Chicago hotels struggling to staff up for full reopening must wait for $75M in federal relief

Chicago’s largest and grandest hotels are reawakening from a pandemic-induced slumber. But they’ll apparently have to wait for the financial relief they need to fully reopen, even if occupancy rates rise and the demand for rooms is there.

Michael Jacobson, president and CEO of the Illinois Hotel & Lodging Association, has been told he’ll have to wait until late summer to find out whether Mayor Lori Lightfoot will grant his request for a hotel-only version of the Payroll Protection Program that helped restaurants survive the pandemic.

Jacobson wants Lightfoot to earmark $75 million of the $1.9 billion avalanche of federal coronavirus relief on its way to the city to help Chicago hotels staff up for a full reopening. That’s roughly $1,500-per-room at every city hotel.

But Lightfoot isn’t ready to decide. She’s still waiting for final federal guidance on the preliminary edict that no new stimulus money can be used to cancel plans to refinance some city debt.

She has also promised an extensive community engagement process before presenting a final spending plan to a City Council with its own wish list.

Hotels shuttered for more than a year, that “haven’t received a penny in revenue,” will just have to wait.

To say Jacobson is disappointed would be an understatement.

“Forty hotels are reopening now. The opportunity to rehire people is now. The whole purpose of our proposal is to get people back to work — the sooner the better,” Jacobson told the Sun-Times.

“I’ve heard from hotels that have shut off their reservations once they sell 75% of their rooms, when they could sell out. They could sell another couple dozen. They haven’t got the staff to truly accommodate more people” — they either can’t find them or can’t afford to pay them.

Hotel occupancy rates for the week of May 29 reached 40% for the first time since the pandemic. That’s a vast improvement from 17% during the same week a year ago — but well below the 76% during the same week in 2019.

The Westin River North recently reopened. So did the Sheraton Grand. The Hilton Chicago reopens Thursday, but slowly — with 200 employees, down from 1,000 before the pandemic. The Palmer House Hilton, mired in bankruptcy, plans to reopen next Thursday, Jacobson said.

“The number of employees recalled is still a fraction of what it was when COVID started,” Jacobson said.

“Hopefully, business continues to pick up throughout the summer so we can bring back more staff. But we could bring people back to work much quicker if we got some aid from the city.”

The mayor’s office acknowledged Lightfoot is not yet ready to make a decision on the $75 million request from Chicago hotels continuing to struggle, even as conventions and tourists return.

“The Treasury guidance is still being finalized, including the 60-day comment period,” the mayor’s office said in statement emailed to the Sun-Times.

“However, we recognize the economic hardship the hospitality sector faces. And we look forward to continuing to engage those hardest hit by the pandemic in the coming weeks as we wait to receive final guidance from the Federal government.”