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Inside Kendall

Trend Watch: Hotels Opening in Chicago Neighborhoods

By Theodore Mandigo and Imran Jivani

Move out of the way, sharing economy: Hotels are rapidly opening in neighborhoods across Chicago—and many major cities in the U.S.—to offer specialized services to guests that come with the same neighborhood immersion and offer all of the amenities guests have come to expect.

Recent examples include Hotel Lincoln in Lincoln Park, Soho House in the West Loop, Northwest Tower in Wicker Park, and Hotel Chicago West Loop/Illinois Medical District. And more are planned.

This trend is interesting because it means these smaller properties, which often range from 40 to 100 rooms, are the next big market for hotels looking to expand. These hotels are not in the city center, which means they need to be integrated into the neighborhood and managers need to ensure they’ve established a strong business model to sustain their bookings year round.

No matter what your business is—a restaurant, a gallery, a doctor’s office—it must fit into the neighborhood. The most successful hotels that follow this trend are restoring historic buildings in gentrified neighborhoods that already have strong commercial or arts sections, or are in a university or medical district. In other words, there are many reasons why guests want to be in this neighborhood and they are already interested in what immediately surrounds them.

When considering costs, these hotel managers are frequently focusing only on the rooms and keep the staff small, which means they rent the restaurant space on the first floor or rooftop to local restaurants. This is important because to be successful, they must keep their operation costs low to follow the annual booking cycles, which peak in the summer and for the winter holidays, die down in winter, and pick up again as the weather begins to warm.

However, this trend isn’t never ending. Each neighborhood will become saturated. What we’re watching is currently happening in Chicago and may taper off as hotel developers feel they’ve maximized earnings in each neighborhood.

For now, we’re in the middle of a development phase. Hoteliers are discovering our beautiful neighborhoods and seeing each as a new opportunity. Customers may appreciate it, too. Once there are great hotel options in each neighborhood, it gives tourists a reason to come back again and again to explore all of the city’s treasures.

Theodore Mandigo is an assistant professor in the School of Hospitality Management. Imran Jivani is the general manager of Hotel Chicago West Loop/Illinois Medical District, a 2011 B.A. Hospitality Management graduate, and a contributing faculty member to the School of Hospitality Management.

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