‘We haven’t seen anything like this’: Coronavirus makes closures, staff cuts and empty rooms the new reality for Chicago hotels
Hotel occupancy rates have plummeted. Housekeeping staff, bellhops, valets and other workers are being let go, not knowing when — or if — they’ll be back. Some of Chicago’s swankiest properties have gone dark, temporarily closing their doors to overnight guests.
An already dire situation is set to get even worse as the new coronavirus puts the brakes on travel and sends the lodging industry into a tailspin, unleashing ripple effects across the economy.
“We haven’t seen anything like this,” said Lee Hoener, general manager of The Drake Oak Brook, part of Marriott’s boutique hotel Autograph Collection. “We’ve had a drastic drop in occupancy — pretty much a 90% reduction. Like most hotels, we’ve had to reduce staff significantly.”
Chicago’s high-end Peninsula and Park Hyatt hotels took the drastic step of shutting down midweek. The Park Hyatt has stopped taking reservations until April 30. says no reservations will be available “until further notice.”
The 173-room Hotel Zachary, across the street from Wrigley Field, is temporarily closing Friday, according to an emailed statement that did not provide an expected reopening date.
Closure remains a possibility at The Drake Oak Brook, too.
“I’d be lying if I said it hasn’t been talked about,” Hoener said. “It’s on the table.”
Rydell Fernandez, a page at The Peninsula, stands outside the hotel at 108 E. Superior St. earlier this year, before the coronavirus sent the hotel industry into a tailspin.(Chris Sweda / Chicago Tribune)
Occupancy levels at hotels in Chicago’s central business district continue to be on a downward spiral, dropping to 35.6% during the second week in March. That’s nearly 49% lower than the same time period last year, according to hotel industry data firm STR. The average daily rate fell 10% to $147.
The grim statistics are playing out across the country. Hotel occupancy levels in the U.S. hovered at 53% last week, about 24% lower than last year. The steepest drops were in Seattle, San Francisco and New York — areas hit particularly hard by COVID-19.
“The performance declines were especially pronounced in hotels that cater to meetings and group business, which is a reflection of the latest batch of event cancellations and government guidance to restrict the size of gatherings,” said Jan Freitag, STR’s senior vice president of lodging insights, in a statement.
“The questions we are hearing the most right now are around how far occupancy will drop and how long this will last,” Freitag said. “Through comparative analysis of the occupancy trends in China and Italy over the past weeks, we can with certainty say that we are not yet close to the bottom in the U.S.”
The impact of the hotel industry’s implosion can have far-reaching consequences. An Oxford Economic Study calculated that a 30% decline in U.S. hotel guest occupancy could mean the loss of almost 4 million jobs and a $300 billion blow to the country’s GDP.
Oxford researchers estimate that the hotel industry supports 8.3 million jobs — 1 out of 25 — in the U.S.
One of those jobs belongs to Latonia Marshall, a single mother of two who lives on the West Side. For nearly a dozen years, Marshall, 40, has worked as a housekeeper at Chicago’s Blackstone hotel. Last week, she found out her services wouldn’t be needed, at least for the time being.
“They said with the coronavirus, they had a lot of cancellations,” Marshall said. “They told us to go and file for unemployment.”
Marshall checked with the hotel this week to see if anything changed. It hadn’t.
What may be her final paycheck from The Blackstone was due to arrive Friday. She, like many of her coworkers represented by Unite Here Local 1, are worried about their health insurance.
A Blackstone representative declined to comment.
“Here we are, just kind of waiting to see what’s going to happen,” Marshall said, choking back tears. “To go from being full-time to not having a job is hard.
“I feel like this is not just going to be a two-week fix,” she said. “I think it’s going to be more than that. I have to figure out in the meantime what I can do to take care of my kids.”
Guadalupe Ochoa, an hourly worker at The Drake Oak Brook, was about to be unemployed now that so few people are staying at hotels due to the coronavirus. Management at the west suburban property arranged for Ochoa and others to work on a hotel renovation project instead. (Cathleen Knobbe/The Drake Oak Brook)
The Drake Oak Brook is in the midst of a multimillion-dollar renovation that recently overhauled 70 guest rooms in one of its towers. Construction work is ongoing in the 84 rooms that make up the second tower. Some hotel staff that would have been let go during this crisis are pitching in with the remodeling project.
“We’ve taken some kitchen staff, some banquet staff, some of the folks in the restaurant, and we’ve put them in blue jeans and work boots and put them them to work in the 84 rooms, whether it be painting or removing old furniture,” Hoener said. “We’ve been trying to think of unconventional ways to be able to still get some money in our employees’ pockets.”
At the new Hyatt House hotel in the West Loop, an abundance of empty rooms recently led to layoffs — a staff reduction that the hotel’s management company, McKibbon Hospitality, said it hopes is temporary.
McKibbon plans to launch an employee assistance fund to help pay for groceries and other necessities.
“We consider our employees family and will continue to help them navigate this unprecedented situation as best as we can,” a company representative responded in an email.
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Pebblebrook Hotel Trust’s portfolio has 54 lodging properties across the country, including Hotel Chicago and the Westin Michigan Avenue. Of its 8,000-plus employees, Pebblebrook has let go of more than 4,000 workers and expects to shed another 2,000 by the end of March, according to CEO Jon Bortz.
“We are looking at closing the doors at more than half of our properties,” Bortz said in a recent statement issued by the American Hotel & Lodging Association.
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