Park Hyatt Chicago, Peninsula hotels close amid COVID outbreak scare

Thursday, March 19, 2020

The two luxury downtown hotels have closed their doors as the Coronavirus continues to slam the hospitality industry.  The Park Hyatt Chicago and Peninsula hotels have both temporarily closed amid the pandemic, according to statements on the properties’ websites, citing public health concerns. They are the first two downtown Chicago hotels to close because of the coronavirus, according to the Illinois Hotel & Lodging Association.

The 198-room Park Hyatt at 800 N. Michigan Ave. said it has “ceased normal operations” and won’t be accepting new reservations until April 30, according to its statement. The Peninsula, which has 339 rooms at 108 E. Superior St., said in its statement no reservations will be available “until further notice.

The Peninsula said that the safety and security of our guests and employees remains our highest priority. The closures add to the long list of businesses shutting their doors as governments across the country try to contain the spread of coronavirus. Many Chicago hotels are experiencing occupancy rates in the single digits, and the sudden shutdown of economic activity has already led to thousands of hotel worker layoffs, according to the Illinois Hotel & Lodging Association.

But the closures are likely just beginning. Hilton CEO Christopher Nassetta said yesterday the giant operator will likely close its hotels in major cities.

IHLA President and CEO Michael Jacobson said that the flood gates are about the open they fear. Some properties will have no choice but to close as they run out of cash to pay employees. One downtown hotel he declined to name had only one person check in yesterday. Another had a total of seven.

Jacobson is pushing proposals for city and state government intervention to help keep hotels afloat.

Plummeting leisure travel stands to cause immeasurable damage to a downtown hotel market that is already grappling with a rash of 20 convention and trade show cancellations at McCormick Place, a key engine for demand. Those events would have accounted for more than 250,000 hotel room nights between the beginning of this month and mid-April, according to the Metropolitan Pier & Exposition Authority, the agency that owns and operates the convention center.

Downtown Chicago hotels have already suffered big occupancy and revenue losses this month. Average occupancy at downtown hotels was 35.6 percent the week of March 8-14, down from 84.2 percent the comparative period last year, according to STR, a suburban Nashville-based hotel research and consulting firm.

The revenue per available room accounts for both occupancy and room rate, fell to $52.43 during that period this month, down almost 54 percent year-over-year, according to STR. Chicago’s heavy reliance on convention and trade show business is likely one reason that dropoff outpaced the national decrease, where RevPAR fell 32.5 percent to $63.74.

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