A chain of college city hotels has opened a hotel in Evanston in an attempt to break into a market so bad that the suburb’s best-known hotel is renting rooms to students at Northwestern University to help weather the COVID-19 pandemic.
Graduate Hotels today opened its first Chicago area location on Hinman Ave. Adjacent to campus to the northwest in 1625, about a year after the boutique brand owner paid $ 11 million for the historic Homestead home on the site and converted it into a college. Themed inn with 119 rooms.
The new hotel is the 28th in the country with the Graduate brand, which developer AJ Capital Partners launched in 2014 as a chain of hotels at universities with designs that reflect the culture and history of the city and the nearby school.
But the world has changed dramatically since AJ Capital began renovating the $ 13 million Evanston property. The coronavirus has torn the hospitality sector, cutting travel cut off and pushing many Chicago hotels to shut down due to a historical lack of demand. The crisis has also rocked universities, many of which stumbled to get students safely back on campus in the fall. In Northwestern, sophomore and sophomore college students are banned from being on campus – including dormitories – during the fall quarter and taking distance learning while third and fourth year students and graduate students are on campus.
For the 269-room Hilton Orrington in downtown Evanston, that policy provided the ability to generate business at a time when there is little use. The property, owned by New York-based real estate company Olshan Properties, rented an unknown number of its rooms to Northwestern students this fall, according to people familiar with the rentals.
The terms of these living conditions are unclear and a hotel spokesman did not respond to requests for comment. The student rents come, however, as the property owner faces a potential crisis on his $ 40 million mortgage, which has been packaged with other loans and sold to bondholders. Net cash flow on the property for the twelve months ended June 30 was less than $ 1.3 million or less than half the debt service liability for that period. This comes from a Bloomberg report associated with the loan. According to Bloomberg data, a master servicer overseeing the loan on behalf of investors changed terms to allow Olshan to make lower mortgage payments from May to July.
At Graduate Evanston, dormitory is not an expected use for the fall quarter in the northwest, but the university has toured the space and has expressed an interest in renting rooms for students in the spring, said David Rochefort, president of Graduate Hotels. This would coincide with the 19 other graduate hotels in other markets that house around 1,300 students in total, Rochefort said.
Universities “honestly need the help,” said Rochefort. “They don’t have beds and they have really complicated problems to solve … we’re happy to play our part.”
Regarding the logic of hotel opening during a pandemic – Graduate has opened six new locations in the last three months – Rochefort said the properties are “leaner” and have lower costs, e.g. B. Less frequent housekeeping to limit the interaction between guest and housekeeper for security reasons. This allows the property to break even when demand is low, he said. “We know the pie itself is smaller right now, but we are very confident that we can get more than our fair share of the demand in these markets.
“We’d much rather be open, invite the church and let the northwest church know what we’ve built,” he said. In times without COVID, the hotel is primarily aimed at alumni, visiting professors looking for a longer stay, and parents of students visiting the campus.
Rochefort said room rates at Graduate Evanston will start at $ 99 a night this fall, although it expects typical rates to be closer to $ 150-160 after the pandemic subsides.
Graduate Hotels currently has six other locations under development, including the first outside the US at Oxford and Cambridge Universities in England.
AJ Capital Partners was founded by CEO Ben Weprin, who recently relocated the company’s main office from Chicago to Nashville. The development firm is best known locally for projects including the Soho House Hotel and Private Club in the Fulton Market District, the Chicago Athletic Association hotel on Michigan Avenue, and the Lincoln Hotel in Lincoln Park.
Alby Gallun contributed to this.