The hospitality industry in Chicago continues to emerge from the recession; in fact, economic indicators and industry data appear to suggest continual, albeit mild, improvement in the market.STR metrics show that occupancy for the year-to-date through November was 65.7 percent, compared with 63.2 percent for the same period in 2010. RevPAR for the first 11 months of the year increased a modest 8.9 percent to $78.24.
Tourism has always been important to Chicago’s economic structure, according to the Chicago Convention and Tourism Bureau. The industry generates about $11 billion in direct spending and $616 million in tax revenue, while sustaining 124,000 jobs. In the summer of 2011, Navy Pier (one of the city’s most visited sites) announced a $155 million revamping, including an expanded Chicago Shakespeare Theater and Chicago Children’s Museum.
Special events certainly feed the demand for hospitality. For instance, the Chicago marathon in the fall attracted many tourists. Of the 45,000 runners, 25 percent were first-time visitors to Chicago. According to CBS Chicago, the event generated more than $70 million for the city’s tourism industry. When Michael Bay filmed Transformers: Dark of the Moon on Michigan Avenue, both Hotel 71 and Trump International touted their own per-night packages. Overall, the production generated more than $20 million in local spending.
In December, the Chicago Convention and Tourism Bureau unveiled a $2.3 million advertising campaign for 2012 intended to attract visitors from places within driving distance (such as Indianapolis, Milwaukee, St. Louis, Detroit, and Cincinnati). The ad promotes the city’s tourism highlights: Navy Pier, Shedd Aquarium, the Field Museum, the Museum of Science and Industry, and “Broadway in Chicago”: each contributed funds to the effort. A departure from previous efforts, the campaign markets the city as a “destination” for leisure, business travel, and conventions.
The city budget for 2012 increases taxes on hotels to 4.5 percent, making the overall tax on hotel rooms 16.4 percent and putting Chicago's rate among the three highest in the nation. (According to Crain’s Chicago Business, the city’s tourism bureau hopes to share in some of that additional revenue to fund marketing efforts). For the typical tourist, the increase would amount to $1.78 per night. Could the hike, while probably not intimidating to a single traveler, affect the city’s convention bookings? Chicago is predicting an increase of as much as seven percent in hotel occupancies because of a NATO summit and other events planned for 2012, so the city does not anticipate a drop in tourism revenue.8 Also, in the fall, Crain’s Chicago Business reported that several Chicago hotels pledged to make more than $500 million in improvements to help bolster the local convention industry and attract more trade shows.
For the second year in a row, the North Michigan Avenue area—the “Magnificent Mile” of exclusive shops, restaurants, and hotel —snagged the No. 1 spot on Priceline’s list of the 50 most popular tourist destinations for the Memorial Day and Fourth of July holidays. The first Radisson Blu hotel in the United States—and Chicago’s newest luxury hotel — opened in the award-winning “Aqua” tower (which also houses high-end condominiums).
In its biannual Hotel Investor Sentiment Survey, Jones Lang LaSalle Hotels names Chicago among the top five cities for hotel acquisitions. In November, Crain’s Chicago Business reported that Sam Zell bought the two-year-old Elysian Hotel in the Gold Coast and would convert it into a Waldorf Astoria. Despite opening in the depths of the hotel downturn, the Elysian has always received strong reviews, even being named the best US hotel in a recent survey by Condé Nast Traveler magazine. After the conversion, the hotel’s per-room price could be the highest in Chicago.
As reported by Las Vegas TSG Business News, Chicago scored a victory on the international air travel scene by landing a major convention for airlines and airports: The World Routes Development Forum. Chicago will host the 2014 forum, expected to be attended by officials from 300 to 400 airlines and 1,200 airports.
In November, Mark Kirk (R-IL) proposed a $5.5 million project to make O'Hare’s international terminal the most "Asia-friendly" in the US. Funded by private donations and sponsors, the project would include signage that could change languages, as well as the use of universal icons and symbols. The effort would complement the plans of economic development officials since the number of international travelers (especially from China, Japan, Korea, and India) is expected to grow in coming decades, while domestic travel will likely remain relatively flat.