John Murphy is making a big bet on the recovery of the downtown Chicago hotel market.
The developer is leading a company to revamp the Holiday Inn Wolf Point, Crain’s Chicago Business reported. The deal would total nearly $23 million for the leasehold interest in the 522-room hotel, which occupies the top floors of an office building in River North.
Murphy plans to buy the partnership stake tied to the estate of Edward Ross, the late Chicago developer who built the hotel in 1976. Murphy will sign a 99-year ground lease with Blackstone Group, which now owns of the building. It is “able to close,” he told The Real Deal, but declined to comment further.
The hotel has been closed since early December, according to its answering machine.
But it has gained new neighbors during its dormancy, as Houston-based developer Hines completes a trio of towers near the hotel. These include two residential towers and a 60-story, 1.2 million square foot office tower designed by Pelli Clarke Pelli and anchored by software company Salesforce.
Little is known about his plans for the Wolf Point Holiday Inn, but Crain reports that he intends to redevelop the hotel with a different brand from the IHG Resorts & Hotels family, indicating he may be heading to more upscale direction.
Murphy has a penchant for redevelopment of aging downtown properties into luxury hotels and residences. He recently transformed the former Cook County Hospital into a Hyatt Place and Hyatt House hotel.
The move comes at an uncertain time for Chicago hotels. In May, the Illinois Hotel & Lodging Association asked Mayor Lori Lightfoot to set aside $75 million to help hotels recover from their pandemic malaise. While some hotels in the city, like the Westin Chicago River North and the Sheraton Grand have reopened, others have recently entered the market.
Downtown hotels hit 42% occupancy in the last week of May, a peak since the start of the pandemic, though still well below pre-pandemic levels when 80% of rooms were generally fulfilled.
[Crain’s] — Joe Loveger