<p>Economic uncertainties caused by political tensions and tariff-related issues threaten hotels’ recovery, as well as jobs, businesses, local economies and state revenue, said the Illinois Hotel & Lodging Association on Friday, during an Illinois Senate special committee on tourism hearing to discuss the state of the industry.</p><p>“Unlike some service sectors, hotels depend heavily on advance bookings for conventions, trade shows and corporate travel, which are often planned years ahead. Disruptions today — geopolitical tensions, tariffs, unclear economic outlooks — result in event cancellations and reductions years into the future,” Keenan Irish, vice president of government relations at IHLA, said in his testimony.</p><p>Industry data show worrying signs. A member survey conducted last month by IHLA found economic uncertainty and government funding cuts are hurting Illinois hotels, with 70% reporting cancellations from international travelers. In addition, 60% of survey respondents reported cancellations of hotel reservations tied to government travel cuts.</p><p>In January 2025, Chicago was the only top 10 U.S. hotel market to record year-over-year declines in hotel occupancy, average daily rate and revenue per available room, according to IHLA.</p><p>Statewide occupancy improved slightly in February and March and was up about half a percentage point in the first quarter of 2025. But this is the slowest year-over-year growth since 2020, and first quarter occupancy remained 6 percentage points below pre-pandemic levels, said IHLA.</p><p>The latest wave of challenges adds to the “significant strain” on Illinois’ tourism and hotel industries, which have not fully recovered from the COVID-19 pandemic, Irish said. Labor costs are up more than 30% since 2019, while borrowing costs have nearly doubled. Insurance premiums continue to rise and costs for supplies and materials are “significantly” higher, Irish said.</p><div class="Enhancement" data-align-center>
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<div class="Figure-content"><figcaption class="Figure-caption"><p>Keenan Irish, vice president of government relations at the Illinois Hotel & Lodging Association</p></figcaption><span class="line"></span><div class="Figure-credit"><p>Provided</p></div></div>
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</div><p>“These rising expenses are putting pressure particularly on smaller, family-owned hotels, limiting their ability to invest in property improvements, hire and retain staff and compete effectively,” Irish said.</p><p>He urged policymakers to make it more affordable for small businesses to operate in Illinois and to increase investment in tourism workforce development to help with labor shortages.</p><p>New economic challenges — including tariffs and broader uncertainty — could dampen recovery for the state’s hospitality industry. Hotels use furniture, fixtures and equipment primarily manufactured overseas, such as beds, desks and lighting.</p><p>“If tariffs increase the cost of these goods, our members are reporting that planned renovation projects would be adjusted, delayed, or require more expensive financing,” Irish said. “These factors can affect a property’s ability to maintain quality standards and remain competitive in attracting both leisure and business travelers.”</p><p>Tourism directly supports more than 295,000 jobs in Illinois, including nearly 50,000 hotel jobs.</p><p>“Disruptions in travel spending — whether from reduced federal government travel spending, a recession, or fewer international visitors — would trigger cascading job losses across hotels, restaurants, retail, transportation and local vendors,” Irish said.</p><p>Areas in Illinois with major federal facilities, such as the Quad Cities, Metro East and Quincy, are especially vulnerable to disruptions, he said.</p><p>Government travel in the U.S. is down 9% year-to-date, and future bookings are 20% below 2024 levels, according to a study released in April by Kalibri Labs, a hospitality industry platform.</p><p>The travel forecasting company Tourism Economics, which originally projected a strong 8.8% increase in international visitors to the U.S. in 2025, revised its annual outlook in April to predict a 9.4% decline.</p><p>Tourism Economics projected a 20.8% drop in Canadian visitors to the U.S. in 2025, compared to 2024, and a 10% decrease from Mexico for the same period. Canada was the largest source of visitors to the U.S. in 2024, with more than 20.2 million visitors, according to U.S. government data.</p><p><i>Contributing: AP</i></p><div class="RelatedList Enhancement" data-module data-align-center>
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May 2, 2025 at 06:33PM
