Democratic National Convention set to raise hotel room rates this summer

Lollapalooza is typically the busiest weekend of the year for Chicago hotels, but 50,000 people flocking here for the Democratic National Convention next August is driving hotel room rates even higher.

The average rate during the DNC is $534.88 a night, according to Sun-Times research on downtown hotel rates at three major events happening in the city this year: the convention, Lollapalooza and NASCAR Chicago Street Race Weekend. The search, conducted Thursday, looked at hotels within a one-mile radius of downtown Chicago.

The most expensive hotel with rooms still available for the convention, which takes 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 each summer in Grant Park, was second only to the Democratic convention. The average daily rate from August 1 to 4 was $485.24. NASCAR’s street racing weekend, July 6-7, averaged $278.29 per downtown hotel room.

The convention was the only event where some daily hotel rates exceeded $1,000. Top hotel rates at downtown Lollapalooza have been capped at nearly $900, and NASCAR weekend rates are under $600.

“We’re really depending more on these major events to support our hotels,” said Michael Jacobson, president and CEO of the Illinois Hotel & Lodging Association.

Hotel rates are based on supply and demand: prices go up and vacancies go down when major events take place in Chicago. That often leads to compression, Jacobson said, when business and leisure travelers coming to Chicago for reasons other than events tend to stay in the suburbs.

“There is a benefit not only to downtown, but also to the entire Chicago area – including the suburbs – because of the higher rates driven by these major events,” Jacobson said.

And those who stay in Chicago will contribute more than just hotel revenue. The projected economic impact of the approximately 50,000 convention attendees is $150 million to $200 million. That matches the economic impact felt in previous host cities — like Philadelphia in 2016 — that drew similar crowds.

NASCAR and C3 Presents, the Texas-based company that produces Lollapalooza each year, have not provided attendance estimates for this year’s events.

Choose Chicago’s Chicago Sports Commission tapped Temple University’s Sports Industry Research Center to compile a report on the economic impact of NASCAR’s inaugural weekend in 2023. The report finds that the race weekend generated $108.9 million in economic impact for Chicago, plus more than $8.3 million. in tax revenue.

The street racing weekend also helped generate the highest hotel revenue Chicago has seen for the July 4 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. These two figures constitute absolute records for the summer months.

With the convention and biannual International Manufacturing Technology Expo expected to attract more than 100,000 attendees in early September, 2024 is expected to be even better for hospitality and tourism.

“People were very happy. I think people are in a much better situation than they were several years ago,” Jacobson said. “There is still a lot of room for growth. Many other markets have returned to pre-pandemic levels. It’s not, so I think there’s a kind of anxiety about reaching that kind of milestone.

In June 2019 – before the pandemic disrupted travel and the tourism industry as a whole – Chicago’s hotel occupancy rate soared to 88.3%. June 2023 was at 76%.

The hotel and lodging association predicts June occupancy will reach 82.8% this year, on par with pre-pandemic levels. The association does not anticipate a complete recovery in the occupancy rate before 2028.

The delay in international business and individual travel are two of the main reasons recovery will still be a long way off, Jacobson said.

“International travelers are the golden goose of tourism,” he said. “They come, they stay longer and spend more when they are in the United States”

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 remains lower than pre-pandemic figures.

Big summer events won’t just give hotels the boost they need to return to normal occupancy levels: They will have a long-term impact on people’s opinions of Chicago, Jacobson said, further drawing more visitors.

“The fact that we got the DNC, I think it helps prove some of the haters wrong,” Jacobson said. “Chicago is not broken. We’re winning these high-visibility, high-impact meetings, and I think that will go some way to changing a lot of other people’s perceptions.