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Chicago hotels having a tough year, with lower rates, more rooms and one high-profile default

Robert Channick, Chicago Tribune on

Published in Home and Consumer News

CHICAGO -- From funky boutique hotels in Fulton Market to the gleaming 1,200-room Marriott Marquis welcoming conventioneers at McCormick Place, Chicago is suddenly brimming with new and diverse places to get a room for millions of annual visitors.

Dozens of recent hotel developments mean more choices for guests on where they want to stay, how much they want to pay and what amenities they might need to help them make it through the night.

For many hotel operators, however, times are tough.

Struggling to keep up with a glut of new rooms across the city, Chicago hoteliers faced January's polar vortex, a cyclical downturn in convention business, lower rates, lower occupancy and at least one high-profile default in 2019.

"There's no doubt 2019 has been a challenging year for all hotels," said John Rutledge, CEO of Chicago-based Oxford Development, which has developed 10 hotels in Chicago including LondonHouse, The Langham and The Godfrey. "It's time to take a breath and absorb some of that new product."

Oxford opened two Chicago hotels in the last year: Hotel Julian, a 218-room boutique hotel in the former Atlantic Bank Building on North Michigan Avenue and the redeveloped Hotel Essex on South Michigan Avenue.


But Oxford, one of the city's most prolific hotel developers, has no new Chicago projects in the pipeline heading into 2020, a reflection of a market Rutledge said is facing "heavy headwinds" in the near term from the surge in supply.

"There's only one project we're looking at in the Chicago market, in the Fulton Market area," Rutledge said. "Other than that, almost all our growth is in other states throughout the country."

There are more than 140 hotels and 45,000 rooms in Chicago's central business district, according to Choose Chicago, the city's official tourism arm.

Chicago has added 37 new hotels and more than 8,100 rooms in the past five years -- a 22%% increase. That growth includes a new wave of boutique hotels springing up in neighborhoods from Fulton Market to Hyde Park, far from the city's traditional hotel district along North Michigan Avenue.


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