Chicago has been whipsawed. Second- and third-tier cities are nipping at Chicago’s heels in ways they never have before.
With smaller locales challenging the Windy City’s conference dominance, a new hotel could help Chicago regain some ground.
Unlike Orlando or Las Vegas, Chicago doesn’t have a “headquarters” hotel next to its convention center. But that’s about to change.
With the longtime conference destination facing tough competition from other cities, the owner of Chicago’s McCormick Place convention center is in the middle of planning a 1,200-room hotel, designed to attract as many as 80,000 new attendees per year, according to Business Travel News.
The facility, announced in February, came after a 2009 study showed that there was demand for up to 8,000 hotel rooms nearby. The $400 million project would include amenities such as meeting space and a restaurant. It would open by 2016.
Analysts say the hotel is needed to help the city stay competitive against upstart convention competition beyond hubs like Las Vegas. In particular, the city is seeing a growing threat from nearby Indianapolis, which has had success with midsize events.
“Chicago has been whipsawed,” PKF Consulting Vice President Mark Eble told Business Travel News. “Second- and third-tier cities are nipping at Chicago’s heels in ways they never have before.”
Beyond McCormick Place, the Windy City is seeing growth in the hotel sphere, according to PKF, which notes that its average daily hotel rate was $178 during the third quarter of 2012—the highest since 2008. The city’s occupancy rate is also on the rise and is expected to hit 66.9 percent later this year.
And even considering the pressure Chicago is seeing from smaller markets, it remains a dominant force in the conference space. A 2012 study from Development Counsellors International showed Chicago was the top destination in the United States. And despite pressure from other Midwest cities, McCormick Place has been successful in retaining some major tradeshows in recent months, including the International Manufacturing Technology Show and the National Restaurant Association and Hotel-Motel Show.