Hotel Projects Proceed Despite Downturn

CHICAGO-Two projects–a planned construction and a renovation–are going forward Downtown in the face of a slumping hotel market. Meanwhile, another $47-million project has opened in East Chicago, IN.

Chief financial officer and treasurer Douglas Neis says Milwaukee-based Marcus Corp. remains in the early stages of developing its first urban Baymont Inn & Suites in a downtown area, having paid $13.4 million for lease rights in March to control the northwest corner of Ontario and Rush streets in the River North area. The company still plans on opening in 2003 after redeveloping a six-story, 191,000-sf building that formerly housed a car dealership and sporting goods store.

Meanwhile, not having an urban property may help the parent Marcus Corp.’s bottom line. “Baymont does not have a lot of urban and resort locations and its properties along interstate highways stand to benefit from the increase in over-the-road travel,” explains chairman Steven H. Marcus.

On the southern edge of Lake Michigan, Harrah’s Entertainment, Inc. has opened the first 10 floors of its 15-story, 293-room property in East Chicago, IN. The remaining floors are expected to be completed in February. Suites are 1,000 sf, or as much as 40% larger than rooms Downtown.

“People who are used to staying at the best hotels in Chicago will be amazed to see the same level of quality and service exists right here in East Chicago,” says East Chicago Mayor Robert Pastrick. “There’s no doubt in my mind this exceptional new facility will attract significant out-of-town dollars to our local economy.”

Despite the crimp in cash flow that forced the Cleveland-based hotel REIT to forego its fourth-quarter dividend, Boykin Lodging Co. continues on with plans for its $19-million renovation of the Executive House at 65 E. Wacker Dr. Work is expected to be done at the Downtown property throughout 2002, company officials say.

In addition to the Executive Plaza, Boykin also is spending $6 renovating a property in Lyndhurst, NJ. Work there is expected to be completed in the first quarter of 2002.

The company notes it spent $18 million through the third quarter on its renovation program, or about 9% of hotel revenues. Boykin justifies the expense, claiming it allows its properties to outperform competitors and increase revenue per available room.

Meanwhile, Extended Stay America, Inc. has opened two more hotels Downstate, a 101-room hotel at 1805 S. Veterans Pkwy. in Bloomington and a 104-room property at 4306 N. Brandywine Dr. in Peoria. The properties give the company 27 hotels in Illinois and 425 in the US.

“The extended-stay lodging market is the fastest growing segment of the hotel industry, and is quickly catching the interest of business professionals, people relocating and those on extended work assignments,” says Extended StayAmerica CEO George D. Johnson, Jr.