Final
City of Garden Grove
INTER-DEPARTMENT MEMORANDUM
To: Lisa L. Kim From: Ursula Luna-Reynosa
Dept: City Manager Dept: Economic Development and
Housing
Date: 9/22/2026
Subject: Receive and file a report prepared by Oxford Economics regarding the potential fiscal and economic impacts of the proposed Hotel Worker Hotel Worker Benefits and Protection Initiative.
OBJECTIVE
For the City Council to receive and file a report prepared by Oxford Economics regarding the potential fiscal and economic impacts of the proposed Hotel Worker Protection Initiative.
BACKGROUND
On June 17, 2026, proponents submitted a Notice of Intent to Circulate Petition to the City Clerk and requested preparation of an official title and summary for a proposed initiative ordinance titled “Hotel Worker Benefits and Protection Initiative Ordinance” seeking to enact provisions regarding the regulation of hotel worker protection, retention, and minimum wages in the City (the “proposed initiative”).
The Garden Grove Tourism Promotion Corporation (GGTPC) retained Oxford Economics to evaluate the potential fiscal and economic impacts of the proposed initiative. The analysis evaluates potential impacts to Garden Grove’s hotel and tourism industry, including hotel operating costs, employment, hotel financial performance, future investment and development, and revenues generated to the City through Transient Occupancy Tax (TOT) and other hospitality-related activity.
DISCUSSION
The proposed initiative would establish a number of requirements applicable to covered hotels in Garden Grove, including hotel worker safety protections, room-cleaning workload standards, limitations on subcontracting, employee-retention requirements following a change in control, minimum wage provisions, service-charge distribution requirements, and related administrative and enforcement provisions.
Item 395/2026
Garden Grove’s hotel and tourism industry is an important component of the City’s economic base, supporting employment, business activity, private investment, and significant General Fund revenues through TOT and other hospitality-related activity. Several of the City’s major Grove District hotel operators have expressed concerns that the proposed initiative could materially increase hotel operating costs and affect staffing, operating margins, competitiveness, and future capital investment. Given the hotel industry’s importance to Garden Grove’s tourism economy and General Fund revenues, staff determined that an independent economic analysis was appropriate to better understand the potential impacts of the proposed requirements on existing hotel operations, future hotel development and reinvestment, and City revenues.
Separately, on September 8, 2026, the City Council adopted Ordinance No. 2980, entitled:
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GARDEN GROVE, CALIFORNIA, ADDING CHAPTER 8.72 TO TITLE 8 OF THE GARDEN GROVE MUNICIPAL CODE TO ESTABLISH SAFETY AND SECURITY REQUIREMENTS FOR HOTEL WORKERS. The City-adopted ordinance establishes local requirements intended to address hotel worker safety and related operating standards and is scheduled to become operative on January 1, 2027.
The proposed initiative is a separate measure and contains provisions that may differ from the City-adopted ordinance in scope, implementation, enforcement, and potential economic effect. Although the proposed initiative must obtain the required number of valid signatures from registered voters before it may qualify for placement on the ballot, staff determined that evaluating its potential fiscal and economic impacts at this stage would provide the City Council and the public with additional information regarding the possible effects of the requirements of the proposed initiative should it ultimately qualify for the ballot and be approved by voters.
The purpose of the economic analysis is to provide independent information regarding the potential fiscal and economic consequences of the proposed initiative and to assist the City Council and the public in understanding its potential effects on Garden Grove’s hotel industry and the City’s revenue base.
To assist in this evaluation, the GGTPC retained Oxford Economics to prepare an independent fiscal and economic analysis of the proposed initiative. The analysis evaluates potential economic effects associated with increased hotel operating costs, including impacts to hotel financial performance, employment, future investment and development, and City revenues.
The report also evaluates the potential for reductions in TOT revenue resulting from changes in hotel performance, room demand, pricing, investment, or other operating conditions associated with implementation of the proposed initiative.
The Oxford Economics report is attached for City Council review.
FINANCIAL IMPACT
There is no direct fiscal impact associated with the City Council receiving and filing the report.
The attached Tourism Economics study evaluates the potential fiscal and economic impacts associated with implementation of the proposed initiative, including potential impacts to TOT and other City revenues.
Item 395/2026
RECOMMENDATION
It is recommended that the City Council:
Receive and file the Oxford Economics report regarding the potential fiscal and economic impacts of the proposed Hotel Worker Protection Initiative.
ATTACHMENT(S)
1. Ballot Title and Summary
2. Proposed Initiative
3. Oxford Economics Report