With at least 10 hotel condo developments underway in Chicago, among them Trump International Hotel & Tower (pictured), Mandarin Oriental Tower, Waterview Tower, Elysian and Raffaello, Yo wondered about the depth of the local hotel condo market. We asked Ted Mandigo of TR Mandigo & Company, a hospitality consulting firm, for his view.
The hotel market is strong and likely to stay that way until 2011 or 2012, Mandigo says, which may bode well for owners of hotel condos, who generally have the option of placing their units in the hotel’s rental pool to generate revenue when they’re not in residence.
But he says sales of hotel condo units aren’t likely to explode the way they have in some vacation hot spots. “We’re a nice Midwest and international tourist destination, but we don’t have the volume that Miami has or Las Vegas has,” he says. Moreover, he adds, competition from hotels in the Chicago suburbs and collar counties makes it harder for downtown hotels to raise their rates aggressively, which has driven the hotel condo market in other cities.
Current hotel condo projects in Chicago are selling at a modest rate, according to Mandigo. “The units that are out there now will move. They’re not moving real fast, but they’ll sell,” he says, adding that the most successful projects tend to have recognizable brands or top-notch locations. Don’t expect to see a rash of new hotel condo developments in coming years, he says: relatively slow sales at some hotel condo developments indicate that the current crop of projects will most likely satisfy demand. “In Chicago it’s going to be a more plodding market,” he says.