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The $180 million 556 room InterContinental Chicago O'Hare
 Intends to Sell Itself as Downtown Luxury at Suburban Prices
By Kathy Bergen, Chicago TribuneMcClatchy-Tribune Regional News

Sep. 9, 2008 - With the debut of the $180 million InterContinental Chicago O'Hare on Monday, Rosemont revved up its firepower in the suburban battle for business travelers and meetings, adding pressure on rivals in an already stressed-out marketplace.

Rosemont already is known as the home to the nation's 12th-largest convention center, which is served by an array of hotel properties from budget to upscale. With this 556-room inn, it enters the luxury market and rolls out spaces for elegant receptions and meetings for up to 1,100 people.

The goal is to offer more options to conventioneers at the nearby Donald E. Stephens Convention Center, and to lure executives flying into O'Hare International Airport as well as those working in the northwest corridor.

"People don't have to fly out to Schaumburg and Lombard; we can do it right here," said Mayor Bradley Stephens. "We have the convention business already and we want to keep it in the community."

The Renaissance Schaumburg Hotel & Convention Center opened three years ago, aiming for small conventions, trade shows and meetings, while the Westin Lombard Yorktown Center opened a year ago, targeting conferences.

Their arrival turned up the heat on the suburban landscape, which is never as strong as downtown Chicago and which, like the entire industry, is witnessing a slowdown due to rising airfares and a slumping economy. The effects may worsen this fall as airlines cut flight schedules.

"There's a little downward pressure," said Elmhurst-based hotel consultant Ted Mandigo, noting both Schaumburg and Lombard have aggressively pursued group business. Schaumburg has been so successful, he said, that it sometimes has to refer business to neighboring properties.

The InterContinental intends to sell itself as downtown luxury at suburban prices, noted Peter Dumon, president of The Harp Group Inc. of Oak Brook, the developer and owner of the property.

"It's $50 less per room, the occupancy tax is lower . . . and it's easier to control your audience," he said. "You can have fun, but not too much fun."

Earlier plans for restaurants by noted Chicago chefs Rick Tramonto and Gale Gand did not pan out, but the hotel will have three restaurants, including McCormick & Schmick's and The Capital Grille. Details of the third are being worked out.

The hotel will have a 300-seat cabaret for comedy and music, which is expected to open in two weeks and will offer for sale a rotating collection of artwork.

In its first year, the property is aiming for an average daily room rate of $190, said Patrick Cook, director of sales and marketing for the hotel. The average rate in the airport region this year, through July, has been $118.34, about the same as the year-ago period, according to Smith Travel Research.

Observers say the property's prospects are good, even with the current market softness due to its proximity to the airport, the convention center and the northwest business corridor.

"There has not been a new four-star hotel added to that market in a long time, and new is always appreciated," said Mark Eble, vice president/Midwest for PKF Consulting, which did feasibility consulting on the project.

And additional developments are in the pipeline that could boost the attractiveness of the site. Negotiations are under way to build a 120,000-square-foot office building just west of the hotel, which would house a 600-person sales office for a major high-tech firm, as yet undisclosed. And immediately west of that site, talks are in progress for development of an outlet mall.

Eble expects that the industry downturn will be milder and shorter than the troughs of 2000-02, and 1991-92.

"There has not been huge growth in new hotels, so that softens the cycle," he said. "The market should be able to absorb this without undue indigestion."

kbergen@tribune.com

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