How many Chicago hotel rooms can you build?
One of my earliest posts predicted potential bargain luxury hotel rates in Chicago in a few years because so many new rooms were coming on line.
A story in Crain's quotes people who are more sanguine than I about these prospects. McCormick Place West is now coming online, which will help Chicago compete with other markets for the largest conventions (union rates and so-so onsite food choices notwithstanding). But a 25% jump? Hmmmm.
The story cites one developer who "says he has seen financials for proposed developments projecting average daily rates of $400 to $500, 'which are insane in Chicago.'" I cannot disagree with that if it is true. Maybe at peak times, yes, but every day? How can you realistically underwrite that? If this trend is accurate, predictions of foreclosures and bankruptcies down the road are probably not far off the mark at all. I'll be interested in following this as both a real estate guy and as as a hotel consumer.
A story in Crain's quotes people who are more sanguine than I about these prospects. McCormick Place West is now coming online, which will help Chicago compete with other markets for the largest conventions (union rates and so-so onsite food choices notwithstanding). But a 25% jump? Hmmmm.
The story cites one developer who "says he has seen financials for proposed developments projecting average daily rates of $400 to $500, 'which are insane in Chicago.'" I cannot disagree with that if it is true. Maybe at peak times, yes, but every day? How can you realistically underwrite that? If this trend is accurate, predictions of foreclosures and bankruptcies down the road are probably not far off the mark at all. I'll be interested in following this as both a real estate guy and as as a hotel consumer.
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