A high-end Spanish hotel group is looking to plant stakes in downtown Chicago as the city’s hospitality industry looks like it could be in struggle mode for some time to come.
RIU Hotels & Resorts, known mostly for its all-inclusive resorts in beach and city destinations across 19 countries from the Maldives to Mexico, is betting business and leisure travel — leading to hotel stays — will return to the nation’s third-largest city in due time. To that end, RIU is looking to open a 29-story business hotel at 150 E. Ontario St., according to Alderman Brendan Reilly.
The 388-room hotel, designed by Lucien LaGrange Studio, could become the Riu family-owned group’s ninth plaza hotel, according to the Palma, Spain-based company’s website. The other United States-based RIU Plaza business hotels include those in New York, San Francisco and Miami, with international sites in Berlin, Dublin, Madrid, Guadalajara and Panama City. RIU did not respond to requests for comment from CoStar News.
RIU and the Streeterville Organization of Active Residents, a local community group, will host an online public meeting April 6 to discuss the proposed high-rise, according to the alderman’s office, which released the proposal in an email to constituents.
The proposal is among a handful offered up for the site that has been vacant since 2015. Sitting in the heart of what can be described as a hotel row just off Michigan Avenue in the Streeterville neighborhood, the plan comes at a time when the hotel industry in Chicago has been badly battered by the pandemic’s forced shutdowns.
For a city that is reliant on leisure travel as much as it is convention and business travel, the pandemic has shut down much of that and appears to find recovery challenging. Occupancy levels in January and February sunk by a cumulative 64.3% to 18.9% for the two-month period, according to STR, the hospitality data tracking subsidiary of CoStar Group.
Typically, the first two months of the year are not blockbusters in a city where winter temperatures are usually at their worst, so to see them plunging in such deep double digits underscores the challenges the city is facing as conventions and business meetings continue to be canceled.
However, a handful of the city’s most iconic hotels are in mortgage trouble, according to Morningstar’s analytics, prompting the financial services firm to expect “the recovery period in Chicago to trail other major cities,” according to a recent report.
“Travel to Chicago has all but ceased since the start of the pandemic, and most experts, including the [Centers for Disease Control], don't expect a return to normalcy until the end of the summer,” the Morningstar report said. “Historically, the number of tourists visiting Chicago significantly peaks then, and missing that cyclical increase in tourism is likely to prolong the stress on local hotels.
“Further, rising supply growth in recent years in an already competitive market will further hamstring the return to stability,” the report concluded.