Hotel Renovations Could Cause Chicago Room Shortage

Hotel rooms might be a little scarce during Chicago's big citywide conventions in coming months with the closing of two properties totaling more than 750 rooms.

The 500-room Bismarck Hotel closed in January for a six-month, $20 million renovation by its new owners. Further complicating the room scene, the 255-room Park Hyatt closed for a two-year renovation. That luxury hotel isn't expected to reopen until January 1999. When it does, the hotel will offer about 50 fewer rooms as Hyatt expands the square footage of each room and loses some space to an adjoining condo project.

"This will definitely put a little crimp in inventory for a short time," said Arnie Karr, president of the Hotel-Motel Association of Illinois. "But look at the bright side--it will bring fresh new rooms to the market." Karr doesn't believe any business travelers will be left without a room, but said some could end up in the outlying areas during peak convention periods.

Although the Chicago metro area offers more than 65,000 hotel rooms, there are never enough rooms during the megashows that draw more than 100,000 delegates to McCormick Place.

Room shortages are likely around the National Restaurant Association show May 10 through 13, the National Sporting Goods Show July 12 through 14 and the Hardware Show Aug. 10 through 13, according to the Chicago Convention & Tourism Bureau. The entire months of September and October also are extremely busy.

Doing its best to increase the number of rooms it offers paying customers, the new Westin River North, formerly the Hotel Nikko, ended its contracts with airline crews that tied up about 100 of its 422 rooms every night. All other contracts are being honored, emphasized Gary Sieland, new general manager for the property.

The only other change Westin has made since taking over the hotel in January was to close the Japanese restaurant, with plans to transform the space into a function area for small, high-end meetings. Westin also has been investing in its North Michigan Ave. location, spending more than $15 million in upgrading all tower rooms, bathrooms, the facade and banquet space.

In other hotel news, the 383-room Allerton Hotel has been purchased by the Dallas-based Bristol Hotel Co., which plans to refurbish the property and reopen it as a Crowne Plaza. The new owners hope to keep the property open during renovations, which are set to begin once architects present plans.

The summer 1998 opening of the 750-room McCormick Place Hyatt is expected to go a long way toward easing the tight room conditions. However, the hotel isn't the only new one in the works, according to Ted Mandigo, a hospitality consultant with Landauer Associates Inc., Chicago. A number of developers are looking at converting office buildings, apartments and even transient rooms-only properties into hotels, Mandigo said. Some are even analyzing the economic feasibility of building new hotels on vacant parking lots along State Street and River North, he added.

"Rates need to go up another 10 to 12 percent to make sense for new construction," Mandigo said. That scenario may well play out this year, which is expected to be a strong convention year in Chicago. Rates rose about 10 percent last year to an average daily rate of $117 downtown and $92 throughout the metro area, he said.

In conjunction with the new House of Blues nightclub in Marina City, developers are building a 350-room hotel slated to open in mid-1999. And two Hampton Inns are planned for opening next year, one in a new building under construction on Illinois and the second in Union Station. Developers also are looking at converting the Oxford House, the Doral apartment building and even the Carbon & Carbide building on Michigan Ave.