Reopening of the Hilton Orrington hotel in downtown Evanston, which was scheduled for today has been delayed, and there are now questions about the long-term ownership and operation of the property.
Like all hotels and motels, the 259-bed Orrington has been devastated by the coronavirus pandemic, due to the near-evaporation of business and leisure travel. The Orrington closed temporarily after Thanksgiving, with the reopening set for today.
However, a front desk representative tells “Evanston Now” the reopening has been pushed back to April, or perhaps late March. No specific date was given.
But there are now even larger questions about the Orrington’s future. According to financial analysts at Fitch Ratings’ CMBS group, the hotel’s income is not enough to pay the mortgage. “Current property-level cash flow is insufficient to cover the monthly mortgage payment,” the Fitch analysts say, “and the borrower is not willing to come out of pocket to make up the difference.” In fact, Fitch, a credit rating agency, says mortgage payments have not been made since at least October.
That borrower, Fitch says, “is temporarily closing the hotel” and is “willing to turn over the keys” to the company now dealing with the loan. The Orrington is not owned by the large Hilton Hotel chain, but rather by Olshan Properties of New York City. Evanston Now has tried to contact Olshan but have not yet heard back after leaving a voicemail message.
If the borrower/owner does “turn over the keys,” it’s unclear what will happen next. For example, will the loan servicer (Midland Loan Services) operate the hotel short term while trying to find a long-term purchaser? Evanston Now has also tried contacting the Orrington’s general manager via email, but has not received a response.
The combination of fewer Northwestern students in Evanston last quarter, no hotel-staying football fans, no in-person graduation bringing in moms and dads, and no weddings, banquets, and other meetings because of COVID-related crowd restrictions all added up to almost no guests at the Orrington.
The Orrington was kept afloat in part last year due to a social service agency renting rooms for the homeless, and also from some college students staying there due to partial closing of the NU dorms. Those dorms have now reopened, and the homeless individuals (about 70) have all been placed at a different hotel, the Margarita Inn.
While the Orrington may be the most dramatic example of the pandemic’s influence, other hotels in Evanston are suffering as well. According to Gina Speckman, executive director of Chicago’s North Shore Convention and Visitors Bureau, local room occupancy is 60-70% below the same period last year.
Even though crowd size restrictions have been lifted somewhat by the state (to 25 people in a meeting room), that won’t lead to much immediate help. “People don’t plan a meeting for today today,” Speckman says. “It’s usually more like six months or a year out.”
According to the American Hotel and Lodging Association, the return of business and group travel is largely keyed to how many people get the coronavirus vaccine. Those business trips are not likely to pick up until late this year, the association says, and all pre-pandemic levels of travel are not expected to return to normal until 2024.
Michael Jacobson, president of the Illinois Hotel and Lodging Association, says the second round of government Payroll Protection Plan payments will help, but hotels and motels still need more federal and state assistance to keep many properties from closing.
Jacobson says “the shame” of the situation is that without more help, a lot of small properties will shut their doors, and “giant investors will buy them on the cheap.”
Jacobson says Illinois hotels pay $8 billion in taxes each year to state, local, and the federal governments. If hotels go under, he notes, those tax payments go under with them.
There is a bit of good news for a place like Evanston in all of this. Not a ton of good news, but at least a bit.
“College towns always come back” faster than do other locations, Speckman says. In fact, a new hotel, The Graduate, opened recently in Evanston despite the pandemic.
“Northwestern,” Speckman says, “is not going away.” So the demand for hotel rooms will return eventually. But eventually may be a long way off.