While it’s certainly premature to declare a comeback, Downtown Chicago’s hotels just posted their strongest month since the pandemic began.
Occupancy rates at hotels in the city’s central business district reached 68 percent last month, while daily room rates averaged just under $240 per night, Crain’s reported, citing data from CoStar subsidiary STR. Both figures represent the highest totals since the fall of 2019, months before Covid restricted travel and emptied the area.
May’s average occupancy was up almost 10 percent from April’s 59 percent and nearly doubled the 38 percent average in May 2021.
Chicago’s dependence on business and convention-related travel has slowed its hospitality sector’s comeback relative to other major U.S. cities. Strict public health rules (hoteliers say demand has shot up since Illinois ended its mask mandate in late February) and rising violent crime rates have also hindered the sector’s recovery.
“Things are much better than where we’ve been over the last two years,” Michael Jacobson, head of the Illinois Hotels & Lodging Association, told Crain’s. “The level of optimism rises every single day when I talk to hoteliers across the city.”
While the average occupancy rate at Chicago’s downtown hotels is still down significantly from May 2019, when it hovered just below 90 percent, nationwide hotel occupancy has nearly recovered to pre-pandemic levels. According to STR data, average occupancy across hotels in the nation’s 25 largest markets was nearly 70 percent in May, down only about 8 percentage points from May 2019.
Group bookings from conventions and trade shows, which typically account for about 20 percent of hotel bookings in downtown Chicago each year, have contributed to the area’s uptick. The National Restaurant Show said it drew more than 51,000 attendees on its busiest day at McCormick Place last month, beating expectations by more than 10,000 people.
Hotel developer Bob Habeeb said leisure demand is also coming back, but it’s the group bookings that are especially promising for the market.
“People are showing up for groups,” Habeeb said. “That’s the really good news in these numbers.”
Habeeb said the true test for Chicago will come in the fall when leisure demand slows and the city will depend on business travel and group bookings.
“We could see some significant headwinds, but we just don’t know,” he said. “This is going to really be a wait-and-see.”
Read more
Chicago
Ace Hotel Chicago announces closure after building sells for $63M
[CCB] — Victoria Pruitt