The increase in hotel supply in Chicago is reaching record levels. Nearly 4,000 new guest rooms have been added to downtown Chicago since January 2016, and another 2,700 rooms in the pipeline will open by the end of 2019, according to city tourism bureau Choose Chicago, numbers that will only add to an already oversaturated market.
This week, Hilton opened is first tri-branded property, right, which added another 456 rooms to downtown. The 23-story new-build, which includes the Hilton Garden Inn Chicago McCormick Place, the Hampton Inn by Hilton Chicago McCormick Place and the Home2 Suites by Hilton Chicago McCormick Place, with 6,600 square feet of combined meeting space, is connected to McCormick Place. Including older properties, a total of more than 2,900 hotel rooms are now physically connected to the convention center, considered to be the largest in in North America.
When the $350 million, 1,205-room Marriott Marquis Chicago opened last September, it had already upped the ante on competition for group business. With another big-box entry adding to the surge in hotel rooms, hoteliers are going to have to compete even more aggressively on room rates.
According to an April 2018 report by Chicago-based Cushman & Wakefield, a real-estate advisory firm, supply was already outpacing demand in Chicago in 2017, creating a 1 percent drop in occupancy levels to just under 70 percent overall. While Chicago's hotels had their best start since 2015 with RevPAR jumping by 4.6 percent over 2017, according to Nashville-based research firm STR, more inventory means planners are poised to gain ground at the negotiation table.
Choose Chicago said visitors to the Windy City reached 55.2 million in 2017, up by1.5 million over 2016, more than enough to surpass Mayor Rahm Emanuel's original goal of attracting 55 million visitors by 2020.