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.
“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.
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.
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.
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, IHLA said.
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.
“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.
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.
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.
“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.”
Tourism directly supports more than 295,000 jobs in Illinois, including nearly 50,000 hotel jobs.
“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.
Areas in Illinois with major federal facilities, such as the Quad Cities, Metro East and Quincy, are especially vulnerable to disruptions, he said.
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.
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.
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.
Contributing: AP