Despite a large minimum wage literature that analyzes employee outcomes, there is less evidence on firm performance, prices, and quality. Exploiting staggered changes in US minimum wages during 2000-2008 and census data on over 29,000 hotel properties, we find that doubling the minimum wage as currently debated would reduce average hotel revenues by 6%
per year and their occupancy rates by 3.1%. Responses vary by employer quality and organizational form. While Luxury hotels pass through cost increases to their customers with no impact on their revenues, Upscale hotels facing more price sensitive customers reduce prices but still suffer losses in occupancy rates and revenues as they struggle with preserving the expected quality level. They are also most likely to see quality downgrades from their segment. The lower end hotels also pass through cost increases to their customers but unlike Luxury hotels face significant declines in occupancy rates and revenues. Overall, the performance effects of minimum wage increases are non-monotonic across quality. We also find negative impacts on hotel entry rates; though the performance and entry effects appear to be short-lived. Furthermore, the negative effects of minimum wages dominate in states without right-to-work regulation, suggesting the need for a more comprehensive approach to labor market regulation.