While work on Euro Disney continued, Disney was also planning a massive expansion for at the Disney-MGM Studios. The new area would be known as Sunset Boulevard, and it would feature new restaurants, stores and hopefully a new "E Ticket" attraction. Although initially Disney Imagineers pitched attractions such as Dick Tracy's Crime Stoppers and Toontown Trolley for Sunset Boulevard, none of the projects were green lit. Then, in the fall of 1989, director and producer Mel Brooks met with Disney Imagineering. Disney CEO wanted Mel to produce his films at the Disney MGM Studios, and creating a new attraction with the producer was something that appealed to both Imagineers and Brooks. The original idea that Imagineers came up with was called "Castle Young Frankenstein". The proposed attraction would have featured a village with winding streets, all of which led to a castle. As Imagineers continued to brainstorm however, the attraction was changed to "Mel Brooks' Hollywood Hotel".
The idea of a Hollywood hotel was one that had actually originated right around the time that the Studios opened. Disney Imaginer Imagineer Bob Weiss wanted to create a resort hotel that was based on the art deco Hollywood hotels of the 1930s. Imaginer Imagineer C. McNair Wilson then suggested that the hotel be the scene of a murder mystery, which guests could solve by investigating clues hidden around the hotel. The hotel cast members, would be able to give guests small hints that would lead them to clues. If guests solved the case, they would be given a certificate for their efforts. The idea of the murder mystery in the hotel, led Imagineers to consider re-theming half of the hotel as the Hollywood Horror Hotel.
Although these ideas proved to be the most influential, Imagineers also came up with other ideas for the Hollywood Hotel. One idea would have featured Vincent Price narrating to guests as they took a "ghost tour". Another suggestion was to create a comedic version of the [[Haunted Mansion]], featuring Mel Brooks and Young Frankenstein. Eventually, however Imagineers proposed working the theme of the Disney-MGM Studios into the attraction. They came up with a story that would feature a murder mystery and a dead director. It would be up to the guests (who were playing extras) to try and figure out who committed the crime.