Korean Air, InterContinental to build hotel in L.A.

Nancy Trejos | USA TODAY

Korean Air is taking hospitality to another level by building the largest InterContinental hotel in North America.

InterContinental Hotels Group, parent company of the InterContinental Hotels and Resorts brand, has signed an agreement to manage the new 900-room hotel in downtown Los Angeles. The hotel will sit atop the $1.1 billion Wilshire Grand Project, which Korean Air and parent company Hanjin Group are developing.

"InterContinental is an international luxury brand like Korean Air, and we share the same vision," says Heather Cho, vice president of Hanjin International Corp.

When completed, the 73-story, 1,100-foot tall property will be the tallest building in the western United States. It is set to open in 2017.

The Wilshire Grand development also will house offices and retail space. The hotel, which will have 360-degree views of L.A., will have a sky-lobby on the 70th floor. The hotel itself will start on the 31st floor and reach floor 73.

Kirk Kinsell, president of the Americas for IHG, says the company wanted to have a presence in downtown Los Angeles, which has been experiencing a revival in recent years. According to research firm Lodging Econometrics, there are three hotels with 1,597 rooms under construction in downtown L.A.

STR says there are 11 projects either in planning stages or under construction with 2,813 rooms.

"With everything that is going on in the business redevelopment, the entertainment and convention center in downtown L.A., it represented an opportunity to build one of the last global gateways for the InterContinental brand," he says. "We are in almost every global gateway, and this was one that we didn't have a presence in."

It's not unusual for airlines to partner with hotel companies to build hotels. InterContinental was founded by Pan Am in 1946. Korean Air has built four other hotels worldwide.

Alan Bender, professor of airline economics at Embry-Riddle Aeronautical University, says such partnerships have been "a mixed bag financially."

But he sees promise in this particular deal.

"First, hotels are a better investment than airlines," he says. "Second, Korean Air is having InterContinental, a proven luxury hotel leader, manage the property for them. Third, the hotel is being built within one of the most economically vibrant districts of perhaps the Pacfic Rim's most vibrant city: Los Angeles ... This seems like a home run to me."