By Bonnie Jean Adams
Chicago welcomed 59.5 million visitors in 2019, with a little more than 34 million staying at least one night in hotels. The city was expecting another banner year with returning conventions as well as tourist and business traffic. When the coronavirus (COVID-19) crisis happened, however, almost everything ground to a halt. Organizers postponed or canceled conventions and other events scheduled through at least June.
The number of people visiting Chicago, compared to this time last year, has dipped considerably. Between March 1 and 28, 2020 hotel occupancy is down 63% from 2019 and room demand is down 62%. Revenue per available room, a key revenue and performance success metric, is down 66%, from $108.36 last year to $36.41 in 2020, according to data provided by tourism group Choose Chicago via research firm STR.
“Occupancy is in the single digits at most hotels across the city, if they’re even still open,” said Michael Jacobson, president and CEO of the Illinois Hotel & Lodging Association (IHLA). “We’re getting more hotels each day deciding to suspend operations altogether. It doesn’t make financial sense to continue fighting the fight when you’re losing money every day.”
While the coronavirus crisis has affected businesses negatively and delayed construction for some, West Loop/Fulton Market construction continues.
In November 2019, the Chicago Plan Commission approved construction of the 16-story Standard Hotel. The 259-room structure, a venture by New York-based DDG and Chicago-based Marc Realty, will be located at 1234 W. Randolph St. It will include a second floor garage but no other parking options, raising concerns among neighbors about a possible surge in traffic in the already congested area.
Developers scheduled construction to start in late spring after reducing the hotel’s size from the 23 stories and 289 rooms specified by the original plan. The hotel also will offer a rooftop pool and bar, restaurant, and public plaza.
Two blocks east, Chicago-based North Park Ventures is planning a hotel and office development at 800 W. Lake St. The 19-story, 265-foot-tall tower will provide an on-site garage with limited spaces, valet parking, and an off-street drop-off area. If all goes to plan, those leading the 800 W. Lake Street project hope to welcome guests in April 2021.
Developers in both cases expect many guests and employees will use public transit or ride hailing services, rather than driving.
Officials want traffic plans
Alderman Walter Burnett Jr. of the 27th Ward and Noah Szafraniec, supervising zoning plan examiner with the City’s Department of Planning and Development (DPD), said they share residents’ concerns about traffic congestion and that, before the City signs off on the project, both developers must create a solution addressing the traffic issue. Burnett and Szafraniec want a detailed plan that covers valet parking and other traffic the hotels would bring in.
The City’s planning department contemplated buildings rising 20 stories or higher when it created the Fulton Market Innovation District in 2014. Several residents argue such developments strain the neighborhood’s infrastructure. Developers have built four hotels in the Fulton Market community since 2014, with another seven hotels in various stages of development and planning.
“Fulton Market is a big draw now,” said Nate Sahn, senior vice president at CBRE Hotels. “It’s also an area that historically didn’t have a lot of hospitality there. Builders will gravitate there because of that.” Brokers and analysts believe the area needs hotel development to support increase numbers of corporate offices and retail businesses opening in the area in recent years. This transition accelerated in 2013 when Google announced its Midwest headquarters would move into a redeveloped cold storage building in the neighborhood. That trend has continued with the arrivals of corporate offices for McDonald’s and Glassdoor.
The cranes are not going anywhere, said Rebecca Thomson, regional vice president of Coldwell Banker Real Estate. “The trend to see headquarters move downtown for this live-work-play concept — no signs indicate that’s going to change,” she noted.
To reach Burnett’s office, call (312) 432-1995. For CBRE Hotels, log on to www.cbrehotels.com. For more on Coldwell Banker, log on to www.coldwellbanker.com. For the DPD, call (312) 744-3653. For the IHLA, log on to www.illinoishotels.org or call (312) 346-3135. For more information about Marc Realty, log on to www.marcrealty.com or call (312) 884-5400. For North Park Ventures, log on to www.northparkventures.com.