Chicago Lodging Market Expands, Enters Suburbia
With a new hotel emerging at a key address downtown and significant hotel development in the surrounding suburbs, the Chicago lodging market remained in high gear this fall. Yet, Chicago hardly is immune to the malaise that has affected other U.S. destinations popular with business travelers in light of the troubled national economy. Given this scenario, buyers expect to be able to negotiate favorable rates in the city, especially if they're prepared to place their travelers in the close-in suburbs.
The new 422-room property, centrally located on Wacker Drive at Michigan Avenue, where it overlooks the Chicago River, is called Hotel 71. "The property is actually a complete renovation of the former Executive Plaza. While we never closed the doors, the renovation was close enough to completion by August that we chose that month to officially change the name," said general manager Ian Nicholson. He explained that 71 is the building's number on East Wacker Drive.
"The top-to-bottom renovation allowed us to rethink the hotel in terms of what business travelers need today, including expectations of comfort and functionality," Nicholson said. "One distinction certainly is the size of the guest rooms. They start at 400 square feet and have a residential feel. This is much larger by far than the rooms in many new Chicago hotels." The reason is that the building originally was intended to be condominium apartments.
Development in the suburbs ranges from the 295-room full service Chicago Marriott Northwest in Hoffman Estates, to the 295-room Doral Eaglewood Conference Resort in Itasca. Both opened last month. In addition, a pair of Staybridge Suites, Six Continents' extended stay brand, broke ground last month in Glenview and Lincolnshire. Each will have approximately 120 rooms and cater primarily to travelers staying five nights or longer.
In choosing a suburban location, operators of these properties hope to attract travelers seeking a cost-effective alternative to downtown, as well as travelers with business in the local community. As an example of the latter, the Marriott is close to major facilities of Sears, Roebuck and Co., Ameritech and Siemens Medical Systems.
According to Jim Anhut, Staybridge Suites senior vice president, this is the first time the brand has begun construction on two properties in such close proximity at the same time. He said it demonstrates Six Continents' long-term faith in the Chicago market as a prime business location.
With occupancy rates and room revenues in Chicago down approximately 3 percent and 11 percent in recent months, respectively, compared with the same period last year, lodging analysts expect buyers to be able to negotiate especially good 2003 deals. "On average, we believe negotiated corporate rates for next year will be flat to 5 percent below 2002 levels," said Keith Mills, lodging analyst at UBS Warburg. "However, in six U.S. cities, Chicago among them, we expect to see declines in negotiated rates closer to 10 percent." Mills said this was due primarily to continued weak business volumes coupled with year-over-year declines in convention bookings.