L.A. Approves 18-Story Expansion of Hotel Next to Universal Studios

A Los Angeles-based hospitality developer has finally received a thumbs-up to expand one of its hotels at the Universal Studios theme park more than seven years after originally announcing the project. However, a hotel worker wage hike approved by the L.A. City Council in December may ultimately derail the project.

The council on Tuesday approved plans from Sun Hill Properties to add an 18-story, 395-room expansion to its Hilton Universal City complex at 555 Universal Hollywood Drive, according to L.A. Daily News. The developer unveiled its plans for a 15-story expansion in late 2017, and then later upgraded to 18 stories. The development will feature a new spa, three restaurants, two pools, an indoor-outdoor bar and a lobby lounge. 

The expansion will complement a 24-story, 495-key tower currently at the site, which is just east of Highway 101 in L.A.’s San Fernando Valley. The L.A. City Council also approved permits for on-site alcohol sales and live entertainment, as well as the project’s final environmental impact review, per L.A. Daily News. Construction on the project, designed by Ankrom Moisan Architects, is expected to take about 30 months.

“From the beginning, we made it our priority to listen and be considerate of our neighbors regarding our expansion plan,” Mark Davies, Sun Hill president and CEO, told Commercial Observer in an emailed statement. “After more than 30 years of serving Los Angeles and the greater San Fernando Valley, we owe that to the community. We worked diligently to get our expansion right for our hotel guests, our neighbors and the community, and today’s vote validates that approach.”

While approval of such a project is typically cause for celebration, it may ultimately be received by Sun Hill as a double-edged sword. The developer said in a letter last year to city officials that the expansion could potentially be canceled if the City Council voted to approve minimum wage increases for hotel workers ahead of the 2028 Olympics, according to Urbanize. 

The City Council did indeed approve that wage hike on Dec. 11, which begins incremental pay increases until it reaches $30 per hour through mid-2028. The first pay bump commences on July 1, 2025. Though because that wage ordinance has not yet been finalized, a decision from Sun Hill on whether to pause the project has not yet been made, a person familiar with the matter told CO. 

“This dramatic increase – coupled with additional healthcare payments – will drive operating costs to unsustainable levels, impacting hotels’ ability to provide services to guests, including valet parking and food and beverage options, and develop new hotel projects in the City,” Hotel Association of Los Angeles officials said in a statement in December. “The wage proposal will reduce the ability of HALA’s members to continue to provide good-paying jobs, health benefits and security to their valued employees.”

Nick Trombola can be reached at ntrombola@commercialobserver.com.