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Chicago O'hare International Airport Chicago O’Hare International Airport HOTEL OPERATOR MARKET INFORMATION www.flychicago.com Table of Contents INTRODUCTION 5 CHICAGO ECONOMIC OVERVIEW 9 O’HARE AIRPORT INFORMATION 15 Introduction 5 Introduction FULL SERVICE HOTEL (CORE) 860 rooms (current) 42,300 sf of conference and meeting space and ballroom Post-renovation program TBD, will include leisure facilities, room service, upscale all-day dining outlets, and other amenities FULL SERVICE HOTEL (T5) 300-400 rooms 25,000-65,000 sf of conference space, meeting space, and ballroom Includes a spa, room service, upscale all-day dining outlets, and other amenities Exact location TBD 6 The City of Chicago Department of Aviation (“CDA”) is considering the renovation of an existing hotel (“Existing Hotel”) and development of a new hotel (“New Hotel”), both of which would be CDA- owned and privately managed, to further enhance the overall offering of accommodations at Chicago O’Hare International Airport (“ORD”, “O’Hare”, or the “Airport”) (together the “Hotels”). Accordingly, CDA is issuing this Request for Proposals (“RFP”), to which hotel operators or teams (each a “Respondent”) can propose for consideration to become the selected hotel operator. EXISTING HOTEL The current lease agreement for the Existing Hotel expires on December 31, 2018, and the anticipated The Existing Hotel was developed in 1970. It is the effective date for a new Management Agreement is only hotel on Airport-owned land. The Upper Up- January 1, 2019. Operations with the selected Op- scale hotel currently offers 860 rooms and approx- erator will begin on this date, and CDA will conduct imately 44,000 square feet of meeting space. It is renovations to the Existing Hotel in phases to ensure directly connected to Terminals 1, 2, and 3 by walk- a portion of the Existing Hotel remains operational way, and by the Airport Transit System (“ATS”) to at all times. Terminal 5. The Existing Hotel also features: NEW HOTEL • All-day dining outlet • Variety of retail outlets CDA will develop the New Hotel near Terminal 5, with an anticipated construction start of 2019. The • Marketplace café anticipated opening date of the New Hotel is 2022. • Sports bar The anticipated effective date for a new Manage- • In-room dining ment Agreement is January 1, 2019, the Technical • Indoor pool Services Assistance would commence upon contract award. These dates are subject to change. • Fitness center • Business center • Connectivity to Chicago Transit Authority Blue Line train to the Loop (Downtown) For more information, please refer • huttle available for local travel and international to the Request for Proposals. terminals • Close proximity to regional bus center with access to Milwaukee, Springfield, Champaign-Ur- 7 bana, etc. 8 Chicago Economic Overview 9 Chicago Economic Overview “...Chicago has led the nation in corporate relocations. The capacity and connectivity 10.9% 11.7% facilitated by O'Hare have undoubtedly played New Hires-Midwest Major Business Expansions a significant role in companies deciding to YOY Growth, Feb 2016 MSA YOY 2015 put down roots here. From transportation and technology to talent and transparency, businesses move to cities that invest in their own future and the future of their residents.” 81.8% 11.2% Venture Capital Investment Patents Issued-City Rahm Emanuel, 2016 MSA YOY Growth, Q1-2016 YOY Growth, Match 2016 CHICAGO ECONOMIC OVERVIEW From its earliest days, Chicago has held an integral position as a center of transportation, commerce, and communication. In the era of globalization, Chicago maintains this strategic position, sitting at the nexus of virtually every major data network in the world. While the city has become a center of professional and service-sector employment, its industrial and manufacturing sectors are still vibrant, bolstered by the largest intermodal-container capacity in the Western Hemisphere. Key trends include: • The number of new hires in the Midwest increased by 127,000 year-over-year from 1.16M in February 2015 to 1.29M in February 2016. • The Chicago (city) economy added an estimated 15,077 jobs year-over-year, led by increases in the leisure & hospitality and education & health sectors. • Venture capital investment into Chicago companies increased by 81.8%, moving up from $97.6M in Q1 2015 to $177.5M in Q1 2016. • The number of major expansions in the Chicago area increased by 11.7%, from 624 expansions in 2014 to 697 in 2015. This significant increase influenced Chicago’s ranking as “Top Metro” in the United States for corporate investment for the third consecutive year by Site Selection Magazine The city generates a gross regional product (GRP) of over $575 billion annually, and is home to 400+ corporate headquarters. Chicago’s largest industries include manufacturing, printing and publishing, finance and insurance, and food processing. Beyond the corporate juggernauts and the Fortune 500, Chicago’s diverse and innovative economic ecosystem is also home to digital startups, bio and clean technology companies, as well as a robust population of institutions of higher education 10 and healthcare providers. CHICAGO’S TOP 25 EMPLOYERS Revenue Employees Company Product/Service Headquarters (Millions) (Chicago) Advocate Health Care Teaching Hospital & Trauma Center Yes $4,600 22,000 JPMorgan Chase & Co. Commercial Banking No $102,100 11,497 University of Chicago Higher Ed Yes $3,130 11,400 Presence Health Healthcare No $1,240 10,987 Northwestern University Higher Ed Yes $1,860 10,846 Walgreens Retail Convenience & Drug Stores Yes $76,390 9,484 NorthShore University HealthSystem Healthcare Yes $849 9,464 Marketing, Consulting & Accounting AT&T No $132,450 9,367 Services Industrial & Agricultural Chemical Abbott Yes $20,250 7,977 Products Automotive, Life, Renters & Allstate Yes $35,240 7,866 Homeowners Insurance United Airlines Commercial Airline Yes $38,900 7,691 Northwestern Memorial Hospital Healthcare Yes $1,710 7,586 AbbVie Pharmaceutical Manufacturing No $19,960 6,826 Health Care Service Corporation Healthcare Yes $19,670 6,660 Sears Holdings Corp. Retail Department Store Yes $31,200 6,427 Bank of America Commercial Banking No $95,180 6,170 Loyola University Health System Healthcare Yes $4.00 6,000 UPS Package Delivery Service No $58,230 6,000 Smartphone and Telecom Motorola Mobility Holdings, Inc. Yes $13,060 5,915 Manufacturing and Design Rush University Medical Center Healthcare Yes $2.40 5,759 University Of Chicago Medical Center Healthcare No $763.80 5,250 Employco Employment Placement Agencies Yes $45.00 5,000 Ford Motor Co., Chicago Assembly Plt. Automobile Manufacturing No $144,080 4,992 Northern Illinois University Higher Ed Yes $588 4,985 Loyola University Of Chicago Higher Ed Yes $540 4,893 11 Chicago Economic Overview NATIONAL HOTEL MARKET OVERVIEW • Hotels are substantial amenity to airports in terms of convenience to travelers and elevating profile and positioning of airport. • Airport authorities across U.S. have reinvigorated their push to develop hotels on airport land now following 5-6 years of growth in airport and suburban markets. • Half of nation’s busiest airports feature a hotel on airport property today or have one in planning phases. Prominent examples include ATL, MSP, JFK, SFO, and now ORD. • 519-room Westin Denver International Airport is most recent high-profile opening. • In order to evaluate how the convenience of on-airport hotels translates to occupancy and rate, JLL analyzed the performance of on-airport hotels located at various major U.S. airports. A survey of primary airport markets with on-airport hotels shows that their proximity to an airport’s core facilities is directly correlated to a performance premium relative to their off-airport competitors. • On-airport hotels in close proximity to terminals achieve on average a 138% premium in revenue per available room over rest of competitive airport market. ON-AIRPORT HOTEL PREMIUM OVER REST OF AIRPORT SUBMARKET 107% 129% 138% Occupancy Average Daily Rate Revenue per Available Room 12 O’HARE HOTEL MARKET OVERVIEW • Full service hotels in Chicago’s O’Hare and Rosemont hotel submarkets have posted 12% annual growth in revenue per available room since 2010, nearly double the national growth rate. The new supply pipeline is low by historic standards. • O’Hare and Rosemont submarkets have seen only limited supply growth in recent years. • Prior to opening of 158-room Hampton Inn & Suites Rosemont Chicago O’Hare in late 2015 and opening of 200-room Hyatt Place Chicago O’Hare Airport in mid-2016, the market had not seen any new hotel openings since 2009. • O’Hare and Rosemont hotel submarkets have seen nearly $390 million in hotel transaction volume since 2013, evidencing investor interest. • Chicago’s O’Hare International Airport is the world’s busiest in terms of aircraft operations. • The 860-room Hilton O’Hare enjoys strong gross operating profit per room given its strategic location and terminal connection. O’Hare and Rosemont Submarket Hotel Room Count O'Hare and Rosemont Submarket Hotel Room Count 12,000 10,000 8,000 6,000 Hotel Rooms Hotel Rooms Hotel 4,000 2,000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: STR Inc., JLL 13 Chicago Economic Overview O’HARE HOTEL MARKET OVERVIEW (CONT’D) The Hilton Chicago O’Hare International Airport is the average daily rate and occupancy leader in the airport market given its physical connection to the airport terminal. The Hotel competes with a set of full service, upper upscale branded hotels in the airport submarket, as outlined below. In addition, when it comes to group and day meetings business, the Hotel also has a secondary competitive set which is comprised of other prime airport terminal hotels across the country, such as the Westin Denver International Airport, the Grand Hyatt Dallas Fort Worth International Airport and the Westin Detroit International Airport.
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