Chicago renews Airbnb restrictions around O’Hare, Midway airports

The Chicago City Council has been trying to help clear the competition turbulence around airport hotels, renewing and expanding restrictions on short-term rentals near O’Hare and Chicago Midway airports.

The measures were passed incrementally in recent months and affect precincts — or voting districts — around the airports in the 13th, 23rd and 41st Wards.

This comes as Chicago-area hotels continue to wrestle with harsh economic conditions from the pandemic.

The approvals mean that all of the precincts in the 13th Ward, which includes the southern section of Midway Airport, have renewed a ban on short-term rentals.

Despite rising occupancy, Chicago hotels are projected to generate a total revenue of $346 million this year, an 86 percent drop compared to 2019. That’s according to the American Hotel & Lodging Association. In July, the organization declared Chicago’s lodging industry in a “depression.”

RLJ Lodging’s financial reports provide one example of the severity of the squeeze hotels operators are facing.

The Maryland-based hospitality REIT owns seven hotels near Midway Airport, including the Courtyard Midway Airport, Fairfield Inn & Suites Chicago Midway Airport and Hilton Inn Garden Chicago Midway Airport. The REIT also owns two hotels in Downtown Chicago. According to RLJ’s annual report, its Chicago properties generated a total revenue of $29.6 million in 2020, a 65 percent drop from the $85.7 million generated in 2019.

Marty Quinn, alderman for the 13th Ward and one of the Council’s most vocal Airbnb critics, authored a pair of ordinances that redesignated 21 precincts as restricted residential zones.

A precinct can be designated as a restricted residential zone once 25 percent of registered voters in the area sign a petition.

The zoning prohibits new short-term rentals in designated areas and hosts who are grandfathered into their precinct’s previous zoning rules are only allowed to operate until their licenses expire. The short-term rental license for a property would also be nullified once the property changes hands.

‘Benefits of tourism’

But Airbnb, which points to Chicago as the second-most popular destination for extended stays of 28 days or longer this fall, claims that short-term rentals have a role to play in Chicago’s recovery.

“Airbnb drives the benefits of tourism to neighborhoods that need it, said Rachel DeLevie-Orey, a company spokesperson. “And, even in small precincts, the focus should be on facilitating the safe return of travel instead of limiting it.”

In the 23rd Ward, the Council banned short-term rentals in the 6th precinct. Last month, it renewed restrictions in eight more precincts: the 1st, 4th, 8th, 18th, 22nd, 23rd, 28th and 29th.

The areas covered by the ban include Midway Airport itself, and areas immediately to the west. The largest hotels in the area, located to the south of the airport, include Chicago Marriott Midway, Hyatt Place Chicago and DoubleTree by Hilton Chicago Midway Airport.

In the 41st Ward, two precincts near O’Hare — the 14th and the 22nd in Forest Glen and Norwood Park East — were designated as restricted residential zones last July.

The expansion of the ban on short-term rentals comes as the city tightens regulations on Airbnb hosts. Under new rules that went to effect in June, owners must now submit registration documents to the city.

The old system allowed hosts to register with home-sharing sites, which transmitted documents to the city every two weeks. Property owners can lose their license over one “egregious” incident or two complaints within a year, according to the existing rules. Egregious incidents — which include drug trafficking, prostitution, gang activity or parties — would also result in fines of $5,000 to $10,000.

The threat of those incidents has been the justification for much of the opposition to short-term rental companies like Airbnb, VRBO and others. Those opponents have mostly been residents who object to short-term rentals in their neighborhoods.

Shortly after the new rule passed, Michele Smith, alderman for the 43rd Ward — covering the North Side including Lincoln Park — said that the legislation will bring relief to her constituents who “have suffered from out-of-control ‘party houses.’”