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2002 National Lodging Forecast Ernst & Young LLP National Lodging Trends, Outlook & Segment Reports |
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Introduction
Although Chicago has experienced two consecutive years of declining occupancy and ADRs, it is anticipating a relatively strong rebound from the events of September 11. As an indication of Chicago�s resilience, during the Gulf War, Chicago was one of the top three cities that outperformed the broader market. Similarly, immediately following the terrorist attacks, Chicago�s market rebounded from an occupancy of 29 percent the week of September 16 to over 70 percent only two weeks later. Furthermore, the McCormick Place Convention Center, which had its first major trade show only three weeks after September 11, experienced only a small decrease in attendance when compared to the same period the prior year. Chicago continues to be a primary market for corporate headquarters and relocations due to its amenities, urban sophistication, and top-rated infrastructure. Its centralized location also allows business travelers and tourists to be within a half-day�s trip to and from most other major cities in the continental United States, a big selling point to the group and convention markets. Boeing is the latest addition to Chicago�s already large list of corporate headquarters, including Sears, Motorola, McDonalds, and United Airlines. Chicago Report
In 2001, the overall Chicago market occupancy is anticipated to reach 62 percent, approximately an eight-point decrease from 70.4 percent in 2000. For 2002, an increase of approximately three occupancy points is anticipated, to an estimated 65 percent. Average room rates are anticipated to be $112 in 2001 showing a decrease from the $117 ADR registered in 2000. For 2002, an increase to approximately $115 is anticipated. Major Demand Changes Lodging demand has seen a slight decrease due the slowing economy, but should hold relatively constant with the city�s full schedule of conventions and festivals. The planned addition to McCormick Place Convention Center will increase its size by more than 800,000 square feet, making it one of the largest convention facilities in the U.S. at approximately three million square feet. The driving force behind this expansion is its current inability to attract additional conferences and trade shows, as the center is continually sold out. Some of the more significant annual festivals include �Taste of Chicago� with more than 3.5 million visitors, the Air & Water Show with 2.2 million attendees, and the Jazz & Blues Festival with 900,000 combined visitors. Soldier Field, home of the NFL Chicago Bears, has recently been approved for a $587 million renovation. This upgrade, scheduled for completion in early 2004, calls for additional seating as well as an increase in the amount of public parkland around the stadium. Additionally, Wrigley Field is anticipated to be improved with increased upper deck seating and 65 new skyboxes. These renovations should increase the number of fans, currently 7.5 million annually, that Chicago�s sporting environment draws to the city. Major Supply Changes More than 1,295 rooms were added to Chicago during 2001, increasing total supply to approximately 29,000 rooms. Several major hotels opened including a 455-room Embassy Suites, a 311-room LeMeridien Hotel, a 189-room Fairfield Inn, and the 340-room Peninsula Hotel. Currently, one major project is under construction, the 415-room Hotel Sofitel, which is scheduled for completion by mid 2002. Although this new lodging inventory represents an increase of almost five percent of total available rooms, industry representatives feel that the market should absorb this inventory without creating any significant negative impact. While Chicago�s new project pipeline is robust, an uncertain economy and the events of September 11 may cause many planned projects to be postponed or cancelled. The city has six properties with more than 3,200 rooms planned for construction over the next two and a half years, including a 385-room Hard Rock Hotel, a 357-room Marriott, a 410-room Hilton, and an Adams Mark Hotel with approximately 1,600 rooms. Chicago is also experiencing a significant amount of hotel renovation, with more than 10 hotels and 1,500 rooms currently undergoing or planning renovations. The largest of these projects is the $70 million renovation of the Hotel Intercontinental in downtown Chicago. Political/Economic/Legal Changes Chicago continues to invest in infrastructure, strong neighborhoods, good schools, and the creation of a vast array of cultural and recreational attractions to further stimulate economic development. The city is currently implementing a long-term program to improve the Chicago Public School System as well as its police and fire departments. Expansions are taking place along Chicago�s lakefront with 17 additional acres of new parks. Chicago continues to promote its competitive economic incentives to attract new industries and, in an effort to stimulate tourism, it is undertaking a citywide campaign called �Make It Chicago,� involving a large number of restaurants, hotels, and theaters offering attractive discounts. Chuck Bedsole, Dallas
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M. CHASE BURRITT
National Director, Hospitality Services (305) 358-4111 BOSTON
DALLAS
LOS ANGELES
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MIAMI
Mark Lunt (305) 358-4111 NEW YORK
PHILADELPHIA
PHOENIX
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Also See | 2002 National Lodging Forecast / Trends, Outlook, Market Segment Reports / Ernst & Young LLP / Feb 2002 |
2002 California Lodging Forecast / Ernst & Young LLP / Feb 2002 | |
2002 Manhattan Lodging Forecast / Top 10 Thoughts for 2002 and Beyond / Ernst & Young LLP / Feb 2002 | |
Canadian Hotel Investment Report 2002 / Colliers International Hotels / Feb 2002 |