Hotel occupancy rates in the suburbs have held firm in the face of current economic conditions because of recent large scale developments and an influx of high-end, niche properties.

To analyze the state of the hospitality industry in the suburban region, it’s necessary to look back to 2001 and the dramatic impact 9-11 had on the market.

“Before we hit 9-11, we had a significant convention overflow from downtown Chicago. It was larger than the downtown properties could handle,” said Ted Mandigo, president of TR Mandigo & Company, a hotel consulting firm. “That provided a decent chunk of business that sustained a pretty good performance in the suburbs.”

It was during that time the region reached its peak performance.

“The economy was moving forward until 9-11,” said Skip Strittmatter, executive director of the DuPage Convention and Visitors Bureau. “We had a very strong market, a good corporate market. The supply was there, the money was there and they were building.”

After 9-11, the market shifted and it has since been an arduous process to rebuild it.

“That left the properties in the suburban markets performing more poorly,” said Mandigo.

Through 2004, many of the hotels in the region operated at an underwhelming 50 percent occupancy level and it took until nearly 2007 for those numbers to stabilize to an acceptable 60 percent and up range.

“We’ve seen some pretty decent performances and some recovery of those occupancy levels,” Mandigo said. “The DuPage County market area finished last year with a 62 percent occupancy.”

While the numbers in the west suburbs have stayed steady, the Southland area has been facing additional challenges toward recovery.

“I think people are very concerned about their financial situation and how that’s going to impact their travel plans, not only independently from the standpoint of vacation travel but also business related travel,” said Jim Garrett, president and CEO of the Southland Convention and Visitors Bureau, whose area encompasses southern Cook County and northern Will County.

The Southland’s occupancy rate in 2007 was 59.4 percent, an increase of 1.4 percent from the previous year. These numbers are just below those of its neighboring counties but the Southland has been faced with more challenges.

“One of the concerns that have recently surfaced is the overflow impact that will be imposed upon the Cook County area with the addition of the new 1 percent sales tax,” Garrett said. “I think this is going to have a negative impact on the industry.”

One tax the Southland will not have to cope with is the proposed 2 percent Cook County hotel tax, which was recently defeated.

“Had that gone through it would’ve been devastating to the industry,” said Garrett. “We put a strong effort to negate that and fortunately we have been able to get that bypassed.”

Another major issue for Southland hospitality is the lack of hotel signs throughout the Illinois Tollway system. The area currently has approximately 30 hotels and 2,700 hotel rooms that have no identification or signage anywhere on the Tollway.

“We’re continuing to work with the (Illinois) Toll (Highway) Authority,” Garrett said. “Once we get the green light and an affirmative partnership with the Toll Authority and the logo signs go up, it’ll have a very positive impact from the standpoint of economic development for those communities where hotels are located.”

One of the most important factors in the development of hotels is site selection.

“Usually a hotel chain or developer will look for multiple sources of business for the property,” said Mandigo. “They also have to be sited so that they’re convenient for travelers and provide the kinds of services travelers are looking for.”

Most developers consider location, in terms of access to highways, geographic density, proximity to office building and local entertainment, explained Strittmatter.

“It’s like gas stations, where you see a lot of them at one intersection or area,” she said.

This clustering of hotels makes it easy for travelers to find locations where access to highways and entertainment is readily available, although, depending on the area, other factors must be considered.

“The most important component is the ability to incorporate effective interstate signage,” said Garrett.

In Lombard, site selection is preceded by a study in market demand.

“Generally, what we require is that (the prospective developer) has a study conducted by a hospitality consultant to ensure that there’s market demand,” said David Hulseberg, assistant village manager and community development director for Lombard, which last year welcomed a Westin hotel that is the largest in DuPage County. “One thing you don’t want to do is bring on new hotels that are going to cut up the marketplace even more.”

For the most part, hotel prospectors all look for the same things, which can create slim pickings for those who attempt to develop at a later time.

“A lot of the hotel sites have been pretty well picked over,” said Mandigo. “It’s tough to find a good hotel site.”

Developers of the Westin Lombard, which opened in August 2007, chose its location because it is adjacent to the Yorktown shopping center.

“We wanted (the Westin) to be right by Yorktown mall to add the additional synergy and we also were limited in terms of available sites,” said Hulseberg.

The Westin’s many features, as well as its location, have made it one of the premiere hotels in the area.

“We’re very pleased with the way the hotel has started off and the business that we’ve been receiving,” said Sarah Marach, director of sales and marketing at the Westin. “It’s exciting with the changes that they’re making at Yorktown mall. We’ve used that as a selling feature for the hotel.”

Mandigo even now considers the Westin a major feature of the west suburban economic landscape in general and of its industry in particular.

“The most dramatic thing that’s happened in the market recently is the development of the Westin,” he said. “That’s a huge property for the suburban market.

“Most of the properties in the suburban market are in the 100-200 room range. When you put 500 rooms in the market, it’s a big chunk of rooms. It also serves the transient end of the market and it has an affect on all the properties in the area.”

On the other hand, a hotel of the Westin’s size brings with it many challenges.

“We are in what we call a ramp-up period,” said Hulseberg. “Any time you bring a new hotel on, you’ve got to get the buzz out there. You’ve got to wait your turn to get plugged in and once (potential customers) see you, then you can keep your business.

“Our challenge right now is letting everybody view us and getting additional bookings in. But we’re doing very well.”

Mandigo also acknowledges the Westin’s difficulties.

“That size of an addition takes a little while to be absorbed into the market,” he said.

Another major hotel addition to the area is the Renaissance Schaumburg Hotel and Convention Center, which is located just west of the Interstate 90 and Ill. Rt. 53 confluence.

These types of high-end properties have become more common in recent years, which is in stark contrast to some of the older hotels in the region.

“A lot of the properties in the south and west suburban markets are properties that are vintage,” Mandigo said. “We built a lot of properties in the 1960s and 1970s and those properties were built at prime locations and served the market adequately but they are now 30-40 years old. They don’t command the same rate and occupancy levels the newer properties do.”

One of the more upscale hotels looking to develop in the suburban region is Starwood’s Aloft Hotels.

“Aloft is kind of an avant-garde that’s targeted to the millennium generation,” said industry consultant Mandigo. “It’s got a friendlier, softer lobby, different lighting, a lot of fabrics, candles, scents and the guestrooms have flat screen televisions and a lot of technology built in.”

Another upscale trend happening is the development of “boutique” hotels, which cater to the highest of the high-end customers.

“In the old days we used to call them three- and four-star, and you still hear that today but they’re now using the word boutique which means it’s just a little different, it’s got a little cache about it for an upscale market,” said the DCVB’s Strittmatter. “They’re very trendy.”

There aren’t many boutique hotels located in the suburban region but a few are already in the planning stages, one of which is a Calamos Real Estate property called The Arista.

“The Arista, which is to be located near Naperville’s CityGate Centre, is going to be a very unique, high-end boutique hotel,” Strittmatter said. “It’s just going to be very elegant.”

Other new developments and expansions are planned for the Southland area.

“Right now we’re working with a number of developers that have plans which include properties in Bridgeport and two in Monee,” said Garrett. “There’s also the possibility that the Tinley Park Convention Center may expand their convention center and add additional rooms to their complex.

“I think the expansion of the convention center would be a very positive component to bring more business into the area.”

The addition of these new developments should further pump up the economic impact and viability of the hospitality industry going forward, a theory supported by recent statistics.

In DuPage County, from 2006 to 2007, visitors spent more than $2.3 billion, up 7.6 percent from the previous year. Tourism industry payrolls of the 2,300 people who work in the industry reached nearly $553 million, up 4.5 percent. Sales tax receipts totaled $107.5 million, up 7.3 percent. And $35.1 million was collected in local tax receipts from visitors, up 9.5 percent.

“All of the indicators that we track have been up, in visitor expenditures, tourism, payroll, local and state tax,” said Strittmatter. “We’re continuing to be competitive but we would like to see additional growth in the hospitality arena.”