COVID-19 Has Crushed Convention Business for Hotels, an Overlooked Part of the Hospitality Industry

Let’s be honest: Chicagoans love playing host to the many visitors the city welcomes each year. They’re known to show off their gorgeous lakefront, Riverwalk, and vast parks; boost their sports teams; tout their numerous free music festivals; and, of course, lay claim to being one of the best dining cities in the world. All of these things add up to Chicago seeing massive amounts of tourist and business traffic each year, especially in summer.

Because of the increased annual traffic, Chicago has experienced a tourism and hotel boom in recent years, with numerous new properties, like the Hoxton, Hotel Zachary, and St. Jane, opening their doors. The city welcomed 59.5 million visitors in 2019, with a little more than 34 million staying at least one night and filling many of those rooms, according to Choose Chicago, the city’s tourism arm.

Annual culinary-focused events like the National Restaurant Show and the James Beard Awards helped drive even more traffic in the last year, boosting Chicago’s restaurant scene. One Off Hospitality Group’s Paul Kahan talked about how convention-goers regularly filled his restaurants. With the city showing an excellent start to 2020 from large-scale events like the NBA All-Star Game and returning conventions, Chicago was on track for another fantastic year where tourism was concerned.

Then the COVID-19 crisis happened, bringing everything to a grinding halt.

Barry Brecheisen/Eater Chicago

Traffic numbers dropped dramatically

Conventions and other events scheduled through June of this year — like the International Housewares Association’s Inspired Home Show, Ace Hardware’s spring conference, the American College of Cardiology conference, Salesforce’s Connections 2020 event, and the NRA Show — have been postponed or outright canceled. The total canceled events would have meant nearly 495,000 people visiting Chicago and booking more than 556,000 total hotel nights, according to Cynthia McCafferty, spokeswoman for Metropolitan Pier and Exposition Authority, which owns the McCormick Place convention center. The influx of traffic to the city would have seen people dine at restaurants, take architectural boat tours, visit retail shops, see live theater or concerts, or visit one of the city’s many museums — all supporting the economy and the city’s tax revenue. But the novel coronavirus is keeping all of those people out of Chicago, equating to a huge loss in revenue and jobs. Let’s not mince words: Chicago will not see the banner year it had hoped to have.

“The bigger the conventions and guests in beds, the more diners in seats,” says Sam Toia, president and CEO of the Illinois Restaurant Association. “There are a lot of conventions that have been canceled. How do you make up for lost business? You just won’t. It’ll be too hard — 2020 will be shot overall for the hospitality industry. You’ll never be able to make up the numbers you’re losing in March, April, and May.”

Since the crisis began, numerous hotels, including the Peninsula, Park Hyatt, Soho House Chicago, Chicago Athletic Association Hotel, Sheraton Grand Chicago, Hilton Chicago, and many more around the Central Business District have all temporarily closed. Ace Hotel has closed its West Loop location, as well as properties in London, New York, New Orleans, and others. Already on shaky financial ground before the pandemic, Trump International Hotel and Tower laid off nearly 300 workers temporarily.

And the number of people who’ve stopped visiting Chicago compared to this time last year is way down. Between March 1 and 28, hotel occupancy is down 63 percent from 2019 and room demand is down 62 percent. Revenue per available room (RevPAR), a key metric to measure revenue and performance success, is down 66 percent, from $108.36 last year to $36.41, according to data provided by Choose Chicago via research firm STR.

“Occupancy is in the single digits at most hotels across the city, if they’re even still open,” says Michael Jacobson, president and CEO of the Illinois Hotel & Lodging Association. “We’re getting more hotels each day deciding to suspend operations altogether. It doesn’t make financial sense to continue fighting the fight when you’re losing money every day.”

Some positivity emerges

Not everything is gloom and doom. The Robey in Wicker Park has kept its doors open to the public, even if the hotel only has an average of three rooms booked each night, according to GM Santiago Leon.

“We have a commitment to the community and to those guests who are counting on us,” Leon says. “We are a neighborhood hotel, so we still have a few people visiting family, or local people because of social distancing have decided to stay with us for a short time.”

Normally, the Robey would employ about 95 people. The staff has shrunk to about 10, with the remainder furloughed or using accrued vacation, personal, and sick days to remain employed full time and continue to get paid and receive benefits. The view from Leon’s office overlooks the CTA Damen Blue Line station and Wicker Park’s Six Corners, and he says it’s generally quiet. He’s concerned about the other businesses in the area, but hasn’t given up hope.

“We remain optimistic about the future,” Leon says. “I feel blessed to have the team I have. Everyone has been extremely supportive. When times like this come, it either pushes people away or brings them closer. This team has come closer.”

Nick Fochtman/Eater Chicago

Other hotels have opened their doors to assist with the crisis. The Sophy Hyde Park closed to the public March 27, but started offering its rooms for free to staff at nearby University of Chicago Medical Center. This gesture is to give doctors, nurses, and other medical staff a break from their frontline work fighting the coronavirus pandemic. Gayle Conran, the Sophy’s spokeswoman, says while the hotel’s bookings had declined, it made more sense to open the doors of the Sophy’s 98 rooms to medical staff.

“Hospitality is about welcoming people in, giving them a place to rest and feel warm and safe for a night,” Conran writes in an email. “It made sense to use the hotel for a greater purpose and help our neighbors at UChicago Medicine as they help save lives.”

On March 23, Chicago Mayor Lori Lightfoot announced the city would start working with Oxford Hotels & Resorts to provide more than 1,000 rooms at some of its properties (including Hotel 166, Hotel Felix, Hotel Cass, and Hotel Julian) to people exposed to or mildly ill with COVID-19. Experts hope this saves hospitals space so they don’t have to use a bed to keep a patient who cannot return home and risk exposing family members to the virus.

Guests need doctor’s orders to stay, and the room and three meals a day would be free. On March 31, Hotel Essex, another participating Oxford hotel, started offering its 274 rooms for free to first responders — police officers, firefighters and paramedics — as a place to stay instead of going home and potentially putting their families at risk.

This program allows many hotels to remain open, operating and generating at least enough revenue to break even while also continuing to employ some staff. The cost to the city is estimated to be about $1 million to use one hotel for a 30-day period, according to Jordan Troy, deputy press secretary for Chicago. Hotel workers will continue to prepare meals, work the front desks, and clean common areas, but only Chicago Department of Public Health workers will interact with patients to deliver meals and clean linens. Chicago is the first U.S. city to have a program like this in place during the effort against the coronavirus.

Jacobson says 120 hotel properties — equaling 22,000 rooms — throughout the state have volunteered to participate in the city’s program.

“When they’re struggling to make their own ends meet, if there’s a silver lining, it’s how many people have stepped up to help,” Jacobson says. “[This program] really covers labor, electricity, property tax — some costs so hotels will break even and remain solvent, but also helping the city. By no means are any hotels profiting off of this.”

Sophy Hyde Park [Official Photo]

Looking ahead

Hotels, restaurants, tourism, and other facets of the hospitality industry are currently struggling, but are looking toward the second half of the year and remain somewhat hopeful. They’re also thinking about the staff that had to be laid off or furloughed, and figuring out how to eventually get them back to work.

“Our aim is to get people back to their usual jobs as soon as possible and avoid losing team members who have become such a big part of the House,” says Soho House Chicago general manager Eric Kirkenmeier.

Some hotels, of course, won’t reopen; that also goes for many restaurants. Once this crisis passes, things won’t immediately come back to normal, whatever “normal” means anymore.

“The flood gates won’t open,” Jacobson admits. “It’ll be a slow walk into growth. It’s safe to assume the industry will look very different when we come out of it. But it’s too early to project.”

While it’s hard to see the forest for the trees, the hospitality industry has weathered other storms. They may not have been as swift and severe as COVID-19, but with assistance from the local, state, and federal governments, there may be a light at the end of the tunnel.

“I don’t know if people are ready to throw in the towel,” the Illinois Restaurant Association’s Toia says. “People in this industry are resilient.”

Let’s hope he’s right.