Hilton Universal City Developer Kills 18-Story Expansion

Sun Hill Properties is putting the kibosh on the planned 18-story expansion of the Hilton Los Angeles/Universal City complex in the face of rising hospitality wages.

The Studio City-based hotel developer pulled out after the Los Angeles City Council voted 12-3 on Wednesday to raise wages in the lead-up to the 2028 Summer Olympics, Commercial Observer reported.

Mark Davis, Sun Hill CEO, told CO that shareholders have “lost confidence in this market with city leaders not leading forward to support business when critical evidence is presented.”

The proposed new tower at 555 Universal Hollywood Drive has been in the works for nearly a decade, growing from an initial planned height of 15 stories and 365 rooms to 18 stories and 395 rooms. The project would’ve complemented the existing 24-story, 495-room hotel next door.

The minimum wage hike would increase hourly pay for workers at hotels with at least 60 rooms and those employed by businesses at Los Angeles International Airport from $20.32 and $19.28 per hour, respectively, to $22.50 this July, $25 next year, $27.50 in 2027 and $30 by the Olympics in summer 2028. Current state minimum wage is $16.50 with city minimum wage at $17.28.

“All our efforts to educate the council on the impact is real and valid, and there will be job loss, in reduced hours and services — the only response any business has when the rules are changed to balance negative financial impact forced by the city passing bad ideas,” Davis said. “[The City Council] supports every idea presented by organized labor carte blanche.”

“Our shareholders do not want to invest in a market with no end in sight for targeting businesses, with no checks and balances on this runaway train,” he added.

Sun Hill is one of many private companies worried about the wage increase’s economic dampening effects across the city over the next three years.

Jackie Filla, president and CEO of the Hotel Association of Los Angeles, warned that other hotels will be forced to close on-site restaurants and shops or modify their room-block agreements for the upcoming Olympics.

“I don’t think anybody wants to do this,” Filla told the Los Angeles Times. “Hotels are excited to host guests. They’re excited to be participating in the Olympics. But they can’t go into it losing money.”

Because the City Council vote was not unanimous, it heads to a second count next week.

— Chris Malone Méndez