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Chicago's Attempts to Shed Image of High Cost Travel Destination
Made More Difficult as State and City Tack on More Fees and Taxes to Visitors,
Already the Highest of Any Major City in the U.S.

By Kathy Bergen, Chicago TribuneMcClatchy-Tribune Regional News

Jun. 15, 2010--At a time when Chicago is trying to shed its image as a high-cost travel destination, the state and city are layering additional fees on visitors.

Airport taxi ride fees are doubling, from $2 to $4; O'Hare International Airport car rentals will be slapped with a daily fee of about $8 later this summer; and Chicago is among a number of cities lobbying for a hike in the airline ticket-tax limit, from $4.50 per leg of a flight to as much as $7, and the city has stated its intent to raise it to the max.

The fees come just as a new state law restructures operations at McCormick Place, with the aim of cutting costs to trade show exhibitors, some of the city's most valued visitors.

And while none of these fees individually represent a whopping hit to the pocketbook, they add to visitor expenses in a city that imposes the greatest amount of taxes on travelers of any major city in the United States, according to a survey by the National Business Travel Association.

The tax bill for one day's hotel stay, restaurant meals and rental car in Chicago was estimated at $40.99 in 2009, the highest among the 50 U.S. cities with the most air passenger traffic, the association found. The estimated tabs in Las Vegas and Orlando, Fla., the city's chief rivals for convention business, were $32.67 and $25.12, respectively.

"I think that where [Chicago] taxes are right now is really at the top end of acceptable," said Peter Eelman, who runs the massive International Manufacturing Technology Show, which comes to Chicago every two years. "Chicago is a business city, and businesses understand that they have to help shoulder some of the load, but we're reaching the limit of what they can endure."

Mayor Richard Daley's office said in a statement that "a decision to raise fees is always made reluctantly, but always carefully. We are confident that Chicago will continue to flourish as a global destination."

Interviews with a handful of visitors Friday indicate taxes are not always an issue.

"I'm not sensitive to it because most of the time, I'm expensing," said business traveler Steve Peacher, an investment officer from the Boston area. "In the overall scheme of things -- between cabs, meals, hotels -- the fees get lost in the shuffle."

Tourists Fredda-Louis Loafmann and her husband, Thomas, said they were thrilled by their first trip here in 15 years, particularly with Garrett popcorn and Giordano's pizza. And they didn't mind swallowing the fees.

"Wherever we go, there's going to be extra fees because of the economy right now," said Fredda-Louis Loafmann, a retired teacher from St. Louis.

But some visitors say the taxes dampen their spending.

Among them is Pierre Jeune, a forensic scientist from upstate New York, who was returning to the InterContinental Chicago with his children, Pierre Samuel and Melina. They were laden with purchases: three Macy's suits for himself, a pair of shoes for his son and an American Girl doll for his daughter.

"When we're on vacation, I splurge, but I would've bought more," he said. "Maybe I would've bought an extra suit if the [sales] taxes were not that high."

Trade show organizers and meeting planners often are more sensitive to taxes because they can have a significant effect on the overall cost of large events.

"All things being equal between two cities that are front-runners for an event, if taxes are much higher in one, they may lose that business," said Caleb Tiller, a spokesman for the National Business Travel Association.

So-called tourist taxes affect locals too. Chicago-based businesses rent cars for sales personnel, book hotel rooms for visiting clients and entertain at local restaurants. And individual Chicagoans take taxis home from the airports, eat out and treat themselves to the occasional hotel stay.

"Sure it hits out-of-towners, without a doubt, but it hits locals in a way that is hidden from view and almost never addressed in the debate on fees," Tiller said.

The new law restructuring McCormick Place doubles the fees on airport taxi and commercial bus rides, with proceeds to fund the marketing of McCormick Place and Rosemont's convention center.

The Chicago City Council last week approved a new fee on O'Hare car rentals, expected to be about $8 per day. The fee, which should be in place by August, is aimed at covering the cost of building a consolidated rental-car center that could help accommodate expansion at O'Hare.

That fee comes atop city, state and transit agency taxes on rental cars that total 20 percent, plus a $2.75 flat fee. This represents the highest tax on rental cars in the country, according the business travel association's survey.

And if Congress approves a new airline ticket-tax limit of up to $7, Chicago officials have said they intend to impose the maximum tax on flights out of O'Hare and Midway, with some proceeds expected to be put toward the O'Hare expansion project.

The Chicago Department of Aviation said improvements funded by the car-rental and airline ticket fees would enhance travelers' experiences at the city's airports and "are needed to remain competitive with other airports and other cities throughout the world."

Travelers already are getting taxed steeply for eating and sleeping in the city. Taxes on Chicago hotel rooms add up to 15.39 percent, the 11th highest among the 50 cities surveyed by the business travel group.

Sales taxes on restaurant meals add up to 11.50 percent downtown, which includes 10.25 percent in various sales taxes, a 0.25 percent restaurant tax and a 1 percent special tax on downtown restaurants, according to the Illinois Restaurant Association. Taxes on Chicago restaurant meals were the highest among the cities tracked in 2009 by the National Business Travel Association.

The 10.25 percent sales tax will drop to 9.75 percent on July 1, because the Cook County Board rolled back half of its earlier 1 percentage-point sales tax increase.

Marc Gordon, head of the Illinois Hotel & Lodging Association, urged rescinding the remaining half-point as soon as possible.

"When we compete for conventions with Las Vegas and Orlando, we are at a disadvantage when you look at our hotel tax and sales tax," he said.

Some trade show organizers say if the McCormick Place overhaul is implemented effectively, and show exhibitors get cost relief, that will overshadow the added fees. But they also cautioned the city against taking steps that can be viewed as nickel-and-diming visitors.

"Why aggravate people?" said Deidre Ross, director of conference services for the American Library Association, which holds some of its annual meetings at McCormick Place.

Tribune reporters John Byrne, Duaa Eldeib and Jon Hilkevitch contributed to this report.


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