Chicago Hotels Take Aggressive Stance To Lure Guests

Faced with an array of new hotels coming into downtown Chicago in a year that would have been a challenge even if the room supply had remained stable, the city's large established hotels in 2002 went on the offensive. They battled back with extensive upgrades and marketing strategies, determined to retain the competitive advantage they have enjoyed as a result of their size, location and reputation.

For such hotel companies as Hyatt Hotels Corp., Marriott International, Six Continents Hotels & Resorts and Starwood Hotels & Resorts Worldwide, these downtown hotels are flagship properties that long have drawn both significant transient and group business travel. The companies may have multiple brands represented in the downtown market, including a number of deluxe properties, but the Hyatt Regency Chicago, the Chicago Marriott, The InterContinental Chicago and the Sheraton Chicago Hotel & Towers still are considered market leaders.

Taken together, the four hotels represent 5,218 guest rooms and 355,000 square feet of meeting space, which would be considerable in any market. All are located either on Michigan Avenue or directly off this main downtown artery.

The new arrivals in 2002 ran the gamut in terms of price point. They ranged from the upper upscale 415-room Sofitel Chicago Water Tower and 422-room Hotel 71 to the upscale 140-room Fitzpatrick Chicago and the midprice 130-room Comfort Inn & Suites Downtown.

Like other gateway U.S. cities, Chicago struggled in 2002. Occupancy was off 2.3 percent over 2001, according to Smith Travel Research, while revenue per available room declined a more significant 5.4 percent, compared with the prior year. To put the decline in perspective, Chicago outperformed Boston and Miami, where RevPAR dropped 9.9 percent and 8 percent, respectively. Yet, the Windy City lagged behind New York and Los Angeles, where RevPAR fell a more modest 4.5 percent and 4.1 percent, respectively. As in other cities, the discrepancy between occupancy rates and revenues was due to hotels cutting back on rate in an attempt to drive demand in the weak economy.

At the Hyatt Regency Chicago, the largest hotel in the city, 400 of the property's 2,019 guest rooms were redesigned during 2002 to convey a cool minimal feel with high-tech amenities intended for the business traveler. "The room, which we've dubbed the Great Room, incorporates a bed that appears to float in the middle of the space with a desk on the reverse side of the headboard," said managing director Greg Saunders. "This separates the room into two distinct areas, a living space and a work space." A dual-line cordless speaker phone and an oversize desk are included in the office space. As part of the renovation, the hotel's grand ballroom also was refurbished and 15,000 square feet of breakout space was added.

Given the importance business travelers place on high-speed Internet access, all the Hyatt's guest rooms during the year were equipped with a wired system. Bucking the industry norm, the Hyatt chose not to charge a daily fee, typically $9.95, but absorb the cost into the room rate.

As part of the renovations at the InterContinental Chicago, three ballrooms were added, bringing the total to six and the number of meeting spaces to 26. According to general manager and regional vice president Chris Mander, the strategy was to create as much flexible meeting space as possible, given the changing requirements of meetings.

The InterContinental relocated the historic property's lobby to open onto Michigan Avenue. "We've restored the dramatic four-story rotunda and grand staircase, which make the lobby more impressive than ever," Mander said. "Relocating the entrance this way symbolically reinforced the fact we're located right in the heart of the city's business district."

At the Chicago Marriott, which last year added new beds and duvet covers, this year plans to tackle guest room bathrooms. "We're celebrating our 25th anniversary this year," said Cindy Ruchman, director of sales and marketing, "so we owe it to our longtime corporate clients to keep the room product fresh and appealing for travelers and meeting attendees. Certainly, buyers know there are newer choices in the market."

The 1,192-room property is the largest Marriott in Chicago. A Fairfield Inn is two blocks away, while a Courtyard is three blocks away. "Having these other Marriott brands so close means we can be flexible in a whole range of ways," Ruchman said.

Similarly, last year the 1,200-room Sheraton Chicago worked closely with the nearby 424-room Westin Chicago River North, both Starwood brands.

According to Michael Miner, vice president and managing director of the Sheraton, "For meetings larger than we can handle, we started offering planners the option of working with one sales representative to book space at both properties."