Hotels have reservations about NATO’s profit potential
By DAVID ROEDER Business Reporter May 18, 2012 10:26PM
Workers prepare as journalists start gathering at the NATO summit media center at McCormick Place, Friday, May 18, 2012, in Chicago. The gathering of heads of state begins this weekend. (AP Photo/Kiichiro Sato)
Updated: May 19, 2012 4:54PM
Chicago’s leading hoteliers have a secret when it comes to the NATO Summit.
It’s that, like many Chicagoans, they’ll be relieved when the event is over.
They eagerly want to serve their elite visitors and agree the summit is a great showcase for the city. Like an athlete in the playoffs, it’s time to step up their game, and some hotels have prepared months for the opportunity.
But many operators also don’t think there’s much money for them to make from NATO. Revenue from the bookings has to be set against higher costs for personnel and security, plus the loss from customers who otherwise would be visiting but have bypassed the hubbub.
“We’ll be pushed to break even,” said Laurence Geller, chief executive of Strategic Hotels & Resorts Inc., whose downtown hotels are the InterContinental Chicago and Fairmont Chicago.
The impact of NATO is “moderate in terms of the number of rooms it fills. The extra costs come from the complexity and the security,” he said. A check of online reservation systems showed most downtown hotels had available rooms through Monday, when the summit ends, although some rates are elevated.
Despite the drawbacks, Geller said drawing NATO “was absolutely the right thing to do.” It sets up Chicago to draw future international travel, said Geller, who added that overseas guests spend 50 percent more than domestic visitors once they get here.
“In the big picture, it isn’t necessarily a great boon for the hotels,” said Marc Gordon, president of the Illinois Hotel and Lodging Association. “Some lost other groups to accommodate NATO.”
Lost in the buildup over NATO is that, by the standards of Chicago conventions, it’s an average-sized gathering. Its expected attendance is about 21,000, not counting protesters, but the just concluded National Restaurant Association show drew three times as many people.
For the hotels, NATO is about bragging rights and the experience of hosting high-profile individuals, said lodging industry consultant Ted Mandigo. He also said the summit’s compressed schedule means the delegations may be unable to explore the city or spend much on hotel services.
If there’s bragging to be done, however, it will have to come after the event. Hotels that are hosting country delegations have abided by security rules and decline to say who they are entertaining.
Other centrally located hotels report no NATO business at all, such as the boutique Amalfi Hotel Chicago, where General Manager Brian Cooney said, “It’s a nonstory for us. We’re flying under the radar.”
President Barack Obama is staying at the Sheraton Chicago for NATO, but the overall secrecy has forced hotels to play it low-key. Some places have suggested they might change a menu item or two at the hotel restaurant to honor their guests, and the industry has supported a local effort to promote off-site dining spots.
For some hotel employees, it amounts to business as usual but on a bigger stage.
Sylvia Rollins, concierge at the InterContinental Chicago, said the city’s ability to draw international visitors is often undersold. Chicago draws an international crowd every day, she said, and usually delivers a world-class welcome.
She said that for NATO, many of the travelers will have their own interpreters to ease language difficulties. “But on a daily basis, I’m dealing with people from all over the world,” Rollins said, recalling a time in which she personally walked Italian guests to a nearby restaurant where she knew a host who spoke Italian.
Chicago, she said, can only benefit from its NATO exposure. “I think Chicago now is being sought and looked at in the eyes of the world,” Rollins said.