Chicago’s downtown hotels commanded significantly higher room rates in June, a signal that the recession may be easing a bit for the beleaguered industry.
The average daily rate was $204.58 last month, up 14.3 percent over June of 2009, according to data from Smith Travel Research Inc.
Occupancy rates have been edging up this year, said Ted Mandigo, an Elmhurst-based hotel consultant, and hotels began to feel more confident about pricing.
“There was less discounting,” he said. “Hotels pulled rooms out of deep discount online travel agencies.”
For the first half of the year, the average rate is down 1.3 percent, to $159.70. But Mandigo said he expects continued strengthening this summer, and a rise in rate for the full year of 2 to 3 percent.
The June rate strength did not extend to the distressed market near O’Hare International Airport, where new supply came to market just ahead of the recession.
The area saw a 1.6 percent decline in average daily rate, to $100.81, over June of 2009, according to Smith Travel. For the first half of the year, the average rate is down 5.2 percent, to $95.03.
Although I agree with Mr. Mandigo that summer rates will continue to strengthen across the board, his 2 to 3% upswing projection for the entire year is definitely off, in my opinion. The strong summertime average rates have been driven almost entirely by the dramatic shift from cross country vacationing to road trip vacationing that has been created by the recession. When summer ends and the country once again has to rely on the corporate and/or convention traveler, average rates will drop once again, as those segments are still suffering heavily from the same corporate travel and trade show attendance cutbacks that have impacted the entire hospitality industry for the past 18 months. While I predict that the year end decline in average rate will be optimistically smaller than in the past few years, there will be no average rate increase, and there is in my opinion no reliable evidence to suggest one.