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.
Nearly 2,500 hotel rooms are projected to open by the end of 2015, boosting capacity by 7 percent
April 25, 2015
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.”