Coronavirus Impact Decimates Chicago’s Downtown Hotel Occupancy

Coronavirus Impact Decimates Chicago’s Downtown Hotel Occupancy

Figure Sinks to Record Low 5.9% — a 91% Drop From Previous Week

Hotel Essex, which used to be called Essex Inn, is one of only a handful of hotels still open in downtown Chicago. The hotel is being used as a refuge for first responders who might not want to go home between shifts. (CoStar)Hotel Essex, which used to be called Essex Inn, is one of only a handful of hotels still open in downtown Chicago. The hotel is being used as a refuge for first responders who might not want to go home between shifts. (CoStar)

Occupancy sank to 5.9% last week, breaking a fresh record reached only the week before, according to STR, the hotel data research arm of CoStar.

That represented a stunning 90.9% drop from the prior week’s 9.3% level as most of the nearly 44,000 hotel rooms in the central business district went dark after mega attractions, including those at the attendee-heavy McCormick Place convention center, were canceled.

In the first week of March, STR logged a 56.1% occupancy level for the central business district.

“Year-over-year declines of this magnitude will unfortunately be the ‘new normal’ until the number of new COVID-19 cases slows significantly,” Jan Freitag, STR’s senior vice president of lodging insights, said in a statement.

Not surprisingly, average daily room rate levels plunged too, hitting a low of $107.51, down 27.6%. Meanwhile revenue per average room rate, a key industry measure referred to as RevPAR, took a 93.4% nosedive to a trough of $6.31.

March started the month off with an ADR of $144.67 and RevPAR at $76.50, according to STR’s first-week numbers.

Occupancy levels at the highest-priced and typically most-profitable hotel rooms sunk to low single digits. The crème de la crème of rooms, categorized by STR as luxury class, had a mere 2.8% occupancy, while the upper upper class sat at 3.6%, upper class at 7.7% and upper mid class at 8.3%.

The economy class occupancy levels were at 22.7%, according to STR. Freitag has said some numbers could be “ghost” figures that might include hotel rooms reserved and paid for, but not actually occupied.

It’s unclear, for example, how the 274-room Hotel Essex downtown will figure, if at all, in those numbers next week. Chicago Mayor Lori Lightfoot said the city will foot the bill on rooms and meals for any frontline responders likely coming into contact with COVID-19 daily who might want to stay there during their off hours rather than head home to families.

The results for the entire metropolitan area are better, but not by much. Occupancy levels sunk 74.8% to 16.1%, reflecting a broader view of the various big-city markets throughout the rest of the country, according to STR.

A year ago, the Chicago area’s occupancy rates were at a healthy 64.1% for a time of the year when weather uncertainty can disrupt plans on short notice.

Across the nation, markets such as New York City and Los Angeles appear to be faring better, with occupancy levels falling to 15.2% and 21%, respectively.

Cities already walloped by high numbers of COVID-19 cases are tracking lower too: Seattle at 18.5%, Boston at 14.1%, San Francisco at 13.8% and New Orleans at 12.7%. Hardest hit has been the vacation magnet of Oahu, Hawaii, at 10.5%.