Chicago has been among the slower urban U.S. hotel markets to recover from the pandemic, but as room demand ramps up, average hotel rates and revenue are now nearing historical peaks.
According to CoStar data, Chicago hotel's 12-month average daily rate hit $160.47 in October, a 4.6% year-over-year increase. Similarly, its 12-month revenue per available room totaled $101.29, nearly a 10.2% increase compared to a year ago. The market's 12-month average occupancy is at 63.1%, a 5.3% increase over last year but still lower than the average of 69% between 2014 and 2020, indicating there's still room to grow.
On the Hotel News Now podcast, two Chicago-based real estate and hotel experts shared their first-hand observations of what's happening in the city and what they expect is yet to come.
David Duncan, president and CEO of hotel management and investment company First Hospitality, said Chicago is a dynamic city that has been popular in recent years with leisure travelers while the city waits for business and group travel to rebound.
"We really benefit from a strong tourism presence during the warmer months, and that has really sort of helped offset the lack of business travel demand, especially in the city center," he said.
Chicago's streets have been pretty busy in recent days, Duncan said. First Hospitality's office shares its building with Amazon AWS, and in the past few weeks, it's been a challenge to find a parking spot or get into the parking garage because Amazon called everyone back to the office.
Most Chicago offices are at about 50% occupancy, Duncan said, but the situation is improving.
"It seems to be heading in the right direction with a lot of corporate travel and corporate office policies appreciating work from home as wonderful for a lot of different things, but if you're going to build culture, you need to see people, and we're seeing a lot of that sort of resurge," he said.
Ryan Ori, CoStar News' senior staff writer in Chicago, said that during his commute on the train, there are days when the cars are packed. On other days, Fridays in particular, it's easy to get on the train.
There are inconsistencies in different areas of the city as well, Ori said. The more tourist-driven areas, such as Michigan Avenue and now Fulton Market, are getting crowded, but the corporate heart of the city has high and low days.
"I think that's kind of a signal that it's come a long way back from the pandemic, but there's still some days that are more lively than others," he said.