Chicago’s hotel industry experienced an impressive rebound in 2024, achieving record-setting revenue thanks to a series of significant events that included the Democratic National Convention and Lollapalooza.
However, the optimism in the hospitality sector has encountered turbulence due to a wave of federal policy changes, such as steep tariffs and immigration crackdowns at key points of entry like airports and borders.
The ramifications of these changes have cast a shadow over the outlook for the rest of the year, raising concerns among hoteliers about the potential decline in international tourism—a vital segment for cities like Chicago.
Richard Mandigo, the Midwest advisory leader for CBRE hotels advisory, commented, “It’s going to drop tourism, period. Originally, and as recently as last month, we were assuming that we were going to have more international tourists.”
Mandigo noted that recent federal policies have severely disrupted those optimistic projections.
“People don’t feel safe coming to America, and so they’re just not going to visit,” he said.
International travel to the U.S. had already declined by 11.6% year-over-year as of March, with figures excluding visitors from Mexico and Canada, based on a preliminary report from the International Trade Administration.
In a stark warning, analysts from Goldman Sachs projected that under a worst-case scenario, the country could suffer a loss of up to $90 billion in combined revenue this year due to decreased visits and canceled purchases of American goods.
The world is effectively “voting with their wallets,” according to Mandigo.
On April 2, referred to as “Liberation Day,” President Donald Trump introduced broad tariffs impacting nearly every country, a move that has frustrated many potential international visitors.
This sentiment is further influenced by reports of tourists being detained at U.S. borders, generating fear and apprehension among foreign travelers.
Robert Habeeb, CEO of Maverick Hotels and Restaurants, expressed the uncertainty facing the industry: “In a market like this, it’s very difficult to see too far into the future.
We’re revising our operating plans very consistently.”
Prior to the onset of policy changes, Illinois had seen promising tourism trends, with nearly 2.2 million international visitors recorded in 2023—the most recent year for which statewide data is available.
These travelers contributed approximately $2.7 billion to the state’s economy, with Canada leading the pack of international visitors.
In terms of hotel revenue, international visitors historically represent between 10% and 12% of total revenue in Chicago’s hotel industry.
These foreign guests typically remain longer and spend more than domestic tourists.
Despite a prevalence of negative sentiment toward the U.S. —stemming from tariffs and immigration policies—Habeeb believes this outlook could change over time.
However, he acknowledges that weak inbound travel is anticipated for at least the next year.
While some data indicate that international demand remains stable at the moment, Amber Ritter, chief commercial officer at the Chicago Department of Aviation, admitted there are growing concerns regarding the future of international travel.
Ritter noted that although international numbers are presently at “record highs,” airlines are cautious about expanding their services in the current uncertain climate.
Notably, Chicago’s hotel and hotel tax revenue reached unprecedented levels in the central business district in 2024, suggesting the city may have finally overcome the lows experienced during the pandemic.
Last year, hotel revenue surpassed $2.8 billion in the CBD, with tax revenues around $157 million, according to a report from Choose Chicago in January 2025.
Initially, experts had forecasted modest growth in demand across various markets.
However, with the recent federal actions creating new uncertainties, Mandigo stated that the industry is struggling to adjust and revise revenue forecasts for the remainder of the year.
He characterized the situation as another unforeseen crisis that would take a considerable amount of time to fully address.
The upheaval has significantly affected the strategies of the hospitality sector.
Habeeb remarked that his company now anticipates a slight decline in revenue per available room in 2025 compared to 2024 due to rising costs.
Although Chicago has managed to return to pre-pandemic revenue levels, profitability has remained elusive because of escalating expenses.
Operators have shifted into what Habeeb terms a “cost contingency mode,” whereby everyone is seeking ways to reduce costs strategically.
However, the service industry faces unique challenges in cutting its workforce, given the direct correlation between staffing levels and guest satisfaction.
As a result, operators have adjusted their schedules, reduced management staff, and are carefully monitoring property inventories.
In terms of wage increases, they may not be as generous as in the past.
Looking ahead, Habeeb is hopeful that normalcy will return to the business environment eventually.
This stability will follow what he predicts will be ongoing fluctuations in headlines and policies that could keep the environment unsettled for a while.
“I’m an optimist,” Habeeb expressed.
He acknowledged that the administration is implementing out-of-the-box solutions, which can yield both successful and adverse results—but ultimately, the focus will need to revert to the “business of doing business” at some point in the future.
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