Even with price growth for hotel rooms in 2022, the lodging market without business conventions returning in Chicago won’t be the same as before the pandemic.
The good news for area hoteliers is McCormick Place trade shows are coming back this year, giving hotel owners, developers and brokers hope that the asset class’ recovery gains more steam after a jump in leisure travel provided some relief in 2022, the Chicago Tribune reported.
The Metropolitan Pier and Exposition Authority said more than 2.5 million people are expected to attend events at McCormick Place and Navy Pier this year. The expected turnout would be significantly higher than the 1.5 million people who came out last year.
John Rutledge, CEO of downtown Chicago hotel developer Oxford Capital Group, said the return of conventioneers and their attendees will provide a much-needed boost to the downtown hotel market.
“There is no doubt the continued post-COVID snapback in travel is absolutely happening,” he told the outlet.
Yet not all sinking ships can be pulled to safety at once, Rutledge said. He pointed out that large distressed assets such as the Palmer House Hilton — a 1,635-room property in the Loop owned by Thor Equities that a judge granted an order of foreclosure in July — still “have a long way to go before getting back to normal.”
Lodging revenues are generally improving. Yet even with an increase in downtown hotel prices last year, with the average daily rate rising 17 percent in 2022 to $252 as of the third quarter from $215 at the start of the year, Chicago and other large cities with cold weather months are trailing the rest of the nation in pandemic recovery. These markets are more reliant on business travel, which hasn’t rebounded at the same pace as leisure travel.
Chicago’s hotel occupancy rate hit 74.8 percent in the third quarter last year, which is down from the 83.6 percent rate in the same quarter in 2019. The Metropolitan Pier and Exposition Authority’s estimate for 2023 is still below the almost 3 million people who attended events in 2019.
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— Victoria Pruitt