Tuesday, April 17, 2007

Coming soon to Chicago: low priced luxury hotel rooms?

Could there be a glut in a few years in the Chicago luxury hotel market? Developers sure don't think so, and snagging the 2016 Olympics would not hurt, either. Trump International Hotel and Tower is well underway (Donald, nice glitzy website, but the music is plain bad...fire the musicians). Shangri-La (a great flag -- right up there with Peninsula in Asia imo) has broken ground on Wacker Drive, Palladian's Mandarin Oriental Tower is looking good but not yet moving, the Amalfi is up and running and getting rave reviews (but has a website with only slightly better music than Trump), and so on and so on and so on.

This isn't stopping Peebles Corp., which has apparently inked a deal to buy 300 N. Michigan Avenue and shop it in part to high-end hoteliers looking for a franchise in town. The story cites Carlson's luxury flag of Regent Hotels as a possibility.

Of course condotels are great for the developers because they allow alternate financing; from my experience, hotels were traditionally a little more difficult to deal with in the loan market. As an individual investment, however, other than at the absolute tip-top of the market, I think this 2005 BusinessWeek story sums up my thoughts. (For the record: I started looking condotels around 2000 and, for better or worse, decided to take a pass.)