Universal Hilton plans new tower as tourists flock to Harry Potter’s wizard world
The biggest hotel in the San Fernando Valley could get a lot bigger as Harry Potter fans heading to Hogwarts flock to the inn.
The owner of the Hilton Los Angeles/Universal City plans to file an application with Los Angeles officials Wednesday to add a second $100-million tower to the hotel overlooking the Universal Studios Hollywood film studio and theme park.
The proposal, however, faces not only a lengthy and potentially contentious environmental review process but also opposition in its current iteration from theme park owner NBCUniversal. The Comcast Corp. subsidiary has a contractual right to approve development on the Hilton site and objects to the project’s proposed size.
Hotel owner Hillcrest Real Estate wants to build a 15-story addition to the Hilton with 365 rooms, a rooftop steakhouse and an upscale spa. The addition was designed by architecture firm HED in collaboration with architect Anthony Chen.
The existing hotel, completed in 1984, is a 24-story tower with 495 rooms, General Manager Mark Davis said. More than 70% of the guests are there to visit Universal Studios Hollywood.
“We’re only getting more and more with Harry Potter,” he said.
Universal Studios Hollywood has enjoyed a surge in visitors in the last few years, primarily as a result of a $1.6-billion plan to expand and upgrade the theme park, including an attraction dedicated to the boy wizard created by British novelist J.K. Rowling.
Since 2014, park additions have included the Fast and Furious: Supercharged ride, the permanent haunted maze based on the AMC series “The Walking Dead,” Despicable Me: Minion Mayhem and the $500-million Wizarding World of Harry Potter.
The Harry Potter land opened in April 2016, helping to boost attendance by 13.9% in the first year to more than 8 million visitors, according to Los Angeles consulting firm Aecom. It was the largest percentage increase of any of the top 25 theme parks in the world.
A deal with Nintendo is also expected to lead to a new attraction opening at the park in the next few years that would be based on the Japanese company’s video games, such as Super Mario Bros. and Donkey Kong.
Hillcrest Real Estate’s application with the city for the second Hilton tower would trigger an environmental impact report on the project’s potential effect on traffic, local aesthetics and other issues.
A public comment period would follow and neighbors including homeowner groups would be expected to weigh in.
Hillcrest is required to seek NBCUniversal’s consent for submitting development applications under a contract between the companies. There has been friction between the two, however.
“We are surprised to hear that Hilton would submit an application without reviewing plans with us and receiving consent from NBCUniversal as they are obligated to do,” the media and entertainment company said in a statement.
“Our key priority is to make sure that any development is compatible from a scale, density, traffic and other impacts standpoint. We understand the currently proposed project substantially exceeds what is allowed by current zoning,” the statement said. NBCUniversal officials would not elaborate on the statement.
Hillcrest, in its own statement, said it has “worked in good faith” with NBCUniversal for the last two and a half years to reach an agreement on the hotel project and “address any concerns they may have.”
“Having reached an impasse in those discussions, Hillcrest has taken the next step and filed our development application with the city,” the statement said. “We look forward to working with our neighbors at NBCUniversal to achieve consensus on our expansion plan.”
The proposed Universal Hilton expansion may be running headlong into other elements of NBCUniversal’s $1.6-billion theme park expansion plan, which initially called for a large housing development on undeveloped land near the existing park.
The housing portion of the plan was eliminated in 2012 after worries about traffic were raised by neighbors. But the plan still envisioned a hotel near the Frankenstein parking garage and another hotel near the Saddle Ranch Chop House restaurant, said Jonathan Green, a blogger who writes about the theme park.
“This is where the Hilton may be running up against the park,” he said.
Davis, the Hilton general manager, said there is so much demand right now that the hotel on Universal Hollywood Drive is often completely booked, helping create an annual average occupancy rate of more than 90%.
Jeff Lugosi, managing director of consulting for CBRE Hotels, said the Hilton and adjacent Sheraton Universal Hotel substantially have the market to themselves in a wider region where the hospitality industry is performing well.
“Los Angeles is one of the top performers in the country,” Lugosi said, based on rising room rates and occupancy in 2017.
Average occupancy in area hotels was 75% in 2012 and expected to reach 80% by the end of this year, according to CBRE. Average daily room rates are expected to climb to $176 from $130 in the same time period.
One issue for the industry is the burst of new hotel construction in such markets as downtown Los Angeles, Hollywood and West Hollywood, but that is only seen as temporarily slowing the robust growth rate.
“We believe those hotels will be absorbed fairly quickly,” Lugosi said. “This is the highest demand we’ve had.”
The boom in California and Los Angeles County tourism is in large part driven by new visitors from Asia. In 2016, Los Angeles County had a record 47.3 million visitors, a 4% increase over the previous year, according to the Los Angeles Tourism & Convention Board.
Hillcrest, a Los Angeles firm owned by Asian investors, hopes to have the Hilton addition completed by 2022. It would generate 800 jobs during construction and 481 on site once it was operational, Davis said.
Unite Here, a union for restaurant and hotel workers, offered a supportive statement for the hotel addition.
Union Vice President Maria Elena Durazo called Hillcrest “a good corporate citizen” because the project would create “hundreds of new good-paying jobs in the service industry for Angelenos.”
The Hilton Los Angeles/Universal City opened in 1984 as the Sheraton Premiere Hotel. It was reflagged as a Hilton in 1990 when the building was purchased by the current owners.