CHICAGO—The Chicago region's hospitality market has had a good run in the past few years. Recently, however, some have voiced concern that, similar to the apartment market, perhaps too much new development was underway. And there certainly has been some pressure on occupancy levels. But according to a new report from Marcus & Millichap, by other metrics, such as growth in the average daily rate, the hospitality industry in Chicago and Midwest still looks healthy, and these trends are likely to continue for the rest of 2017.

“People think there has been a dip in the hospitality industry in general, but it is still strong,” Ebrahim Valliani, investment associate in Marcus & Millichap's Chicago O'Hare office, tells GlobeSt.com. The ADR for the Upper Midwest increased by 2.6% last year, and M&M forecasts that this year it will rise another 2.1%. RevPAR growth was slower, but Chicago hotels did post a nominal gain last year. “People have been asking us, 'what is the outlook for the rest of the year?' And the outlook is positive.”

M&M data show that about 3,000 rooms will come online in Chicago during 2017, and this will put pressure on RevPAR. But Valliani believes “there is still a need for more rooms in the Chicago MSA.” He points out that during many of the big conventions held in the McCormick Place on the lakefront, some attendees end up staying in suburban hotels.