Not even Des Plaines, the future home of the state's 10th and final casino, has been spared from the slump devastating the hotel industry.
The $445 million project moves forward daily, yet the building of four new hotels in the city has been stalled indefinitely.
"I would say 100 percent it's because we're in the worst economic times since the Great Depression," Des Plaines Ald. Mark Walsten said. "That would be the reason (the hotel) projects basically collapsed."
From projects in the planning stages to hotels that have been in business for decades, the hospitality industry has been hit across the board, experts said.
During the last two years, hundreds of hotel projects that have been contemplated, discussed, even announced in Chicagoland — many in the northwest suburbs — never materialized, said Ted Mandigo, president of TR Mandigo & Co. hospitality consulting firm. Many were unable to get financing.
A few projects, most in the downtown Chicago market, started construction but weren't completed, he said. And at least three hotels — two in the northwest suburbs — have closed their doors.
Travel is one of the first expenses cut by businesses as well as individuals when times get tough, said Marc Gordon, president and CEO of the Illinois Hotel and Lodging Association.
"The economy has been devastating to hotels the last two years," Gordon said. "We've been suffering more than other industries. We'll probably be one of the last to recover once the recovery finally takes hold."
A decline in occupancy rates has been a major factor in the closing of local hotels, said Arlington Heights business and development coordinator John C. Melaniphy III.
The hotel room occupancy rate for the Chicago area dropped from 64 percent in 2007 to 51.4 percent in 2009, according to data provided to Melaniphy by Smith Travel Research, a leading data provider for the lodging industry.
The Woodfield area, however, saw a slight increase in occupancy rates during the beginning of 2010, according to the data. The rate jumped from 40.5 percent in January to 61.8 percent in May with fairly equal increases each month.
Still, the uptick didn't come in time to save the Sheraton Hotel and indoor CoCo Key Water Resort on West Euclid Avenue, Melaniphy said. The 426-room hotel in Arlington Heights closed in December.
"There is significant competition in the market," Melaniphy said. "There was some speculation that conventioneers and children in bathing suits is not the best formula."
On Jan. 1, Wyndham O'Hare at Rosemont also closed, said Rosemont spokesman Gary Mack.
That property had been sold several years ago to a group of investors, Mack said.
"I would definitely say it was a victim of the economy," he said. "There's no question about that."
Having local hotels in financial distress has hindered the progress of new projects, said Mandigo, an assistant professor at Kendall College School of Hospitality Management. Purchasing a hotel secondhand can be more cost-effective than starting a project from scratch, and the possibility has left people waiting to see what is going to happen with struggling establishments.
Progress on the four hotels planned for Des Plaines was stalled more than a year ago, Walsten said.
They were all expected to go on Mannheim Road — two north of the tollway and two to the south, he said. But lack of funding halted those plans.
"I'd love to have hotels down there because we generate the most tax money that way," Walsten said. "The fact of the matter is this particular area happens to be saturated at this time."
Construction on a new Choice hotel was supposed to be completed this summer, but the Schaumburg project hasn't even broken ground, said Matt Frank, the village's economic development coordinator.
Site permits granted in 2008 have been extended in case the project — it was supposed to go up at Interstate Highway 90 and Roselle Road — eventually will be built, Frank said. The developer is still pursuing financing options.
In Hoffman Estates, an approximately 250-room hotel and indoor water park was planned for near Beverly Road and I-90, but the property is now for sale.
The developers spent a lot of money on plans but haven't gotten a shovel into the ground, said Gary Skoog, director of economic development for Hoffman Estates. Still, they continue to try to find financing.
Skoog said he hasn't lost hope. There are signs, he said, that the economic situation in the village might be slowly improving.
Lately, more restaurateurs have been checking out vacant spaces, he said. A Cost Plus World Market store that had closed is expected to reopen in the Poplar Creek Crossing shopping center. And a new machine tooling company plans to build its facility in the village.
"We want to think optimistically and positively," Skoog said. "It's not going to be back to the heyday, but we'll take what we can get."
By:: Kristen Kridel,
Source:: Chicago Tribune