AEG drops 755-key hotel development by convention center

Tensions are high between the Anschutz Entertainment Group (AEG) and the City of Los Angeles, a partnership that goes back two decades.

The entertainment firm announced Thursday that it will no longer be pursuing the development of a 755-room hotel on Olympic Boulevard next to the L.A. Convention Center. The reason: the city is now planning its own on-site hotel for the center, and AEG doesn’t want the competition.

The city’s plan for its own hotel would have “severe operational and economic consequences” for AEG, the company’s Vice Chairman Ted Fikre said in a letter to City Attorney Mike Feuer last week, the L.A. Times reported. The construction of the city’s 1,000-room hotel would also violate agreements between AEG and the city, which granted AEG the right to use convention center facilities, he claimed.

The city was very much in favor of L.A. Live, the sprawling entertainment complex that would have included the massive hotel, in its planning stages. Former Mayor Antonio Villaraigosa and City Council, for instance, voted to let AEG to keep $270 million in city taxes generated by the project over almost three decades. And just two years ago, City Council gave AEG oversight in managing the convention center.

But that relationship may now be on the rocks.

“The development of a second headquarters hotel was not a part of the deal when the city insisted that AEG build a convention headquarters hotel,” Fikre wrote.

Meanwhile, the city stands by its plans for the 1,000-room hotel as part of a larger goal to modernize the convention center area. Nearby in South Park, investment firm Lightstone Group is planning two high-rise towers that include about 1,000 hotel rooms. [LAT] — Cathaleen Chen