The ceremony moved last year to a new venue, the recently built Kodak Theatre, which is at the center of a giant shopping mall in the heart of Hollywood. But on a warm, sunny Saturday in March, the crowds shopping at the Hollywood & Highland complex are downright sparse. True, small knots of tourists stop and pose for photos with the famous Hollywood sign in the distance. Some pay $15 to tour the Kodak Theatre itself. And newcomers gaze up at the pair of giant white elephants meant to evoke the set of “Intolerance,” the 1916 D. W. Griffith epic with a cast of thousands. But as Mike Godley, a convention tourist from New Jersey, notes as he looks down at the half-empty courtyard, massive crowds are exactly what’s missing. “I like this place,” Godley says. “The facilities are incredible. But where are all the people?”
Godley isn’t the only one who wants to know. Oscar’s return to Hollywood last March 24 was a clear success. “We were very worried about putting on a show in a shopping mall, but it worked out very well,” says John Pavlik, spokesman for the Academy of Motion Picture Arts and Sciences, which signed a 20-year contract to hold the Oscars at the Kodak. The bigger problem now is how to make the complex a winner on the other 364 days of the year.
Since opening in 2001, the Hollywood & Highland project has struggled with problems ranging from construction cost overruns to the decline of tourism after September 11. As a result, the complex hemorrhaged red ink for owner Trizec Properties, which announced that it was getting out of the entertainment mall business and selling the place even before it opened. Last year, Trizec wrote down the complex’s value by more than two thirds–from $615 million to an anorexic $195 million. However, in recent months, the value seems to have stabilized, and Trizec officials are currently tweaking the mix of shops and services to increase visitors and income. They’ll sell when they can get a good price. But as Rick Matthews, Trizec Properties spokesman, admits: “We have lost a lot of money on this project.”
What ailed Hollywood & Highland was a combination of unfortunate planning and a ghastly run of bad luck. The 645,000 square-foot complex is an ambitious blend of the Kodak arena, giant banquet facilities, a luxury hotel, restaurants, nightclubs and shopping. When planning began in the late 1990s, executives banked on two seemingly impregnable trends. They skewed the mix of stores to appeal to free-spending tourists, particularly well-heeled Asians equally interested in Hollywood mystique and high-end shopping. The idea, more or less, was that a Japanese shopper would check out Bette Davis’s dainty footprints at the nearby Grauman’s Chinese, then rush over to buy a $400 pair of black pumps. Further skewing the project toward tourists, Trizec hoped to anchor their entertainment complex not with traditional retailers but with the then hypersuccessful studio stores, such as those operated by Disney and Warners.
The shopping plan didn’t work on either account. The bottom fell out of studio stores even before the project opened, which forced Trizec to go hunting for new anchor tenants. Then, just before the project opened, the 9-11 terror attacks decimated tourism. The result: a mall with no core audience. “They built a center for out-of-towners who didn’t come, and geared it for tenants who got out of the business even before the facility opened,” says George Lefcoe, professor of real-estate law at the University of Southern California Law School, who studied the project.
Trizec scrambled to sign up new retailers that would appeal to locals–like Gap and Banana Republic, Nine West and Express. But the midcourse correction wasn’t so easy. The stores that opened up there provided no must-shop experiences. Worse, Angelenos balked at paying $10 for parking, a charge set by the city to make back the $100 million it spent to build the facility’s garage. “Whoever thought $10 for four hours was a reasonable price for parking didn’t know what they were doing,” says city councilman Eric Garcetti, whose district includes Hollywood. Last year, officials dropped parking fees to a competitive $2. But then a competing retail center called The Grove opened a few miles south, vacuuming away local customers.
The good news is that, judging by the past few months, the bad news is probably over. The losses appear to have stabilized–and some of the nonretail businesses are doing well. The Kodak Theatre itself has succeeded from the start, winning a prestigious award for great acoustics and design and filling up with 207 bookings last year, including dates for the Latin Grammys, “American Idol” and concert dates by Celine Dion, Paul McCartney and even Barbra Streisand. The Renaissance Hollywood Hotel, a former Holiday Inn behind the complex that was renovated and expanded as part of the development, looks great and is doing well. It was 60 percent occupied in its first year, thanks to conventions and meetings from corporations such as Microsoft and Mattel. Overall, the Hollywood & Highland project generated $300 million last year.
Now even the retail element shows some hopeful signs. The retail space is 94 percent leased, with upcoming additions like a bar/bowling alley called Lucky Strike, 22,000 square feet of new space given to Wolfgang Puck and a museum featuring a collection of Debbie Reynolds costumes. To attract more locals, mall planners are fashioning promotions such as cheap parking and shuttle rides to the Hollywood Bowl and the nearby Pantages Theatre, where “The Producers” will soon be playing. And some shoppers are buying. Krista McConnaha, 21, who drove down with her family from Bakersfield for the day, sat sipping coffee with stuffed bags from Sephora and Victoria’s Secret under the table. “We’ve been here for hours,” she enthuses.
Hollywood & Highland has scored in another way, too: it looks like it has finally helped kick-start some redevelopment in the long-downtrodden neighborhood. “The project had a catalytic effect on the rest of Hollywood,” says Leron Gubler, president of the local chamber of commerce. “Before, no one was willing to take the risk [of opening anything new here].” Now a half dozen other theater, retail and restaurant projects have opened (or will soon) in the area. Hip clubs are springing up, with more planned. Celebrities aren’t exactly strolling the boulevard like they once did, but it may be the beginning of the renaissance that the neighborhood has wanted for decades.
And at the complex itself, marketers are working out new permutations to exploit its connection to the Oscars. One recent night, 100 people dressed as reporters and autograph-hounds lined the red carpet leading from Hollywood Boulevard to the mall’s Grand Staircase, shouting and snapping pictures of the well-dressed men and women emerging from stretch limos. “What’s going on?” asked a bewildered passerby. The reporters and fans were actors, hired to simulate a hyped-up Oscars night crowd. The “celebrities” were out-of-town executives from Best Buy, guests at the Renaissance Hollywood Hotel who were on their way upstairs for their own awards banquet. Their limo ride had simply taken them around the block. As they ran the noisy gauntlet, some of the execs looked embarrassed, most amused, and a few even paused to chat with the faux reporters, like they had seen countless celebrities do on TV. Whether they thought the ersatz Oscar moment was cool or camp, it didn’t matter. They enjoyed the charade, and it couldn’t have been achieved anywhere else.
