Virgin Hotel Chicago Sold at Huge Discount

It opened with buzz and brand cachet in 2015. A decade later, the Virgin Hotel Chicago might be headed in a very different direction.

A Michigan-based firm specializing in timeshare conversions bought it, likely signaling the end of the building’s run as a traditional hotel, Crain’s reported.

Accelerated Assets paid nearly $77.4 million for the 250-key hotel at 203 North Wabash Avenue, property records show. That’s $309,600 per key. The seller was a joint venture between Miami’s Lionstone Development and Virgin Hotels, which spent over $117 million ($468,000 per key) to redevelop the Old Dearborn Bank Building into the world’s first Virgin Hotel a decade ago.

The price amounts to one of the most-expensive post-pandemic deals for a downtown hotel, but it still marks a haircut for the owners. Virgin confirmed the sale but said it will continue managing the property under the Virgin Hotels brand.

The sale was brokered by JLL, which highlighted the property’s potential for expanded event space and a year-round rooftop destination. The building, designed by Rapp & Rapp in 1928 and landmarked in 2003, sits steps from Michigan Avenue and the Riverwalk.

Accelerated has not disclosed its plans, but the company is known for buying and repositioning hotel and residential properties into timeshare models, often in partnership with operators like Bluegreen Vacations. In 2013, Accelerated helped convert Hotel Blake in the South Loop into a timeshare.

Such a move would be a rare bet for Chicago, where the timeshare model has little precedent.

“It will be challenging to tap into an international market,” hotel consultant Ted Mandigo said, noting that urban timeshares are more common in coastal gateway markets like New York.

The Virgin Hotel still has a few years left on a Class L property tax incentive, which slashes assessments for owners who rehab historic landmarks. That break, which may have sweetened the deal for Accelerated, gradually phases out through 2027.

Though occupancy is rebounding, Chicago hotel revenues are 15 percent below pre-pandemic levels when adjusted for inflation, according to CoStar. The sale of a top-tier brand like Virgin shows investors are still willing to make big bets on downtown hospitality, even if they come with new math.

— Judah Duke