CHICAGO | InterContinental North Tower | 850 FT / 259 M | 71 FLOORS | PRO

[VivaLFuego]

Originally Posted by BVictor1

They could start marketing units before it's approved by the plan commission, zoning council and city council. What usually happens first are the reservations and deposits which are usually refundable. Remember Fordham, 1400 & 1600 Museum Park began marketing before approval. It's up to the developer.

So this requires a zoning change? Is this because of its height, mixed-use, or both? Seems like that location would already be zoned as necessary.

[chicubs111]

Last updated: May 4, 2006 06:04pm

Hotel Results Stalling Tower Tear-Down
By Mark Ruda Email this story | Printer-friendly | Reprints

InterContinental ChicagoCHICAGO-Two luxury hotels here, as well as a property in Miami, have exceeded Strategic Hotels & Resorts Inc.’s in their first year in the company’s portfolio. Indeed, improved hotel performance is causing Strategic Hotels & Resorts to rethink when to start construction of a 70-story tower at the InterContinental Chicago at 535 N. Michigan Ave.
Revenue per available room jumped 34% to $167.03 during the first three months of the year at the InterContinental Chicago at 505 N. Michigan Ave., compared to the first quarter of 2005, when it was under different ownership. Average occupancy jumped nearly 10 percentage points to 62.3%. Meanwhile, the company continues to seek city approval for a 70-story mixed-use building to replace the hotel’s north tower, but indicates it is hardly a short-term project.

“We think this makes sense, as the entitlements would be in effect for several years, it will continue to add flexibility and value to the property,” says executive vice president of asset management Richard J. Moreau during his company’s first-quarter conference call. “However, the economics are tougher to justify today as operating performance has accelerated and the value, based on some recent comparable sales of this property, has risen. So we would retain the entitlement, hold off on development of the tower for now as we evaluate construction costs, prices for this unique type of product, as well as the overall performance of the hotel.”

However, the company is bringing a concept that has proven extremely profitable at its Ritz-Carlton Half Moon Bay in California. Strategic Hotels & Resorts will begin building a 2,000-sf wine room fronting on Michigan Avenue this summer, more than three times the size of the model used at Half Moon Bay, Moreau says. Built for $250,000, the California wine cellar has generated revenue of $1,000 per sf, Moreau reports, with a 45% profit margin. “Our first-year return will exceed the investment,” Moreau says during his company’s earnings conference call Thursday.
Meanwhile, sales of hotel condominium units at the Fairmont Chicago are expected to begin during the next three months, Moreau adds. Also at 200 N. Columbus Dr., Strategic Hotels & Resorts is beginning construction on a spa and fitness center, as well as making upgrades to three floors of rooms, at a total cost of about $10 million, he says. All three properties, the 691-room Fairmont Chicago as well as 792-room InterContinental Chicago and 641-room InterContinental Miami, all posted double-digit RevPAR growth in the first quarter.


http://www.globest.com/news/536_536/.../145475-1.html

[Suchgreatheights]

I hope this isn't a bad omen.

[jcchii]

at least it's being temporarily delayed because things are healthy and profitable

[Chi_Coruscant]

Strategic would be smart enough to rebuild the north tower soon, regardless of InterContinental's good economic performance. Re-building would maximize the potential values of that hotel when the time comes for selling.

[Steely Dan]

so it sounds like this plan might be going back-burner for now.

bummer.

[rgolch]

Let's be honest. It's inevitable that some of the towers we are all crossing our fingers for will not happen. As long the the Fordham spire gets built, all will be well.

I also wonder about mandarin orient. and 71 east huron.

[chicubs111]

Well if you think about this one...They might delay this tower because of having a stronger hotel sales recently,hence not having the need for a tower right away,..but atleast that gives it much better odds of getting built in the future than having a poor economic report from strategic which would probaly smash the project all together....I hope thats makes sense lol....

[BVictor1]

Maybe they are just trying to collect as much revenue as possible now, because once demolition begins, they will be out of 100+ hotel rooms for 2-3 years.

Just a thought...

[trvlr70]

Originally Posted by BVictor1

Maybe they are just trying to collect as much revenue as possible now, because once demolition begins, they will be out of 100+ hotel rooms for 2-3 years.

Just a thought...

That's what I got out of the article. Basically, the hotel, along with the ugly as hell north tower, has been experiencing high occupancy rates and making lots of coin. Demolition/construction would obviously eat into those profits. Perhaps the addition would make more sense in a period of weaker profitability.

[jpIllInoIs]

If Intercontinental tower is delayed, could that help Mandarin and Fordham get built? Better chance of financing, better room occupancy forecast? sort of a yin/yang thing.

[STR]

Originally Posted by rgolch

Let's be honest. It's inevitable that some of the towers we are all crossing our fingers for will not happen. As long the the Fordham spire gets built, all will be well.

I also wonder about mandarin orient. and 71 east huron.

I've had this feeling that Fordham will be the last major tower to be completed in this boom. I still believe that, though depending on how the schedules work out Aqua may turn out to be the last. I'm afraid that MO screwed around for too long and missed the boat.

[chicubs111]

Not too sure what people are afraid about this being the end of the boom...The Intercontinental tower is on hold basically becasue the company is doing better than expected, not because of any lack of demand or uncertainty about the condo/hotel market.

[spyguy]

I think MO Tower will make it because of the Mandarin name, which is up there with the best in the world.

[honte]

Originally Posted by jpIllInoIs

If Intercontinental tower is delayed, could that help Mandarin and Fordham get built? Better chance of financing, better room occupancy forecast? sort of a yin/yang thing.

Yes, or Aqua. Wasn't there talk of Fairmont being a potential operator for the hotel in that building, once some of their rooms across the street sell as condos?

They would be smart to construct the rooms elsewhere (Aqua), and then demo the existing building, provided the hotel market here remains strong.

[Dale]

I just don't envision an 'end of the boom' in the sense that a given building will be the 'last built', as if to imply that nothing else will be built for an indeterminate period.

I suspect this way of thinking owes more to American apocalypticism than to economics.

[HK Chicago]

It could also be due to the end of the last boom, and the boom before that, and...

[Chi_Coruscant]

Okay, Strategic wants to focus on Aqua first, then maybe start with InterContinental.

Better to delay for while than kill it, eh?

[STR]

Originally Posted by spyguy

I think MO Tower will make it because of the Mandarin name, which is up there with the best in the world.

I think MO will make because Mandarin has been trying to get into Chicago for 10-20 years. IIRC They were going to have the first 30 floors of a much taller Millennium Center (or another slab in the area) back when that was in proposal stage.

[Steely Dan]

^ yeah, if memory serves i believe that it was 55 east erie that MO had designs on way back in the intial planning stages for that one.