Hot Hotels
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For the first time in decades, the Chicago hotel market is hitting on all cylinders, says Strategic Hotels CEO Laurence Geller. He sees “tremendous growth” in the meetings, business and leisure markets. While many visitors come from the USA, particularly the Midwest, there's a new stream of tourists from the UK and Latin America, he says. So, it’s no coincidence that Chicago-based Oxford Capital Group, a national developer and investor, is building two hotels in Chicago and one in Boston and that Chesapeake Lodging announced in an SEC filing on Friday that it’s investing $126M to acquire a hotel here that it didn’t name. |
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Chicago hotel occupancy rates have already surpassed the recent ’07 peak and room rates are coming back quickly, says PKF’s regional VP Mark Eble. Soon, rates will meet or exceed ’07 because the urban core has been spectacularly revitalized, he tells us. Hoteliers like Oxford that are building into this market will do well, Mark says. Oxford, which for years has acquired, developed and redeveloped hotels around the US, most recently hit a home run with its’09 opening of the 225-room Hotel Felix downtown. Oxford is now developing another upper-upscale, boutique hotel at 127 West Huron and the luxury Langham Chicago Hotel at the former IBM Building next to Trump Tower. |
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| Optimism is justified since downtown RevPAR is up 11.3% for the first half of the year, says Smith Travel Research SVP Jan Freitag. Chicago ranks sixth in rising RevPAR (total revenue divided by the number of available rooms) behind Oahu (17%), Nashville (14.8%), San Francisco (14.9%), Houston (13.3%) and Boston (11.9%). (We can understand Hawaii, but we can't let Boston beat us.) Jan says with little new supply ready to open, existing hotels are reaping the benefit of stronger room sales. Chicago hotel occupancy through June is up 6% and the average room rate, 5.1%. “That’s pretty good,” Jan adds. |
