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Economic Impacts of Hotel Worker
Protection Ordinance in Garden Grove
September 2026
Prepared on behalf of:
G.G.T.P.C
Garden Grove Tourism Promotion Corporation
1 Key Findings
Key findings
Oxford Economics prepared a detailed analysis of the The Ordinance would negatively impact hotel proposed Hotel Worker Protection Ordinance
(Ordinance) affecting the hotel industry on behalf of the demand and local tax revenue (stabilized, Garden Grove Tourism and Promotion District.
single-year impacts)
Specifically, we analyzed the proposed policy changes
related to hotel housekeeping work rules and increased
minimum wage for hotel workers. We assessed impacts
to the City of Garden Grove relative to a baseline that + assumes business as usual, without the policy changes. Change in hotel Total business Total jobs Total TOT Other state and While some impacts would occur immediately with the room demand sales impact local tax impact enactment of the Ordinance, others will occur over time. -12.0% -$105.0M -721 -$1.3M -$9.3M
This study focuses on a stabilized year, about three to five years after the Ordinance is enacted.
• We estimate, with the proposed policy changes
going into effect, hotel room demand would Ine feat an ease of are one nut deter pose only ear a abile year ate the poles .
Source: Oxford Economics
decrease by 12.0%, resulting in an annual loss of
$105.0 million in local business sales, an average of
721 fewer jobs in Garden Grove, and a loss of
approximately $1.3 million of transient occupancy
tax revenue.
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Key findings
We estimate impacts over a 10-year period as follows
(relative to the baseline without policy changes): Over a 10-year period, the Ordinance would result • Enacting the Ordinance would result in a loss of in significant losses $1.2 billion business sales, including $312.9 million
in lost wages and salaries.
• Losses include the 500-room Nickelodeon Hotel
Resort, which we assume would no longer be
developed if the Ordinance was passed.
Total business Total wages and Total jobs Total TOT Other state and • The total loss of state and local tax revenue would sales salaries impact local tax impact reach $106.4 million relative to a baseline scenario,
with a loss of $10.8 million in transient occupancy -$1.2B -$312.9M -716 -$10.8M -$95.6M tax revenue and $95.6 million in other state and
local tax revenue.
Note: Estimates measure total economic impact due to proposed policy changes for the 10 years after the Ordinance is enacted. Impact to City of Garden Grove study area. Results are shown in real 2026 dollars, without the impacts of inflation over time
Source: Oxford Economics
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4 2 Scenario Results
Introduction
The Garden Grove Tourism and Promotion District engaged Oxford Economics to conduct a study of the proposed Hotel Worker Protection Ordinance (Ordinance) in Garden Grove, California. The Ordinance dictates hotel operating policies by raising the minimum wage for hotel workers and establishing rules impacting hotel housekeeping.
For this analysis, we assumed a scenario with:
• Work rules: Housekeeping workload would be limited to 3,500 square feet per day, unless the employer pays double regular pay for all hours worked that day. Additional restrictions would limit the number of specialty rooms allowed to be cleaned or floors 121 11 /2
allowed to be traveled. 1
10 • Minimum wage: Wages will increase for all hotel workers according to the following 2 schedule: 10 9
• 2026: $18.00/hour 3
• 2027: $19.75/hour
• 2028: $21.50/hour 4
• 2029: $23.25/hour 7
5 6 5
• 2030: S25.00/hour 7
6 • With inflationary increases in 2031 and beyond
The Ordinance puts future benefits at risk as increased wages and restrictions put additional pressures on hotel operations.
6 Scenario description
Initial impact Downstream impacts
With the Ordinance, the work rules would necessitate an increase in With increased prices, reduced services, and fewer available rooms, Garden housekeeping employment to provide additional staff time to clean rooms, Grove hotels would become less competitive. Because of this, we estimate increasing overall hotel payroll. With an increased minimum wage also a 12.0% decrease in hotel demand increasing payroll, additional pressure will be placed on hotel operations. To With fewer visitors, Garden Grove is expected to experience a loss of visitor manage the increased payroll, we expect hotels would respond in the following spending on other tourism related establishments, such as restaurants. ways:
This results in negative downstream economic impacts, as business sales, Operator response wages, and taxes that depend on visitors are affected. • Increase prices: Hotels would increase room rates, raise food and beverage prices, and look for opportunities to increase charges for other services to help make up for the increased payroll.
• Reduce staff hours and services: Hotels would reduce weekly hours or remove non-essential positions entirely to make up for the increased number of housekeeping employees. Because of this, some services would be reduced or removed, and the hotel experience will degrade. • Reduce capital investment: Cost increases that are not offset by the above steps will result in reduced cash flow available for maintenance, capital investment, property taxes, debt service and returns on investment.
Garden Grove will become less attractive as a market in which to invest, given increased uncertainty about the future operating environment.
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Chain of expected impacts
The following diagram shows expected effects of the Ordinance:
Operators raise prices and
reduce services to account Hotel demand is reduced
for higher operating costs
relative to the baseline,
negatively impacting the Net impacts
Existing hotels cut back on services, number of visitors that come reduce non-housekeeping employment,
Ordinance passes and increase prices to Garden Grove Reduced business With higher prices... sales, reduced jobs,
Increases payroll costs reduced wages and
with higher minimum Potential hotel guests look to stay wage and more Investors reduce new and outside of Garden Grove as prices salaries housekeeping hours increase and services decrease
existing development due to
reduced property value Reduced tax revenue
With reduced development...
Reduced hotel supply relative to the
Hotels can't pass on all higher costs baseline decreases the number of without losing demand. Impacted rooms available for potential hotel operations result in lower property guests
values and discourage investment in
new and existing hotels
Source: Oxford Economics
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8 Development impact nickelode on
We assumed in the baseline scenario that the Nickelodeon Hotel Resort would open with 500 guest rooms at the start of 2028.
If the Ordinance is passed, future capital development would be put at risk. The Nickelodeon Hotel Resort is a proposed hotel that has received approval from city council to be built. However, we consider this project as one that is at risk of being cancelled if the Ordinance is passed. Enacting the Ordinance would change the environment of the hotel industry in Garden Grove, causing development companies to consider the additional financial risks and potentially cancel projects.
The potential loss of the Nickelodeon Hotel Resort exacerbates the impacts of the Ordinance. Capital investment would be reduced relative to the baseline, as the hotel is no longer being constructed. Visitor spending would be reduced relative to the baseline as well, as increased room demand caused by the increased room inventory would no longer occur.
The impacts caused by the loss of this project are included in our scenario analysis.
9 Scenario impacts
In our analysis, we estimate that hotels would face an unmitigated 32% increase in total hotel payroll due to the minimum wage and the increased housekeeping Negative annual scenario impacts staff requirements. This represents a significant operational challenge in the hotel City of Garden Grove, stabilized year, real 2026 dollars business, in which staff play a particularly important role. Hotels would attempt to recover a portion of this cost increase by raising room rates, food and beverage Price increase (%) 9.1% prices, and other charges. Hotel operators would also reduce maintenance Lost hotel room nights (%) -12.0% activities where possible, cut back on capital investment in projects at existing Lost hotel room nights (level) -164,943 hotels, and avoid investing in new hotel development.
Lost visitor spending -$69,778,381
In response to higher prices, reduced services, and less capital investment, some Lost capital investment -$7,899,495
visitors would choose to reduce their length of stay or visit elsewhere. These Total lost business sales -$105,043,961 combined effects would result in a loss of 164,943 room nights, a 12.0% reduction relative to the baseline, and a loss of $105.0 million in business sales annually. Source: Oxford Economics These impacts would take several years to take full effect, and we have focused our analysis on a future stabilized year approximately three to five years in the future.
Baseline Policy change scenario
Business as Minimum wage increase,
usual work rules
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3 Economic Impacts
DIRECT IMPACTS TOTAL
Total economic impacts Tourism contribution IMPACTS
measured by visitor Direct, indirect,
spending and induced
Our analysis of the economic impact of the proposed policy changes begins with impacts reduced spending by visitors and on construction, but it also considers the downstream effects of this reduction of spending into the local economy. To determine the total economic impact in the City of Garden Grove, we input visitor
INDIRECT IMPACTS SALES
and construction spending into a model created in IMPLAN. The model calculates LODGING Purchases of inputs from suppliers
three distinct types of impact: direct, indirect, and induced. Suppliers' own supply chains The impacts on business sales, jobs, wages, and taxes are calculated for all three GDP
levels of impact. ENTERTAINMENT/REC
SUPPLY B2B GOODS
1. Direct Impacts: Visitors create direct economic value within a discrete group CHAIN & SERVICES of sectors (e.g., recreation, transportation). This supports a relative EFFECTS PURCHASED proportion of jobs, wages, taxes, and GDP within each sector. JOBS
FOOD & BEVERAGE
2. Indirect Impacts: Each directly affected sector also purchases goods and INDUCED IMPACTS services as inputs (e.g., food wholesalers, utilities) into production. These Consumer spending out of employees' wages:
impacts are called indirect impacts. INCOME
LOCAL TRANSPORTATION
3. Induced Impacts: Lastly, the induced impact is generated when employees whose wages are generated either directly or indirectly by visitors spend INCOME HOUSEHOLD those wages in the local economy. EFFECT CONSUMPTION
TAXES
RETAIL
IMPLAN is particularly effective because it calculates these three levels of impact - direct, indirect, and induced - for a broad set of indicators, including spending, wages, employment, and taxes.
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Direct economic impacts
Negative annual direct economic impacts
The accompanying table summarizes the direct economic impacts of the proposed City of Garden Grove, stabilized year, real 2026 dollars policy changes in Garden Grove. This analysis includes direct effects such as Business sales -$77,677,876
reduced visitor spending and capital expenditures. Wages and salaries -$12,639,750 • The direct lost business sales in Garden Grove is $77.7 million, with 602 lost Jobs -602 GDP -$38,072,649
jobs. Direct tax revenue losses total $14.8 million, including $9.0 million in lost state and local taxes. Total taxes -$14,787,025
• Lost wages and salaries reach $12.6 million. Higher payroll levels at hotels, due State and local taxes - $8,962,112 to higher wage rates and work rules requiring additional housekeeping staff, Lodging tax -$1,402,006 would be more than offset by reduced wages and salaries in other parts of the Transient occupancy tax -$1,255,187 Garden Grove TID assessment -$129,270
economy.
California tourism assessment -$17,549
• Increased hotel ADR would tend to increase transient occupancy tax (TOT) Sales tax -$3,512,926
revenues initially. But over time, reduced investment in Garden Grove hotel Other taxes - $4,047,181 inventory is expected to negatively impact TOT revenues. We estimate an Federal taxes -$5,824,913 annual loss of $1.3 million in TOT revenue. Personal income tax -$2,352,880 Social security -$2,892,588
Other taxes -$579,444
Tax impact by summary category
TOT revenue -$1,255,187
Federal taxes -$5,824,913
State and local taxes (non-TOT) -$7,706,925
Source: Oxford Economics
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13 Total economic impacts
Total negative annual economic impacts
City of Garden Grove, stabilized year, real 2026 dollars The accompanying table summarizes the total economic impacts of the proposed policy changes in Garden Grove. Business sales -$105,043,961 Wages and salaries -$22,494,647
This analysis of totaleconomic impact includes direct effects, such -721 Jobs
as reduced visitor spending, supply chain effects, such as reduced GDP -$54,799,521 purchases by hotels of goods and services from local businesses, and income effects, such as wages spent by hotel employees. Total taxes -$18,689,401 State and local taxes -$10,595,530
• In this scenario, the total lost business sales in Garden Grove is Lodging tax -$1,402,006 $105.0 million, with 721 lost jobs and $22.5 million lost wages Transient occupancy tax -$1,255,187 and salaries. Garden Grove TID assessment -$129,270
California tourism assessment -$17,549
• Total tax revenue losses total $18.7 million, including $10.6 Sales tax -$4,023,966 million in lost state and local taxes. Other taxes -$5,169,558 Federal taxes -$8,093,871
Personal income tax -$3,199,733
Social security -$3,979,274
Other taxes -$914,864
ax impact by summary category
TOT revenue -$1,255,187
Federal taxes -$8,093,871
State and local taxes (non-TOT) -$9,340,343
Source: Oxford Economics
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14 Total economic impacts, Negative 10-year total economic impacts City of Garden Grove, real 2026 dollars, 10-year
cumulative total impacts
10-year period
Business sales -$1,209.8
Wages and salaries -$312.9
The accompanying table summarizes the total economic impacts of the Jobs -716 proposed policy changes in the City of Garden Grove over a 10-year period GDP -$649.3 • The total loss of business sales is $1.2 billion, including $312.9 million Total taxes -$200.3 in lost wages and salaries. State and local tax revenue decreases by State and local taxes -$106.4 $106.4 million. Lodging tax -$12.0
Transient occupancy tax -$10.8
Results are shown in real 2026 dollars, without the impacts of inflation Garden Grove TID assessment -$1.1 over time. California tourism assessment -$0.2
Sales tax -$38.9
Other taxes -$55.5
Federal taxes -$93.9
Personal income tax -$36.4
Social security -$46.4
Other taxes -$11.1
Tax impact by summary category
TOT revenue -$10.8
Federal taxes -$93.9
State and local taxes (non-TOT) -$95.6
Source: Oxford Economics
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Methods
Policy Changes We estimated the loss of visitor spending in response to the proposed policy changes We assume that the proposed Ordinance goes into effect at the end of 2026 after based on an assumed price elasticity of demand. This included recognition that many being approved by a majority of voters in the upcoming election. The Ordinance, groups and leisure travelers considering a market such as Garden Grove have alternatives.
which would impact operations for hotels with 150 or more rooms, is summarized as follows. We estimated reduced hotel capital investment based on the expectation that hotel Hospitality minimum wage increase: operators would have significantly reduced appetite to re-invest capital in Garden Grove • The current minimum wage of $16.90 would increase for hotel workers based on hotels due to lower profit margins, uncertainty on the future regulatory environment in Garden Grove, and the hurdles and risks involved in securing a development agreement. the following schedule: $18.00 in 2026, $19.75 in 2027, $21.50 in 2028, $23.25 in 2029, $25.00 in 2030, followed by annual inflation increases. We believe that the Nickelodeon Hotel Resort is at particular risk and modeled the impacts of the loss of this hotel in our scenario.
Hotel work rules Economic Impact
• Limit on hotel room cleaning to a maximum of 3,500 square feet by staff We prepared a customized IMPLAN input-output model to quantify impacts associated member in an eight-hour workday, unless employer pays twice the regular rate with changes in visitor spending and capital investment. This model incorporates data for all hours worked.
on employment, wages, and sales to analyze three streams of economic activity. • Certain other limitations, such as limiting the number of specialty rooms allowed to be cleaned or floors allowed to be traveled. • Direct impact: Spending occurring directly at hotels, other travel purchases, and hotel construction and development.
Impact of Proposed Policy Changes • Indirect impact: Supply-chain effects that occur as hotels make intermediate purchases to support business operations.
We analyzed the potential cost increase caused by the policy changes by building a • Induced impact: The effect of labor income on the economy, such as when hotel model to quantify specific business impacts. We based our model estimates in part workers spend their income.
on CoStar data on hotel performance, as well as our industry experience on the effect of price increases on hotel room demand (referred to as the elasticity of demand). We added these three streams together to calculate the total economic impact.
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About Oxford Economics
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