New hotels still opening in the suburbs

The troubled hotel industry this year has seen some major brands close around the suburbs, including the Sheraton Chicago Northwest in Arlington Heights and the Wyndham O'Hare in Rosemont. But at the same time, several new hotels have opened.

The Holiday Inn Express in Lake Zurich opened in March; the Hampton Inn & Suites in Deer Park opened in July; and the Candlewood Suites Northwest Chicago in Elgin cuts its ribbon in August. Another hotel is being planned for Randhurst Village in Mount Prospect.

Those latest entries don't offer full-scale luxury or big banquet facilities. Instead, they provide no-frills comfort at a lower price, something that leisure and business traqvelers on tight budgets have been booking.

"Hotels in our area have been long overdue," said Dale Perrin, executive director of the Lake Zurich Area Chamber of Commerce. "Our communities have been in a need of a hotel for a long time, especially when families come into town to visit for the holidays and graduations or even business travelers who don't want to book a room in Mundelein or Arlington Heights."

While these new openings provide a glimmer of hope, the overall hotel industry has suffered revenue losses of about 40 percent this year due to the recession, fewer meetings and conventions, and tightfisted business and leisure travelers, experts said.

About 3,400 rooms were added to the Chicago and suburban market in 2009, bringing the total room supply to 108,571 at 23 properties. In downtown Chicago, more than 1,000 rooms at four new properties were added for a 2009 total of 33,297. That means the overall market is at 57.7 percent occupancy through November, compared with 65 percent last year. Chicago showed 68.6 percent through November, compared with 73.3 percent last year, according to Elmhurst-based TR Mandigo & Co., a hotel consultancy.

"The industry is reeling with many hotels negotiating loan extensions, refinancing, in Chapter 11 or giving properties back to lenders," said firm principal Ted Mandigo. "I would guess that represents about 15 percent of the hotels in the market."

But it's hard to judge what the economy will be like when a new hotel opens, such as those in Lake Zurich, Deer Park and Elgin. It takes roughly two to three years of planning and construction before those doors open, experts said.

"There's so much groundwork that's necessary in order to open a hotel. If the economy changes, you still need to move forward with the building," said Jessica Neville, general manager of the Holiday Inn Express in Lake Zurich. She declined to say the hotel's occupancy rate due to competitive reasons.

Purchasing the land, obtaining building permits and licenses, hiring architects and contractors and then later hiring workers all takes time. A lot can happen to the economy in the meantime, Neville said.

"Still, starting at a time like this helps us to grow with the market and to be as competitive as anyone else," Neville said.

Those that opened this year likely started their planning in 2007 or 2008 when the economy was better and financing was more readily available, said Marc J. Gordon, president and CEO of Illinois Hotel & Lodging Association.

"In a perfect world, I'd start a hotel now. But by the time you opened it, the economy could be doing well," Gordon said. "But the problem is, you can't get financing now."