Representatives from Illinois’ hotel and lodging industry say business is still nowhere near where it was prior to the COVID-19 pandemic.
As a result, they’re looking for another round of public aid.
Illinois hotel leaders are proposing the Hotel Jobs Recovery Act, which would allocate funds to hotels across the state to rehire workers. The group is proposing $250 million to come from the state’s leftover American Rescue Plan Act funding, giving one-time grants of $1,500 per room for every hotel in Illinois.
“Throughout the last two years of the pandemic, our hotels have lost over $5.5 billion in room revenue and that’s not getting any better,” said Michael Jacobson, president and CEO of the Illinois Hotel & Lodging Association. “We thought we would be well into the recovery phase by this point. Unfortunately, because of omicron and other conditions, we’re really back to square one. In fact the last two months, Chicago has been dead last in terms of hotel occupancy.”
Chicago’s occupancy rate averages at 39.1%, compared to a high of 65.7% in the New Orleans hotel market and 78.8% in Orland as of March 5, according to STR, a hospitality data firm.
Jacobson attributes this shortfall in Chicago to the winter season, as well as COVID mitigations like the recently lifted vaccine and mask mandates.
Juan Leyva, vice president of operations at Oxford Hotels & Resorts, a Chicago-based hotel ownership and management company, says the funding would help draw back workers amid an ongoing workforce shortage.
“There’s been so much instability over the past couple of years in our industry,” Leyva said. “So many people left the workforce during the pandemic because of the uncertainty. These funds will help us train and bring people back and just help regrow our industry because it’s in the worst place it’s ever been.”
State Rep. Kam Buckner (D-Chicago) is vice chair of the House Tourism Committee and House sponsor of the legislation. He believes the bill is essential to Illinois’ economic recovery.
“I don’t think that the state can afford not to do it when we look at this industry and how important it is to the overall economic impact of the economic picture,” Buckner said. “In the state, we’ve got to be able to move forward. There is no business recovery in Illinois or in Chicago about a robust recovery of our hotel, hospitality and tourism sector.”
According to the Illinois Hotel & Lodging Association, about 40% of Illinois hotel jobs have been lost since the start of the pandemic.
Buckner says there’s been high interest in the proposal from other elected officials.
“We talked to both Democrats and Republicans about this and we’ve gotten some great buy-in from folks from all around,” Buckner said. “We’re talking about an industry that has $16 billion dollars in salary and wages.”
Jacobson says federal funding up until now hasn’t been enough to cover losses across big name hotels and smaller-owned ones.
“Not only did some of our hotels not receive PPE loans, some of the larger downtown hotels were actually too large in 2019 to qualify for them,” Jacobson said. “But those are the ones that are continuing to hurt the most. Those are ones that saw occupancy rates in January in the 6 to 7% range.”
Leyva adds that many of larger hotel names like Hilton and Marriott are actually owned by local Chicagoans or Illinois residents.
“Even though you see a big brand on the top of the building, it doesn’t mean that it’s owned by a corporation that has a publicly traded company,” Leyva said. “It could be a couple or a family owning this hotel and they’ve decided to franchise with a brand for the support. So I think there’s a huge discrepancy when people see the independent hotels and these big brands and I think we all need the support.”