Step into the paneled lobby of the James hotel, past its leather chairs and sofas and up to the check-in counter, where you're handed a warm facecloth, and the hurly-burly of the city recedes. Upstairs, you're pampered further with a 16-inch mattress and luxury linens, a 42-inch plasma TV, and a compact stereo with an iPod docking station. In-room Wi-Fi is free, and the bedside clock even projects the time onto the ceiling. "We aim to create that special sensory moment that keeps them coming back," says Patrick Hatton, the hotel's general manager.
Out-of-towners would never guess that the $359-a-night room has the same dimensions it had when the hotel was the budget-friendly Lenox Hotel & Suites or that the Scandinavian-inspired lobby used to be a Houston's bar and grill. Two years ago, the property reopened as a "lifestyle" hotel aimed at trendies who want to see and be seen. Since then, three other downtown hotels have been remodeled and rebranded, the Sax, Cass, and Blackstone. A fourth, Kimpton's $40 million renovation of the 1927 Bismarck Hotel into the 483-room Allegro, was completed in May.
But fashion, by definition, is fickle. Moreover, Chicago is adding hundreds of high-priced hotel rooms just as the economy's downtown threatens to knock the wind out of business and vacation travel. For now, the James is more than holding its own. Hatton says revenue per available room, the hotel industry's benchmark, rose 26% in the first quarter from a year earlier. But spending on food and beverages is slipping, he concedes, and meeting planners are asking for bigger price breaks. "With the slowing economy," he says, "it's a survival game now."
Through the 1990s, the big names in hostelry—Hilton, Hyatt, Marriott, Holiday Inn—used design to convey consistency across all their properties. They rethought that cookie-cutter approach after Starwood Hotels & Resorts opened its first W Hotel in New York in 1998 and turned high-fashion, high-energy design into a marketing tool. Today, the industry's mantra is differentiation, with design supplying a property's "story."
"We now see design at the forefront of the planning process," says Roger G. Hill, head of the Gettys Group, a Chicago design shop that managed the Blackstone and Cass renovations. "Capital markets want to know far in advance what the ultimate project will look like."
The 297-room James, on North Rush Street, has an enviable clientele: Gen-X travelers with incomes of $100,000-plus who are eager to sample the newest adventure. Its lobby and David Burke's Primehouse restaurant have become places to glimpse fast-track business executives, such entertainers as Kanye West and Ashlee Simpson, and local sports celebrities. When it opened, Chicago had only a few other high-end boutique inns. It's getting more all the time.
The Dana Hotel & Spa is the newest. A few blocks away, on North State Street, it features floor-to-ceiling windows, balconies, a open-air rooftop lounge, and a floating sushi bar. Managing partner Gene Kornota says the hotel has another edge over the James. His cost is $277 per room, while the James' estimated room cost, based on a recent sale by one of the partners, is $400, giving Kornota leeway to underprice his rival.
Some of the lifestyle hotels also have powerful corporate allies. The Cass is part of Holiday Inn Express, while Marriott handles reservations for the Blackstone. The strongest threat to the James may come, in fact, from Marriott, which is partnering with boutique-hotel pioneer Ian Schrager to open 30 Edition-brand properties. Chicago's Edition is set to open in 2011 in a 50-story tower less than two blocks east of the James.
Design trends may also be moving away from the sleek style epitomized by the James and toward homier places. Rick Swig, president of RSBA & Associates, a hotel consultancy in San Francisco, thinks the James is vulnerable. "All these hotels not targeted at the traditional traveler will not look good," he says, "once the bloom is off the rose and the fashion moves on."