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Drake Hotel, host to royals and mobsters alike, hits market
Owners eye $250M sale, leave option for partial residential conversion
Chicago’s iconic Drake Hotel is for sale, marketed in part to include a potential residential conversion amid the hospitality industry’s continued struggles.
The century-old beaux-art hotel, whose 10-foot pink neon sign serves as a gateway to the Magnificent Mile, could bring in more than $250 million, according to Bloomberg, which first reported the listing. The 13-story building at 140 E. Walton is known for its high tea in the Palm Court. It even renamed a five-room suite in honor of Princess Diana after she spent three days in it in 1996. Guests pony up $32,000 a night for the Princess Diana package.
The Brashears, a prominent Chicago family, and Acore Capital own 90 percent of the hotel, which includes the ground lease. The family has been involved in the ownership and management since its opening in 1920 and still holds the controlling interest.
But as Covid decimated the city’s hotel and tourism industry last year, owners began piling on debt and defaulting on loans.
Last October, the Drake Hotel — along with Hilton and Marriott — racked up the highest unpaid property tax bills to Cook County.
Over its 101-year history, the 535-room Drake has hosted royalty, celebrities and even mobsters, cementing its status as one of the city’s seminal hotels. But its owners are also targeting the complex as “unencumbered of brand and management,” according to marketing material JLL sent Wednesday. Hilton manages the property.
The renovation and redevelopment of the hotel could include “creating or enhancing ancillary uses like the retail space and the potential creation of residential units,” according to JLL, which has the assignment to sell the hotel.
Downtown hotels are still in recovery mode, though sales and development activity have picked up. Preliminary occupancy has also risen to 58.7 percent as of July, according to lodging data provider STR. Occupancy stood at 25.6 percent last July and 82.4 percent over the same period in 2019.
Last week, Oxford Capital Group, among the city’s largest hotel owners and operators, purchased Thompson Chicago, a boutique hotel in the Gold Coast.
In June, developer John Murphy led a venture to purchase the Holiday Inn Wolf Point, a 522-room hotel adjacent to the under-construction Salesforce Chicago.