O’Hare Airport to Get $350M Hotel Expansion

Three new hotel developments are set to sprout up near the airport by 2020.
The O'Hare Hilton hotel (left), the Terminal 5 hotel (right), and the extension of the ATS (upper right)

The O’Hare Hilton hotel (left), the Terminal 5 hotel (right), and the extension of the ATS (upper right)

Chicago—Three hotel projects at O’Hare International Airport will more than double the airport’s current hotel capacity, the administration of Chicago Mayor Rahm Emanuel announced last Friday. The expansion will comprise the construction of two new hotels and the modernization of the existing O’Hare Hilton, all on the airport’s grounds.

Adjacent to Terminal 5, the Chicago Department of Aviation will finance and develop a new hotel with direct access for O’Hare travelers to and from the terminals via the airport’s free, 24-hour Airport Transit System. The full-service hotel is expected to have 300 to 400 rooms and 25,000 to 65,000 square feet of conference space, banquet rooms, ballrooms and other amenities.

The second on-airport hotel will be part of a new mixed-use commercial development adjacent to the multi-modal, joint-use facility now under way on the northeast side of O’Hare, along Mannheim Road. This property will feature 150 to 200 rooms, a business center, office space and other amenities. It too will be linked to the terminals via O’Hare’s ATS, which will be extended 2,000 feet to that part of the airport. In addition, the ATS’s current fleet of 15 vehicles will be replaced with 36 new rail cars.

The $782 million multi-modal facility, announced in May 2015, is a consolidated rental car and public parking facility with up to nine levels.

Finally, the existing O’Hare Hilton is to be renovated to be able to accommodate large-scale trade shows and events; amenities such as spas, extended room service, concierge services, and quality restaurants and boutiques will also be added. This project will begin once the current lease expires, in two years.

A request for proposals will be issued in the fall, and construction is slated to be complete by 2020. The total investment for these hotels will be about $350 million, according to the city of Chicago.

Other current upgrades at O’Hare include a $1.3 billion project for a new runway (Runway 9C/27C), deicing pads and other infrastructure and the development, in partnership with American Airlines, of five new gates at O’Hare by 2018, the first major gate expansion since 1993. (Passenger traffic through O’Hare increased 9.8 percent from 2014 to 2015, according to a report from HVS.)

The O’Hare hospitality submarket is performing fairly well now, but with low barriers to entry, it has historically produced “a wide range of winners and losers,” Hans Detlefsen, president of Hotel Appraisers & Advisors in Chicago, told Commercial Property Executive.

An on-airport hotel often holds a competitive advantage over hotels that are simply near a major airport, he continued, provided that the former is “physically integrated into airport terminals in such a way that guests do not need to use a taxi, pay for a rental car or go outside… This is especially true for very large airports that feature interesting dining and shopping opportunities inside the terminals, such as O’Hare.”