Examining Important 2022 Hospitality Trends in the Greater Chicago Area
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
In a general sense, hospitality is the feeling of making people feel welcome. The history of hospitality is very fascinating. Pineapples were so rare that they were used by nobility to not only honor guests, but to flex their own power.
While the hospitality industry is long past this symbol, the reality is that comfort is truly something worth paying for, which makes this industry one to pay attention to within the context of commercial real estate.
The American Hotel and Lodging Association is the best place to start by looking at hospitality trends. They put out an interesting report called the State of the Hotel Industry, and it pulls no punches when it comes to the reality of the industry.
Key Takeaways From the State of the Hotel Industry Report
Since the State of the Hotel Industry report is over 21 pages, it would be best to summarize the key takeaways for reference. Those insights are listed below:
- 40% of US consumers are planning to save for a vacation or trip away from home; this is the 2nd most important financial priority for consumers after paying down debts.
- Gen Z and millennials are extremely eager to travel again, according to Accenture’s 2021 US Holiday Shopping Survey (data featured in report)
- 44% of US consumers indicated that the pandemic caused them to re-think their priorities, including focusing more on travel and happiness.
- Travelers aren’t as easily classified as business or leisure anymore; it’s a blend that’s referred to as bleisure travel.
- Small and medium-sized enterprises can capture midweek occupancy thanks to bleisure travel, a key opportunity for increased occupancy rates.
There are so many insights in this report that it is well worth it to explore it in full. The main point here is that hospitality is here to stay, and major cities are certainly going to reap the benefits.
This brings the topic to the greater Chicago area. While most forget the history, Chicago is still one of the greatest cities in the country, and a huge economic powerhouse of the Midwest
Travel Is Back in Chicago
With new hotel development coming into play, it makes sense that the biggest players are betting heavily that the market will even itself out as consumers gain more and more confidence with traveling.
While corporate travel is still recovering, that doesn’t mean that exploring hotels for sale in Chicago isn’t worth it. It just means that multiple audiences are required in order to truly make the hotel operation profitable.
According to Fortune, business travel will recover but the path ahead is still rocky. Indeed, with in-person meetings now replaced with Zoom calls and the classic corporate retreat taken off the table, it truly is a brave new world in the hospitality industry.
Thankfully, travel is back in Chicago. Last year’s Lollapalooza Festival made that clear enough: local Chicago hotels were at 85% capacity for the event. For the post-pandemic era, that’s a pretty good sign.
Acquiring the Right Hotel
Whether the goal is to analyze deals to pass on to buyers, or investors looking for something new to add to their portfolio, one thing is clear: the right hotel will certainly make a difference. Indeed, the generic hotel right off the highway isn’t the focus here.
Travelers are looking for experience and service, and they want to pay well for the right experience.
Here’s what to consider while pursuing the various hotels for sale in Chicago:
- What is the ultimate theme for the hotel? Themed experiences can drive up revenue, but they do require additional planning.
- Is there a marketing plan in place already? Building on an existing concept helps speed up revenue generation; a good marketing plan is truly worth its weight in gold.
- How strong are the financials? A struggling hotel with weak financials doesn’t mean a bad acquisition if the deal works out well.
- What kind of setup is the hotel already known for? There are multiple types of hotels, including full-service, extended-stay, and budget hotels.
- What repairs are needed? Sometimes repairs can get overlooked. For example, is the property as accessible as it should be? Checking over ADA guidelines is important.
Drawing up the perfect deal doesn’t really exist. There is no such thing as the perfect deal, but there are certain deals that are better than others.
Advantages and Disadvantages of Buying a Hotel
So sure, it’s possible to buy a hotel. Is it always worth it? Not at all. There are advantages and disadvantages to buying a hotel, and below are a few more points to consider:
- Costs. Hotels come with high operating expenses and in the post-pandemic era, this is only going to get worse as increased sanitization requirements drive up costs.
- Tax advantages. Given the current status of local hospitality markets, cities are offering tax breaks and other incentives to help keep hotels afloat and jobs intact.
- Higher risk, higher rewards. Hotels have risks, but they are easier to automate than other types of businesses. A hotel can run on a thin staff if enough systems are in place.
- Strong value-add possibilities. A hotel is versatile, easy to explain, and easy for people to patronize.
- Some financing difficulties can arise. Lining up the financing for a hotel does require proving that it can be profitable, just as required for something like a restaurant.
- High renovation costs. The nature of hotels does require renovations in order to improve the property, which can often go overlooked as investors are tempted to spend most of the money on the property acquisition.
Overall, the advantages of being able to add diversity to a commercial property collection and grow revenues certainly outweigh the disadvantages.
The Road Ahead
Hotels for sale in Chicago are plentiful and come with a wide range of amenities. Distressed properties can signal even more opportunity, especially in line with more money flowing into the city thanks to recent legislation.
State and federal funds can combine to make the process of owning, operating, and even expanding a hotel a less painful transaction.
Browse & List Hotels for Sale for Free Right Here on MyEListing.com!
You can list and browse hotels for sale for free right here on MyEListing.com. Simply create a free account and receive access to accurate market intelligence reports, free demographics, customized property type alerts, and more.
Other recent articles
Article Search
Share
All Article Categories
