S. Korea tycoon has high hopes for L.A. hotel project
On a honeymoon trip to Southern California in 1974, Yang-ho Cho and his new bride drove into downtown Los Angeles only to get lost among the dark, empty industrial buildings and shuttered shops.
Cho remembers he could find no one on the streets to ask for directions to his hotel.
Nearly 40 years later, Cho is heading the development of the tallest building west of the Mississippi, a $1-billion downtown hotel complex that no one will have trouble finding at night.
It represents only the latest investment of major South Korean capital that Cho has helped bring to Southern California as chairman of Hanjin Group. The Korean conglomerate operates a business empire with $36 billion in assets among its 23 subsidiaries, including the flagship Korean Air Lines Co.
Korean Air is the third most popular foreign airline at Los Angeles International Airport and the fourth largest cargo carrier at Los Angeles International Airport. It was the third airline to bring the massive A380 jet to LAX.
Hanjin Shipping Co., another subsidiary, is the largest container shipping line at the port of Long Beach, the nation’s second busiest port behind the port of Los Angeles. Hanjin has expanded the size of its operation there by more than six times over the last few decades, operating out of a 375-acre terminal under a 25-year lease with the port.
Combined, Cho’s companies employ about 1,000 full-time workers in Southern California and will have an additional 1,750 employees once the hotel project is completed. Construction of the hotel will employ 11,500 workers over the course of the project, scheduled to open in 2017.
Cho’s friends and business partners attribute his financial commitment to the region to his deep ties to Los Angeles, a place he calls his second home.
“No one has been more important to building a relationship between Korea and Southern California than Chairman Cho,” said Bill Allen, president and chief executive of the Los Angeles County Economic Development Corp.
The new hotel project, to replace the demolished Wilshire Grand Hotel, comes at a difficult time for the Hanjin. Heavy losses at its shipping company prompted Korean Air to loan Hanjin Shipping about $141 million to ease the company’s liquidity shortfall.
The demand for cargo shipping is “stagnant,” partly because of a rise in protectionist measures by governments aiming to stimulate domestic economies, according to a recent report by the International Air Transport Assn., a trade group for the world’s airline industry.
Cho shrugs off suggestions that it may be a bad time to erect a 73-story hotel complex with 900 rooms and 30 floors of office space. It represents the first time new high-rise office space has been built in downtown L.A. in nearly 25 years.
“I have a vision that the U.S. economy will improve and this is the best time to invest,” he said.
The project also reflects the philosophy of the chairman’s father, Choong-hoon Cho, who founded the Hanjin Group in 1945, which the son took over after his father’s death in 2002.
“Create a new market, differentiate don’t imitate existing markets,” Cho recalled his father telling him.
Cho grew up in Incheon, where his playground was the parking lot for his father’s burgeoning transportation business. He attended boarding school in the U.S., returned to South Korea to earn an engineering degree from Inha University before his father sent him to USC to earn a master’s degree in business. He later earned a doctorate in business administration from Inha University.
He remains a member of the board of trustees for USC, where all three of his children earned degrees.
Cho had his start in Korean Air in 1974, when his father put him in charge of the Americas regional headquarters. He worked his way up, and his father appointed him airline chairman and chief executive in 1999 to deal with a series of accidents, including a collision in Guam that killed 228 passengers. Cho recruited experts from U.S. airlines to help improve Korean Air’s safety record.
Cho was named Hanjin Group chairman in February 2003, 2 1/2 months after his father’s death.
To expand into new markets, Cho plans to create an air cargo hub for Central Asia in Uzbekistan, where Hanjin is managing the Navoi airport. He hopes it will become a key logistics hub between the East and the West, a modern equivalent of the Silk Road.
Charles H. Matthews, a University of Cincinnati professor who has traveled to South Korea to study the country’s business trends, said Cho has a strong reputation as a business leader there.
“He’s come into his own, on his own,” Matthews said.
Cho said he expects to turn Hanjin over to his three children, although he makes it clear that they must earn their inheritance. “I don’t want to just give it away,” he said of the company. “They can’t just sit down and get a free lunch.”
His son, Walter, is an executive vice president at Korean Air, daughter Heather directs the airline’s in-flight experience and hotel operations, while another daughter, Emily, oversees Korean Air’s marketing, advertising and public relations. Emily is also in charge of the low-cost airline subsidiary Jin Air.
Cho said planning for the long term is important, but he has little tolerance for delays.
In 2005, he met then-newly elected Mayor Antonio Villaraigosa, telling him Korean Air needed specially designed gates to bring the A380 to LAX. If the airport could not accommodate the big plane, Cho said, he would reroute the flights to San Francisco.
LAX now has 13 gates that can accommodate the massive plane, including nine at the new Tom Bradley International Terminal.
Villaraigosa describes Cho as “honest and humble” but said he also pressed the mayor to eliminate any delays in getting the hotel project through the city’s approval process.
“My relationship over the years had everything to do with how quickly we tried to move that project along,” the former mayor said.
Cho describes Los Angeles as “the center of culture and education and the gateway to the U.S.,” but he has been critical of LAX, complaining that it takes too long for arriving passengers to retrieve their bags and check out of the aging facility. He said passengers can zip through Incheon International Airport, just outside Seoul, in about half the time it takes to get through LAX.
“The one time I did meet with Chairman Cho, he was very clear that LAX needed to modernize — and to do so quickly,” said Gina Marie Lindsey, executive director of Los Angeles World Airports.
As for the Wilshire Grand Hotel complex, Cho said the project is on schedule and on budget. He expects the hotel to open in 2017, at a time when the U.S. economy is expected to be thriving and the demand for hotel rooms and office spaces will be strong.
It’s a project that reflects his business philosophy.
“We are looking for the long term, not short term and then get out,” Cho said.
