A key element of the Grand Avenue redevelopment project was secured Thursday when developer Related Cos. announced it will bring a five-star hotel to the $1.8 billion mixed-use project.

The Mandarin Oriental Hotel Group has agreed to build a 275-room Mandarin Oriental hotel that is scheduled to open in summer 2010. It would occupy the first 20 floors of a 48-story, Frank Gehry-designed tower that would be topped by condominiums.

Bill Witte, president of Related of California, said that the hotel is important to the development adjacent to the Walt Disney Concert Hall, because it will be a 24-hour destination.

“It will include a number of restaurants, a pool bar and terrace that will be available to the larger public,” said Witte. Plans are to begin demolition of an existing parking lot at the hotel site this fall.

The announcement appears to indicate that Related is making progress in moving forward with the Grand Avenue project. It also comes just a month before the company will make its case in front of the City Council for a $40 million subsidy in the form of a rebate on the city’s parking and hotel bed taxes.

“We felt it was important to let them know in advance of what they were getting if they were to approve the request,” Witte said.

The Mandarin Oriental Hotel Group has properties at Time Warner Center in N.Y. and other high-end locations in Miami, San Francisco and Washington D.C.