Service Properties Lists Royal Sonesta for Sale in Chicago

Service Properties Trust is officially testing the market for the 261-room Royal Sonesta hotel in Chicago’s River North neighborhood.

Marketing materials from brokerage JLL indicate that the Newton, Massachusetts-based real estate investment trust is seeking a buyer for the 17-story property at 505 North State Street. Crain’s reported that the offering comes several years after the firm purchased the hotel for $55 million in October 2019.

While no asking price has been publicly disclosed, the listing will serve as a barometer for investor interest in the city’s central business district. The hotel occupies the lower floors of a 36-story mixed-use tower at the northeast corner of State and Illinois streets.

Industry analysts suggest the seller may face a substantial loss relative to its 2019 purchase price based on recent regional transactions. JLL brokers Adam McGaughy and John Nugent are managing the sale process for the upscale, full-service property.

A recent comparable sale on the Magnificent Mile saw the Westin Michigan Avenue Chicago trade for just under $100,000 per room. A similar valuation for the Royal Sonesta would result in a significant financial haircut for the publicly traded real estate investment trust, according to the outlet.

The listing aligns with a broader strategy by Service Properties Trust to aggressively thin its hospitality holdings. The firm ended 2025 with 94 hotels after divesting 112 properties throughout the year. The portfolio rebalancing allows the company to focus more heavily on its retail net leases, according to the publication, and these holdings primarily include travel centers and quick-serve restaurant properties.

JLL is positioning the hotel as having potential for a comprehensive renovation to drive future returns. Although guest room corridors were updated last year, the property has not seen a full-scale renovation in a decade.

Investors may find upside in modernizing the 17th-floor amenity level, which currently features an indoor pool and fitness center, according to the publication. The brokerage specifically highlighted the outdoor terrace as a prime candidate for conversion into a modern event space.

Market fundamentals show a steady but incomplete recovery for Chicago’s tourism sector. Data from Choose Chicago indicates that 55.3 million visitors traveled to the city in 2024, a 6.5 percent increase over the previous year.

Revenue per available room across downtown rose to $167.67 last year, according to data from CoStar Group. While this exceeds 2019 figures, the industry remains below pre-pandemic levels when adjusted for inflation.

— Eric Weilbacher