“For a lot of people, being in the office is still not a thing. As long as people aren’t back in the office, downtown areas will continue to hurt” from a lack of corporate travel business, he said.
Just as crucial is the return of conventions and trade shows, whose attendees typically account for 20% of all downtown hotel rooms booked each year, according to city tourism arm Choose Chicago. McCormick Place reopened to events last summer and has hosted 77 events since July 1 that drew more than 674,000 guests, according to the Metropolitan Pier and Exposition Authority, which owns and operates the convention center. But the impact on hotels was watered down compared to pre-pandemic times, as those events only drew about 65% of their forecasted attendance, according to MPEA.
Hotel investor Bob Habeeb, whose Chicago-based development firm Maverick Hotels & Restaurants opened the new Sable hotel at Navy Pier early last year, said downtown business over the last several months has been especially sluggish as COVID variant waves set in. He is once again hoping for a strong summer leisure travel season ahead—”last year it happened almost overnight, and it was an avalanche,” he said—but acknowledged the market will trail other cities until business travel comes back.
Then there’s the crime issue. COVID remains the biggest problem for hotels, Habeeb said, but the recent rise in carjackings in the city and other violent crime isn’t far behind in keeping visitors away.
“All major markets are suffering from crime, but it seems particularly punitive in the Chicago market,” he said. “The business community looks forward to the same strong, decisive leadership at the city, county and state levels on crime that we saw on the pandemic.”
Hotel owners are counting on the recovery pace picking up speed in 2022 to avoid another rash of property distress and loss of value that plagued last year.
The Hotel Felix and JW Marriott Chicago joined the Palmer House Hilton on the list of properties whose owners were hit with big foreclosure lawsuits, while the owner of the Hilton Suites Chicago Magnificent Mile in the Gold Coast handed its deed to its lender to avoid a legal battle.
Prices paid for downtown hotels reflected the cloudy future ahead for the city’s hospitality sector: The Thompson Chicago and Talbott Hotel in the Gold Coast were both sold for just more than the value of the debt the sellers owed on the properties; The previous owner of the St. Clair Hotel just off the Mag Mile sold the 208-room property for close to its debt level in the face of a deadline to pay off the loan; and the Hotel Audrey at 166 E. Superior St. traded late in the year for a fraction of the sellers’ investment in the 216-room hotel over the past decade.