Lollapalooza is a ‘game changer’ but Chicago hotel industry wants $75M in aid; two big downtown hotels plan to reopen in June
Two of the largest Chicago hotels that closed early in the COVID-19 pandemic are preparing to reopen next month, a sign of hope for the battered downtown hospitality industry.
The 1,641-room Palmer House Hilton and the 1,214-room Sheraton Grand Chicago are the second- and fifth-largest hotels downtown, by number of rooms. The Sheraton, along the Chicago River between the Magnificent Mile and Navy Pier, says it will welcome back guests starting June 7.
The sprawling Palmer House in the Loop is accepting reservations beginning June 17 through Hilton’s website, which also includes a message that mentions the reopening date. In an email to the Tribune the hotel declined to confirm the reopening date, saying only: “Hilton is committed to working toward welcoming guest back to Palmer House, subject to business levels and applicable government regulations.”
Hotels are ramping up after Tuesday’s announcement that Chicago’s largest music festival, Lollapalooza, will return to Grant Park in full capacity July 29-Aug. 1.
That followed a recent announcement that several major conventions will return to McCormick Place this year, starting with a scaled-down version of the Chicago Auto Show, July 15-19. Also this week, Chicago and the state loosened the mask requirements for fully vaccinated people, following new rules from the U.S. Centers for Disease Control and Prevention.
“With the wide distribution of vaccines, we’re in the position to safely resume how summers typically look in Chicago,” said Michael Jacobson, president and CEO of the Illinois Hotel & Lodging Association, on Tuesday. “We could not have afforded to lose another summer.”
The return of large events has given hotels confidence, but it comes with the grim prospect that a full hotel recovery isn’t expected until 2024, he said.
Experts have predicted the overall downtown economy could take years to fully bounce back.
The hotel trade group is asking the city for $75 million in grants to cover reopening costs, which mostly would cover early weeks of wages for returning workers. The Hotel Jobs Recovery Plan, as it’s called, asks the city to use about 3% of Chicago’s funds from the federal American Rescue Plan.
Large hotels will need to rehire hundreds of workers in order to open their doors, Jacobson said.
“Hotels have gone so long without revenue that they don’t have the money to pay that many people right off the bat,” Jacobson said. “We need an initial bridge grant to get those people hired back.”
A spokeswoman for Mayor Lori Lightfoot did not respond to a request for comment Tuesday.
Many Chicago hotels closed in March 2020, in the early days of safety measures taken to try to contain the public health crisis.
Downtown’s largest hotel, the 2,032-room Hyatt Regency Chicago, has remained open — albeit with just one of its two towers in operation.
Another hotel downtown, the 424-room Westin Chicago River North, opened Wednesday.
As of May 2, about 18% of downtown rooms remained offline, according to the lodging association. “That will be close to zero by midsummer,” Jacobson said.
Overall occupancy for the most recent week calculated was 31%. That’s up from 15% in the same week a year earlier, but far below the 84% from that week in 2019, the trade group said.
Average room rates were $151, up from $102 last year but down from $218 in 2019.
Lollapalooza’s return at full capacity is “a game-changer,” Jacobson said, because of the event’s direct effect on hotels and because it signals that Chicago is once again a tourism destination.
A key challenge in the coming weeks will be for hotels to hire thousands of workers to service the city’s 51,000 hotel rooms, Jacobson said. Many of the people who previously filled those jobs have found other work locally or moved out of Chicago, he said.
“Particularly in management positions, people have left the state for places like Florida, Arizona and Tennessee where hotels have remained open,” Jacobson said. “The priority is bringing those people back, because they’re already trained.”
Some Chicago properties also are in financial distress.
The Palmer House’s planned reopening comes amid an ongoing foreclosure suit against longtime property Thor Equities, which was sued in August for more than $338 million in missed loan payments. Wells Fargo Bank’s lawsuit against New York-based Thor, the highest-profile example of financial distress on downtown Chicago hotels, remains ongoing in Cook County Circuit Court.
Hilton’s long-term contract to manage the hotel is not affected by the lawsuit.
The property’s receiver approved a 2021 budget for Hilton to operate the hotel, according to a Trepp loan report.
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