Lollapalooza is typically the busiest weekend of the year for Chicago’s hotels, but 50,000 people flocking here for the Democratic National Convention this August are pushing hotel room rates even higher.
The average rate during the DNC is $534.88 a night, according to a Sun-Times search of downtown hotel rates during three major events taking place in the city this year — the convention, Lollapalooza and NASCAR Chicago Street Race Weekend. The search, which was conducted Thursday, looked at hotels within a one-mile radius of downtown Chicago.
The most expensive hotel with rooms still available for the conventiono, taking place Aug. 19-22, was $1,077 a night at the Langham, a five-star hotel on the Chicago River.
Lollapalooza, the four-day music festival held every summer in Grant Park, trailed just behind the Democratic convention. The average daily rate Aug. 1-4 was $485.24. NASCAR’s street race weekend, July 6-7, averaged $278.29 per downtown hotel room.
The convention was the only event for which some daily hotel rates climb above $1,000. The highest downtown hotel rates for Lollapalooza were capped at nearly $900, and NASCAR weekend rates are below $600.
“Our reliance has really increased on these major events supporting our hotels,” said Michael Jacobson, president and CEO of the Illinois Hotel & Lodging Association.
Hotel rates are supply and demand-based — prices climb and vacancies dwindle when major events come to Chicago. This often leads to compression, Jacobson said, when both business and leisure travelers coming to Chicago for reasons other than events tend to stay in the suburbs.
“There’s a benefit to not only just the downtown area, but also the entire Chicagoland area — including the suburbs — because of the higher rates that are driven by these major events,” Jacobson said.
And those staying in Chicago will be contributing much more than just hotel revenue. The projected economic impact of the convention’s approximately 50,000 attendees is $150 million to $200 million. That’s in line with the economic impact felt in previous host cities — like Philadelphia in 2016 — which drew similar crowds.
NASCAR and C3 Presents, the Texas-based company that produces Lollapalooza every year, didn’t provide estimates on attendance for this year’s events.
The Chicago Sports Commission at Choose Chicago enlisted the Sports Industry Research Center at Temple University to compile an economic impact report on the inaugural NASCAR weekend in 2023. The report found the race weekend generated $108.9 million in economic impact for Chicago, plus more than $8.3 million in tax revenue.
The street race weekend also helped drive the highest hotel revenue Chicago has seen for the Fourth of July weekend since 2015, according to NASCAR.
Last year “was a good summer,” Jacobson said. Summer 2023 hotel revenue totaled $825 million, according to Choose Chicago, and hotel taxes totaled $46 million. Both figures are all-time records for summer months.
With the convention and biannual International Manufacturing Technology Show, which is estimated to bring in over 100,000 attendees in early September, 2024 is projected to be even better for hotels and tourism.
“People were very happy. I think people are in a much better spot than they were several years ago,” Jacobson said. “There’s still much more room to grow. A lot of other markets have recovered to their pre-pandemic levels. We have not, so I think that there is some kind of anxiousness to hit that kind of milestone.”
In June 2019 — before the pandemic disrupted travel and the tourism industry at large — Chicago’s hotel occupancy climbed to 88.3%. June 2023 was at 76%.
The hotel and lodging association projects June occupancy hitting 82.8% this year, within reach of pre-pandemic levels. The association doesn’t predict a full occupancy recovery until 2028.
Lagging international and individual business travel are two big reasons recovery is still years away, Jacobson said.
“International travelers are the golden goose of tourism,” he said. “They come, they stay longer, and they spend more when they’re in the U.S.”
Leisure travel was the big winner last year, with demand for hotel rooms up 8% from last year. Conventions have also made a comeback, but their attendance is still behind pre-pandemic figures.
Big summer events won’t just give hotels the boost they need to return to normal occupancy levels — they’ll provide a long-term impact on people’s opinion of Chicago, Jacobson said, luring even more visitors.
“The fact that we did get the DNC, I think that’s helping prove some of the haters wrong,” Jacobson said. “Chicago’s not down and out. We’re winning these high-visibility, high-impact meetings, and I think that will kind of dovetail into changing a lot of other people’s perceptions.”
