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This Midwestern metropolis once had the most sought-after convention center in the country. Then major cities elsewhere built large, state-of-the art facilities to chip away at Chicago’s dominance in the meetings market.
“Thirty years ago, Chicago didn’t have much competition for conferences and conventions,” says Mark Eble, managing director and Midwest practice leader for PKF Consulting USA, part of CBRE Hotels. “Today, cities like Orlando and Las Vegas and to some degree Atlanta have eaten Chicago’s breakfast.”
Now, Chicago is positioning itself to return to the head of the table. The expansion of McCormick Place, the convention center, is expected to bring more business travelers to the city. A 1,200-room Marriott Marquis is slated to open on the property.
But hotel developers think the demand for rooms will outpace what the Marriott Marquis can offer. A hotel building boom has hit downtown Chicago, making it one of the most active markets in the country.
This year alone has seen the opening of the Chicago Athletic Association Hotel, Virgin Hotel, Loews Downtown Chicago, Hyatt Centric the Loop Chicago and Hampton Inn Chicago Downtown.
More hotels are in the works, including the LondonHouse, part of Hilton’s Curio Collection; the Conrad Chicago, also a Hilton property; and a new Kimpton, part of InterContinental Hotels Group. All will open in 2016.
“Chicago has not gotten a lot of development in the last couple of cycles downtown, so it’s due,” says Bruce Ford, senior vice president at Lodging Econometrics, which tracks the hotel industry. “Business travel in Chicago is bustling. It’s a very good central city. It’s got great airlift. And they have a much better convention center.”
In the first six months of 2015, Chicago added 1,639 hotel rooms to its downtown area alone. In all of New York City, there were an additional 1,587 rooms, according to STR, which monitors hotel da- ta. Last year, occupancy, or the percentage of hotel rooms filled, in downtown Chicago hotels, reached 75.6%, and the average daily rate increased by 4.1%, according to PKF Hospitality Research.
Eble says another 5,413 rooms will be added just to downtown Chicago by 2017, about a 13% increase over 2014. The last time downtown Chicago had such a hotel development boom was 1988-90, he says.
The Chicago Athletic Association Hotel opened in May in the 250-foot Venetian Gothic tower that once housed the city’s exclusive athletic club. The 241 rooms pay homage to the building ’s past. Guests can luxuriate in vintage boxing-inspired bathrobes.
Loews Hotels opened its 400room Chicago property in March in a 52-story tower. Some rooms have views of the Navy Pier. Celebrity chef Jose Garces is running the Argentine steakhouse Rural Society inside the hotel.
Many of the hotels that have opened are new brands that chose Chicago to make their debut. “People launching these brands are saying, ‘Where do we want to be?,’ ” Eble says. “There are only a handful of must-have markets in the U.S., and Chicago is one of them.”