Chicago's tourism industry was already facing a challenging 2016, with 200,000 fewer convention room nights booked than last year,
Microsoft CEO Satya Nadella announces new products and updates at Microsoft Ignite, the company's conference for IT professionals, in Chicago on May 4, 2015.
6:44 am, October 15, 2015
In a major blow to Chicago's technology community and tourism industry, Microsoft has canceled its Ignite conference for 2016, and plans to move it to Atlanta.
The loss of the conference, which was scheduled for May 9-13 at McCormick Place, will affect more than 50 hotels and cost the city about 90,000 room nights, sources said.
A corporate travel partner for Microsoft sent notice to participating Chicago hotels Tuesday night, informing them of the decision and requesting that the rooms booked for the May event be released.
A Microsoft blog post confirmed Wednesday that Ignite 2016 will take place Sept. 26-30 in Atlanta. "We've continued to listen to your feedback and use it to refine our approach," the company said in the post. "To that end, we have made the decision to shift Microsoft Ignite from spring to fall."
A company spokesman declined to comment further.
Microsoft Ignite made its debut at McCormick Place in May, with a weeklong event showcasing its products to information technology professionals. The inaugural conference drew more than 20,000 attendees, officials said. The return engagement was on the books for 2016, but sources said Microsoft wanted to reschedule for later in the year, when McCormick Place was unavailable.
Chicago's tourism industry was already facing a challenging 2016, with 200,000 fewer convention room nights booked than last year, according to Choose Chicago, the city's official tourism arm. With the loss of Microsoft Ignite, the deficit will be closer to 300,000 fewer room nights.
In an email to hoteliers Wednesday morning, Don Welsh, president of Choose Chicago, expressed his disappointment over the software giant's decision.
"While this is a significant loss for the first half of 2016, I want to assure you that this action taken by Microsoft is purely the result of industry buying cycles," Welsh said in the email. "The customer requested fall dates to better align with those cycles; however, McCormick Place did not have space available."
Choose Chicago is under financial pressure, with $7.2 million of its funding frozen by the state's ongoing budget stalemate. Last week, the agency announced it would eliminate 28 positions, representing one-fourth of its workforce, and close two international offices, with more potential downsizing ahead, officials said.
Convention business tends to be cyclical and booked years in advance. While tourism has been on the upswing, Chicago's failed Olympic bid, which would have tied up McCormick Place, chased away at least some convention bookings for 2016, according to Welsh.
Beyond that, eight other major conventions have canceled events in Chicago since 2012, including GRAPH EXPO 2016, the Kitchen & Bath Industry Show and the HIMSS19 Annual Conference & Exhibition, a health care event with 35,000 attendees.
The one-two punch of Choose Chicago's downsizing and Microsoft's cancellation is of great concern to the city's hotel operators, who have more than 2,000 additional rooms to fill with the opening of 10 new Chicago hotels in 2015.
Longtime Chicago hotelier Laurence Geller said it is too late to find significant new convention business for 2016, and recruiting leisure travelers requires aggressive marketing, something that has been put on hold during the state budget stalemate.
"The only way to fill it in is to induce business through short-term marketing campaigns — promotions, events," Geller said. "But there's the conundrum: (Choose Chicago doesn't) have a budget."
The state provides about 40 percent of Choose Chicago's $30 million annual budget.
Geller, the former CEO of Strategic Hotels & Resorts, completed the acquisition of the Waldorf Astoria Chicago from Sam Zell's Equity Group Investments in July. He is also converting an office building at 101 E. Erie St., formerly home to ad agency FCB, into a 290-room Conrad hotel, which is set to open in May.
While neither of Geller's luxury hotels was booked directly for the Microsoft conference, he said the cancellation will affect rates across Chicago, including at his properties, which would have benefited from limited availability.
rchannick@tribpub.com
Twitter @RobertChannick
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April 25, 2015
Why Chicago hotels are worried about 2016
Chicago hoteliers have their work cut out for them. While the city has been setting records for visits by out-of-towners, the 2016 calendars of some of downtown's biggest hotels are full of costly holes.
So far for next year, Chicago has booked 31 “citywide” conventions—gatherings that fill 3,000 or more room nights on their busiest night each and account for about half of all hotel stays here. That's down from 41 this year and 35 last year. The upcoming events would amount to just over 1 million hotel room nights versus 1.2 million this year.
The expected downturn comes at a bad time. Nearly 2,500 hotel rooms are projected to open by the end of 2015, boosting capacity by 7 percent, as the industry has expanded to accommodate rising visits by tourists. (Visits topped 50 million for the first time in 2014.) Another 1,750 rooms could come online next year, according to Chicago-based hotel consulting firm T.R. Mandigo. Thus, even a steady year of trade shows would mean more empty rooms and possibly lower rates.
The 2016 calendar is worrisome, says Marc Anderson, who joined Choose Chicago in February as the city tourism bureau's chief sales officer after nearly eight years running regional sales and marketing at Peninsula Hotels. “We needed to do something as a city to affect business for 2016 and be creative.”
Those in the business blame two behaviors for the drop in bookings. Many organizations rotate their annual conventions among host cities, and competitors are drawing business away with lucrative incentive packages. on top of that, Choose Chicago has focused on securing conventions just a year out, rather than for a series of years, recognizing that many associations and companies are wary of making long-term commitments after the Great Recession.
Among big annual trade shows skipping Chicago next year are the International Air-Conditioning, Heating, Refrigerating Expo, which will be in Orlando, Fla., and the American Bar Association, which will hold its annual meeting in San Francisco.
To fill those gaps, Choose Chicago and the city's self- described Big 12 hotels have organized a push from a total of 64 hotels to offer what they say are unbeatable deals for group meetings during nonpeak months in 2016.
Any group that books 20 or more rooms next year in January, February, July, August and December or 2017's first quarter in one of those hotels is on the hook to fill only half of its room block instead of the standard 80 percent. (A hotel can turn down business if it already has a group on the books.) Participating hotels also are offering half-off parking, 20 percent off food and beverage costs and free Wi-Fi. Events at McCormick Place can get food and beverage at cost and 20 percent off rent, and 21 high-end restaurants have agreed to waive minimums on food and beverage bills.
“They're saying, quit going to Orlando; have (an event) in Chicago,” says Steve Conklin, director of sales and marketing at the JW Marriott hotel in the Loop.
It's working in some cases. Orlando-based conference planner Lauralee Shapiro of third-party contractor Conference Direct says one small association client that has been wavering between Chicago and another city soon will sign to bring 370 room nights here thanks to nearly $10,000 in savings on food and beverage and Wi-Fi, as well as a roughly $14,000 potential difference between 50 and 80 percent hotel room commitment.
“Reducing liability (on the hotel room minimum) was huge,” Shapiro says. “It gives them peace of mind to say we can commit to something two years out because we've got that leeway.”
Other small clients that usually consider holding shows in the suburbs now are looking at the city because of the cost savings, says Kathleen Clickett, Chicago-based national account manager at third-party booking agent Experient.
Some hotels are taking other measures to boost 2016 bookings. The Hyatt Regency McCormick Place, which is owned by the city-state agency known as McPier that runs the convention center next door, paid Conference Direct its commission fee upfront. McPier is projecting that the hotel's operating income will decrease in 2016 for the first time since 2010.
Choose Chicago will embark on a 10-city nationwide road show in June to promote the incentive offering, which is on the table only through Sept. 30, and is targeting groups that fill 2,000 or more room nights, such as large corporate meetings. Anderson says the price breaks have generated 237 leads, 65 of which signed for a total of more than 8,800 room nights, many from customers that have never been to Chicago.
Lucrative incentives are becoming a bigger part of the convention and trade show recruiting game given an explosion in convention space over the past decade that has outpaced demand. Whether the deals will pay off for hoteliers, however, is uncertain.
“Do I expect it to produce a huge amount of business? Probably not,” says Bill Bennett, director of sales and marketing at the InterContinental Chicago Magnificent Mile. “But it does get our name out there.” He says his 2016 business is not looking as weak as others'. Still, agreeing to the incentive offer is a smart marketing move, he adds. “It's eyeballs on something that mentions our name.”
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New downtown hotel openings will slow in 2016
By Alby Gallun
2015.8 15
The biggest downtown hotel building boom in nearly 30 years will slow down next year, easing concerns about a potential glut.
After building 10 hotels with 2,407 rooms in downtown Chicago this year, hotel developers will complete just three with 809 rooms in 2016, according to Lodging Econometrics, a Portsmouth, N.
H.-based research firm. But supply will surge again in 2017, when a new 1,200-room Marriott Marquis next to McCormick Place is expected to open.
Amid rising business and leisure travel, demand for hotel rooms in the Chicago area so far has kept up with supply,...