Market History and Forecast
for Downtown Chicago
1920’s Chicago had as many rooms as it does now,
though many closed by the 1960’s. From then,
new hotels were built, pushing up rates.
Historic Performance
ADR
RevPAR
Occupancy
75%
$140
$120
70%
$100
65%
$80
$60
60%
$40
55%
$20
$2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
50%
Because of an increase in rooms,
occupancies have decreased both at
peak and during recessionary periods.
Historic Inflation Adjusted Performance
In. Adj ADR
$22
In. Adj RevPAR
Occupancy
75%
$20
70%
$18
65%
$16
$14
60%
$12
55%
$10
$8
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
50%
What’s Changed?
• Chicago itself is doing as well as it ever has in
occupancy. Rate is getting better.
• The Metropolitan area is huge.
• There are over 109,000 rooms in the metro
area. Chicago CBD has 39,000.
• Historically, Chicago sent over 500,000 rooms
into the suburbs per year, or around 120 days.
• Now it’s less than 100,000, or 10-20 days.
Changes in the Traveler
• People now stay where they want to.
– Corporations are more flexible
– There are way more rooms to choose from
– The consumer is more informed
• Thanks primarily to the internet
• There are more travelers
– Convention has stayed the same, but they’re a smaller
percent (used to be 60%, now 45%). People don’t
always stay in the HQ hotel anymore.
– Leisure is a larger percentage (used to be 10% or less,
now it’s 15% and growing)
Regional Markets
Why do we think Chicago is going to
lose occupancy?
• It’s all room count.
46,000
Room Count Vs. Occupancy 2008-2018
Rooms
44,000
100%
Occupancy
95%
90%
42,000
85%
40,000
80%
38,000
75%
36,000
70%
65%
34,000
60%
32,000
55%
30,000
50%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
• We’re going to add 20% more rooms to the
supply in the next 5 years.
• Demand is still going up, but not fast enough.
Chicago Forecast
• 2012-13 was the peak of the current cycle.
$250
Historic and Projected Growth
ADR
RevPAR
80%
OCCUPANCY
75%
$200
70%
$150
65%
$100
60%
$50
55%
50%
$0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
• Winter sent Occupancy and Rates down Q1 2014.
• Supply will take time to be absorbed.
Weekly data
• Tuesday is the highest rate day, Saturday is the
highest occupancy day.
– Tuesday is usually corporate and group, at full rack
and is less price conscious.
– Weekends are usually packaged rates and
discounts.
– This change happened about 5 years ago during
the recession.
Monthly Data
• Historically consistent. May-October are the
busy months. November-April are slow.
Chicago CBD Market Monthly 2011 - 2014
ADR
RevPAR
$300
100%
90%
$250
80%
70%
$200
60%
$150
50%
40%
$100
30%
20%
$50
10%
0%
$0
Jan March May
July
Sept
Nov
Jan March May
July
Sept
Nov
Jan March May
July
Sept
Nov
Jan March
This YTD is Rough
• April
– Occupancy down 2.5%
– ADR down 4.5%
– RevPAR down 6.9%
• YTD
– Occupancy down 4.9%
– ADR down 3.8%
– RevPAR down 8.4%
• Supply up 5.6% YTD
• Demand up 0.4% YTD
New Supply
• 2,800 rooms recently opened or about to
open.
• Another 4,800 in the planning stage. More
are added almost weekly at this point.
• A lot of conversion from old office buildings.
• Neighborhoods are starting to get their own
hotels, generally boutique properties.
New, U C and Proposed Hotels
Opened
Early Planning
Advancing