It's Been A Hard Winter For Chicago Hotels, And Relief Can't Come Soon Enough

After a brief burst of optimism last summer, Chicago hotels are once again going through hard times.

The spread of vaccinations last year drove down the city’s infection rate, and tourists returned, although business travelers were still few and far between. But the one-two punch of omicron and winter led to a steep fall in occupancy. Now some stakeholders are calling on Gov. J.B. Pritzker to provide the hospitality industry with another round of aid.    

The numbers are stark. According to STR data published by Choose Chicago, the city’s tourist information center, hotel occupancy in the Central Business District fell from 46% on the week before Christmas, and 47% on the week of New Year’s, to between 22% and 25.6% throughout the month of January.

"We had great momentum through the summer of last year, and even through the holiday season, but now that we are in the new year, some of the downtown hotels had single-digit occupancy last week,” Illinois Hotel and Lodging Association CEO Michael Jacobson told Fox 32 in January.

Chicago has never been a tourist mecca in the dead of winter, so low occupancy numbers in January aren’t necessarily bad news. But downtown occupancy so far this year is below the historical average, according to STR.

For the week ending Jan. 29, downtown hotel occupancy was 22.5%. That was a 42.9% decline from the same week in 2019, just before the pandemic’s onset, according to Choose Chicago’s STR data.

The demand for downtown rooms on the week ending Jan. 29 did see a big jump over the same week in 2021, increasing by more than 124%, but that’s cold comfort for those watching the market.

“It’s only growing faster because it was so low and didn’t recover at all last year, so any improvement this year seems much bigger,” HVS Chicago Managing Director Stacey Nadolny said.

Jacobson wants to see action from the state government. He pointed out in a statement from the association that nationally the hospitality industry has lost $111.8B during the pandemic. And with business and tourism still subject to disruptions from Covid-19, hotels are struggling to bring back the thousands of employees lost to layoffs over the past two years.

“Despite these struggles, Gov. J.B. Pritzker’s budget proposal neglected to offer any relief to the industry, which prior to the pandemic brought in $4 billion a year in state and local taxes and supported more than 290,000 jobs,” Jacobson said. “As the governor looks for ways to support working families, we call on him to embrace our Hotel Jobs Recovery Plan, which would allocate $250 million in American Rescue Plan Act funds to hotels across the state.”

Other relief could be on the way. In the past few weeks, new infections due to the omicron variant dropped dramatically. As long as no new variants arise, that decline could lead to the reignition of both business travel and tourism.

According to the city of Chicago, the current daily average of new Covid-19 cases is 532, down from the 6,891 recorded on Jan. 3, and roughly equal to numbers the city recorded late last summer. Similar declines were seen elsewhere in Illinois. In response, Pritzker this week announced plans to end the state’s mask mandate in most public locations by the end of the month. Chicago officials seem ready to follow the governor’s lead.

“If we as a city continue to see declines in these leading Covid metrics, we too should be in a position to lift restrictions at that time,” stated a Wednesday release from the Chicago Department of Public Health.

Convention-goers are the other pillar of the city’s hospitality industry, and there are already some signs of optimism in that sector. The Chicago Auto Show will open this weekend at McCormick Place Convention Center, a return to its traditional February schedule after the pandemic forced 2021’s event to be delayed until July.

In January, the Rosemont, Illinois-based International Housewares Association decided its three-day Inspired Home Show would go forward at McCormick Place starting on March 5. The show is typically one of Chicago’s largest, attracting up to 52,000 participants, and was the first convention to cancel in 2020. Although this year’s event is shorter than usual, the association plans to return to its typical four-day schedule next year.

McCormick Place consists of four interconnected exhibition halls, as well as the 10,387-seat Wintrust Arena, and with more than 2.6M SF, it is the largest convention center in North America.

According to Cynthia McCafferty, speaking for the Metropolitan Pier and Exposition Authority, the municipal corporation that owns Navy Pier and McCormick Place, there are 152 events scheduled to take place this year at McCormick. These shows are expected to attract a total of about 1.6 million visitors.

That would be far behind the number of visitors brought to Chicago by conventions in 2019, she added. That year, about 270 events were held, attended by between 2.8 million and 2.9 million people. But only a few weeks into the new year, McCafferty said it's likely more events will be added to the schedule.

“The sales pipeline looks really strong, and I think people are ready to get back to meeting in person,” she said.