ORDnHKG

In the previous location that currently is occupied by the Gwen, it was better, and Conrad Chicago had no bears but a cow instead (base on the citywide art theme cows on parade)

jacisme

https://www.chicagobusiness.com/comm...4-e5abed9fea5d

As they stare down a $70 million foreclosure lawsuit, the owners of the Conrad Chicago hotel have split with Hilton Worldwide as the shuttered inn's brand partner, raising new questions about the future of a hotel that's poised to deal a major financial blow to both the owners and their lender.

Hilton confirmed in a statement that is no longer affiliated with the 289-room hotel at 101 E. Erie St. as of Feb. 7, ending a partnership with a joint venture of hotelier Laurence Geller and Wanxiang America Real Estate Group that owns the property. The statement said it was an "amicable" decision between the two sides to terminate their management agreement for the hotel, which occupies the majority of a 20-story building just steps from the Magnificent Mile and has been closed since April 2020.

The move comes almost 16 months after the Geller-Wanxiang venture was hit with a foreclosure complaint alleging they defaulted on their $70 million loan tied to the property, according to Cook County court records. That complaint is still pending, court records show, while the owners and their lender, Washington D.C.-based Union Labor Life Insurance, have been quietly shopping the hotel to prospective buyers in an effort to resolve the dispute, sources familiar with the offering said.

The property is one of the highest-profile examples of distress in a local hotel market that has been pummeled by the COVID-19 pandemic. The slow recovery of the downtown hospitality sector from the public health crisis has decimated the value of hotel properties, leaving many owners underwater, meaning their properties are worth less than the debt tied to them. The Palmer House Hilton and JW Marriott Chicago are among the major downtown hotels whose owners were hit with foreclosure lawsuits early in the pandemic.

Luxury hotels like the Conrad have also been especially slow to bounce back from the pandemic, weighing down local hotel performance. Average revenue per available room at downtown hotels in 2021, a metric that accounts for both occupancy and room rates, was 40% below 2019 levels, according to hospitality data and analytics firm STR. That underperformed the average among the nation's 25 largest markets, which were down by an average of 33% compared to 2019, STR data shows.

It's unclear how much capital Geller and Wanxiang invested turning a former block of offices in the Erie Street building into the Conrad, which opened in 2016. Their venture paid more than $34 million in 2014 for what was then the offices of advertising agency DraftFCB, then took out the $70 million loan in 2015, according to Cook County property records.

Based on prices paid for other downtown hotels in recent months, their equity in the property has likely been wiped out, and a sale of the hotel today would almost certainly result in a major financial haircut for Union Labor Life Insurance. A handful of hotel investor sources estimated the property might trade today for less than 75% of the debt balance, if a buyer were to continue to operate the property as a hotel.

But Hilton's departure also opens up the prospect of a buyer picking up the property to reposition it as something else, especially as business travel and conventions and trade shows on which downtown hotels rely are slow to come back. Demand for downtown apartments, meanwhile, has already surpassed pre-pandemic levels.

Spokesmen for Geller, Wanxiang and Union Labor Life Insurance did not respond to requests for comment.

The Conrad is poised to become the second major hotel loss for Geller and Wanxiang, which also teamed up in 2015 to buy the Waldorf Astoria Chicago hotel in the Gold Coast for almost $112 million—then a record-high price paid for a Chicago hotel. The duo lost the highly leveraged propertyin 2019 to their lender, which was then hammered by the pandemic, and sold the hotel in 2020 for just less than $55 million to billionaire Joe Mansueto.

Losing the Conrad would eliminate Geller entirely from the Chicago hotel market, which he targeted for a big, new career stage after his 2012 departure from Strategic Hotels & Resorts, the company he founded. The website for his current venture, Geller Capital Partners, no longer lists any hotels in its portfolio.

Wanxiang, which is the commercial real estate arm of auto parts manufacturer Wanxiang America, has a track record for highly successful real estate bets in the city over the past decade. The company has backed several high-profile projects led by Chicago developer Sterling Bay, including the redevelopment of the former Fulton Market Cold Storage warehouse into a modern office building that now houses Google's Midwest headquarters.

Led by commercial real estate veteran Larry Krueger, Wanxiang is also an investor in the 46-story hotel and apartment tower Sterling Bay developed at 300 N. Michigan Ave., the 1.5 million-square-foot BMO Tower skyscraper recently completed next to Union Station and the new One Chicago luxury residential high-rise in River North.

Wanxiang's local hotel investments, however, haven't fared as well. In addition to the Waldorf and Conrad, the company was an investor in a venture led by Chicago-based Sterling Bay that recently sold the Talbott Hotel in the Gold Coast for almost 20% less than its total investment in the property.

SFO_UGS

I just read that Hilton was pulling out of the Conrad Chicago. Since the pandemic, I've stayed at other hotels in Chicago and to be fair, the Conrad Chicago was never a first choice prior to the pandemic. Other than indivudals losing their positions, I'm not sorry to see the Conrad Chicago disappear. Service was bloody awful and unless you paid for one of the larger rooms, the "standard" rooms were small and pricey. Yes, it's Chicago, but my complaint over numerous visits was the lack of baseline SERVICE. It just wasn't there for a "luxury" hotel (though, I never thought it was a luxury hotel. A nice hotel, yes. Luxurious? No.) Too many "I'm sorry's," "We need to do better," etc., etc., and their remedy was additional (worthless) points to my account or a standard room for 2 nights on a return visit. When it happens too many times, it's time to find a different hotel.

I recently stayed at the former Conrad Chicago, which is now The Gwen under Marriott. Don't bother, anyone. They have a new lobby/bar, but the rooms are still underwhelming. In fact, the bathrooms are exactly the same as they were when it was the Conrad. And the room carpet hasn't been changed since my last visit in 2013 when it was a Conrad. Good service, though, but an unimpressive room.