Chicago Welcomes Hotel Sprout Despite Slow Economy

<B>Chicago Welcomes Hotel Sprout Despite Slow Economy</B>

By Robert Selwitz

As with many of America's major corporate travel destinations, Chicago currently is coping with a year in which the prime problem is that it's not the phenomenon that 2000 was.

Nevertheless, new lodging options continue to sprout, particularly in and around midtown and O'Hare International Airport.

Veteran hotel consultant Ted Mandigo, of Chicago-based hospitality specialty firm T.R. Mandigo & Co., pointed to Rosemont, virtually next door to O'Hare and home to the nation's 12th largest convention center. There, a 300-room Hawthorne Inn has been re-flagged as a Holiday Inn Select, and a 206-room Hyatt has debuted, near the already standing Hyatt Regency. And, last year, a 369-room Doubletree also entered Rosemont.

Now under development are two other significant properties: A 400-room, yet-to-be-flagged upscale entry, and a 360-room Renaissance. Both should open this fall.

Mandigo also expected Hilton to expand its presence, either by expanding its standing 880-room site or by adding another structure.

Last year, Hyatt made a particularly strong expansion statement by introducing a very upscale, brand new 203-room property on North Michigan Avenue, the site of an earlier Hyatt that was demolished to make room for the new entry. This new Park Hyatt is part of a multi-use project that includes high quality shops, rentals and condominiums.

In August, Hyatt will continue to spur its Windy City activities, when the new 110,000-sq.-ft. Hyatt Conference Center opens directly across the street from the Hyatt Regency McCormick Place. The properties will be connected via enclosed pedestrian walkways.

According to James Reilly, president and CEO of the Chicago Convention and Tourism Bureau, the new structure will allow for a variety of layouts with up to 28 meeting rooms for a total of 31,000 square feet of meeting space. A pre-function area also is available with an entire wall of windows facing east toward McCormick Square.

"Chicago and McCormick Place continue to be the focal point for America's meetings and exhibition industry," Reilly said. "Not only will the new conference center meet the demand from many existing shows for space, but it also will help attract more smaller meetings and conventions to Chicago."

Another quartet of notable hotels is set to debut this year, including a 456-room Embassy Suites two blocks from Navy Pier and two blocks from the Magnificent Mile shopping district. Planners will be able to book 11,000 square feet of meeting space with 16 breakout rooms and a 6,300-sq.-ft. ballroom.

Also opening will be a 189-room Fairfield Inn & Suites and a 278-room Le Meridien Hotels & Resorts--including 17 meeting rooms, offering 12,000 square feet of meeting and banquet space--in the North Bridge district. Also scheduled is a 340-room Peninsula hotel. The Peninsula will provide a mix of meeting facilities, as well as a glass-enclosed, two-story ballroom and pre-function area.

Also this spring and summer, several downtown hotels will complete major property renovations. These include the Whitehall Hotel, the Millennium Knickerbocker, the Fairmont Hotel Chicago, the Hotel Inter-Continental, the W Chicago City Center (formerly the Midland Hotel) and the W Chicago Lakeshore (formerly the Days Inn Lakeshore).

The arrival of Starwood's Ws, and the debut of the Monaco and Burnham--both Kimpton properties--means Chicago is joining the trend of offering stylish upscale boutique hotels among its lodging repertoire.

In addition to all this, hotels likely to debut during 2002 include a 425-room Hilton Suites and a 415-room Sofitel.

Mandigo said that while market-wide occupancy totals during 2000 reached 70.6 percent, with an average daily rate of $116.42, downtown did even better, scoring 74.2 percent, with an average rate of $154.89.

"However," he said, "looking at this year's tabulations--particularly for the first quarter--things are not quite so strong. Occupancy rates were 56.8 percent for January through March compared with 59 percent last year, and average room rates dipped to $106.52 this year, compared with $116.42 for January through March, 2000.

"Traditionally, Chicago enjoyed 120 'fill days' annually, most of which occurred during peak convention periods of April to June and September to November," Mandigo continued. "Now, I expect that citywide sellouts will happen for just 90 days each year. I think recent hotel additions, plus the current slowing of business travel, partially explain the reason for this situation."

Mandigo said this eased access to Chicago hotels can benefit current bookers, particularly those seeking upscale digs. "Most of the latest additions target upper echelon customers," he said. "That means they should be better able to negotiate better rates, either individual or corporate."

He added, "We already have a Four Seasons and a Ritz-Carlton. The arrival of a new Peninsula, Le Meridien, etc., clearly must enhance the bargaining position of travelers seeking the very best."

Mandigo noted that there's plenty of scheduled growth in the exhibition space marketplace. He pointed to an $800 million expansion at McCormick Place that will bring the facility's total available area from 2.6 million to 3.5 million square feet.

Also, for those seeking a genuine lodging bargain, during days when McCormick Place is shuttered, Mandigo suggested calling the adjacent 800-room Hyatt.

"Here's a real feast or famine situation," Mandigo said. "When conventions are on, rooms can go for $300 per night. But when there's no show, you can book a room for as low as $90."

In other news, Chicago will provide free trolley service on six lines throughout the summer. According to the CTB, the trolleys, running daily every half-hour, will link such major destinations as the Museum Campus, Sears Tower and the Magnificent Mile shopping district.