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What Makes Airport Hotels Hot Investments?

Chicago Hotel

Hotels in airport submarkets aren't as sexy as their counterparts in urban core markets. But they may be more stable assets for developers and investors. Here's why.


Savills Studley managing director Tom Baker says airport hotel occupancy rates mirror those of urban hotels in the same market, yet the RevPAR of urban core hotels is higher. Airport hotels have lower rates and more discounted business stemming from distressed passenger stays. But it's mitigated by lodging contracts hotels have with airlines for booking stranded passengers and airline crew. Tom adds that operating costs and real estate taxes in urban core hotels are higher than in airport markets, which balances out lower RevPAR and makes airport assets as efficient as downtown hotels.

The Hilton Chicago O'Hare will be modernized to accommodate large trade shows under a plan proposed by the Chicago Department of Aviation.

Tom says hotels on airport property like the Hilton Chicago O'Hare (pictured) are an airport submarket's strongest performers. These hotels are great meeting points for travelers from multiple locations and ideal for early morning and international flights. Having a hotel on airport property is convenient for business travelers who can take their time preparing for travel, knowing the airport is nearby


Another factor at play in airport hotel markets is brand familiarity. Travelers will go where their points lead them. Tom says many travelers will play Hilton, Marriott, Hyatt, Starwood and other point programs to get the highest status they can for their spending power. This means travelers don't have to compromise on quality. The personal touches trending in boutique hotels are trickling over into full-service and limited-service owners. Tom says Hilton Garden Inn and Courtyard in these markets are amazing products that have been influenced by some of the boutique offerings.


The airlines are even putting some skin in the game. Last July, JetBlue partnered with MCR Development to redevelop Eero Saarinen's landmark TWA terminal at JFK International Airport into a 504-room hotel. MCR signed a 75-year lease on the terminal last September.