INVESTMENT
The John Jacob Astor Suite includes butler service , like all other accommodations at the hotel .
Provenance Hotels portfolio .)
“ Our team always has its eyes peeled for unique opportunities and situations where we can step into something relatively quickly given our overall understanding of all the pieces ,” Alibhai told HOTELS .
The St . Regis Chicago was a quintessential deal for Gencom , which teamed up with fellow real estate company GD Holdings to acquire a majority stake in the 191-room property . The acquisition price was not disclosed , but as part of the deal , Chicago-based Magellan Development Group , the original developer of the hotel , née the Wanda Vista Hotel before the flag change , retained an ownership interest . JLL Capital Markets arranged a $ 76-million loan for Gencom , GD Holdings and Magellan through lender Värde Partners .
Despite the volatility of the financing markets , Gencom ’ s track record in the luxury hotel space was an ace in the hole when it came time to source debt . In fact , according to Alibhai , they received six bids to finance the project . The loan with Värde was completed in only 30 days , with Alibhai calling it one of the fastest financing closings its ever done . “ The terms were pretty fair ,” he said . “ One of the things that you can ’ t help are that base rates have gone up so much in this last couple of months .”
FIRST-RATE SECOND CITY NUMBERS Downtown , urban core markets were rocked by the pandemic , but are inching back to optimal performance as leisure travel remains strong and is complemented by a return of corporate transient and group business . The Windy City didn ’ t escape the muck , but as Alibhai said : “ We are big believers in Chicago .”
According to STR , Chicago ’ s luxury hotel market ran hot prior to the pandemic and is getting back to health . The fourweek RevPAR average to May 20 , 2023 , was $ 230.66 , compared to $ 239.94 at the same time period in 2019 . Average daily rate in the 2023 period hit $ 324.55 ,
The dining room at Japanese restaurant Miru , operated by Lettuce Entertain You . complemented by an occupancy rate of 71 %. In the 2019 period , occupancy was a whole 12 percentage points higher , but ADR was some $ 36 less .
On an annual basis , for full-year 2022 luxury hotels recorded RevPAR of $ 183.84 ($ 6 less than in 2019 ) with ADR of $ 307.48 ($ 264.82 in 2019 ) and occupancy of 59.8 % ( 71.7 % in 2019 ).
The data make it clear : luxury rates in Chicago continue to hit highs , but occupancy still has room to grow , enervated by the still lack of demand from the corporate and group sector .
The sector ’ s rather uneven performance numbers up to now made no matter to Gencom ’ s decision to invest in The St . Regis Chicago ; in fact , they , combined with the state of current luxury supply , made the decision a rather easy one for Alibhai . “ If you look at over the course of 20 to 25 years , luxury hotels and resorts have the best RevPAR growth over long periods of time and the best [ real estate ] appreciation ,” he said .
The Chicago market ’ s high barriers to entry was another reason the deal was attractive , said Alibhai . According to him , The St . Regis Chicago is the first luxury new-construction hotel built within the last 10 years in the city . As such , luxury competition is limited , Alibhai argued , which allows luxury hotels to yield up .
30 hotelsmag . com Jul / Aug 2023