Daniel Burnham's Reliance building, a fixture of early 20th century State Street and renovated in 1999 with city money- the Hotel Burnham is in foreclosure.
Crain's Chicago Business reports Bank of America has sued the hotel owners, Dan McCaffrey Company, defaulted on loans of $36 million.
The owners of the 122-room hotel at Washington and State had been plowing through their own cash to remain current on monthly mortgage payments but stopped payments in July, sending the loan into default.
The owners are hoping to modify the terms of the loan.
In contrast, the mood on opening day at the Elysian couldn't be more optimistic. A $280 million project that took six years to build has been through all manner of uncertainty in the wake of the worst recession since the depression.
"After many years of blood, sweat and tears and I kid you not... blood, sweat and tears- it's open," said Mario Tricoci.
Spa magnate and developer Mario Tricoci is a partner in the 188-room hotel that strives to be the last word in Chicago hotel luxury. He thinks even the well-heeled traveler these days is looking for value.
"We have balconies, with terraces, we have fireplaces- for about the same price you would pay for the other 5 stars I think physically you are getting a little bit more," said Tricoci.
It's the Elysian's "value proposition" that its principals said could only be offered because they had private financing in a down market.
RAVI: "What if you had to rely on the banks to finance all this, what might have happened?"
"Who knows, boy, some of the banks we were dealing with… are no longer in existence. It was very scary out there and I am glad that we didn't have to deal with that," said David Pisor, CEO Elysian Hotel.
Analysts said the Hotel Burnham had been felled by high debt from refinancing in 2007 just as the outlook for hotels got gloomy.
Downtown hotel occupancy in 2008 through October was 73 percent; in 2009 that fell to 68.8 percent. The average room rate for 2008 through October was $203.30; in 2009 that dropped steeply, to $164.72.
"The good news is it that it probably can't get any worse than it is now, if you live through this, you live to fight another day, you will be on the outside, the other side, poised to for success but now is absolutely the worst time to be opening a hotel," said Tom Corfman, Real Estate Writer, Crain's Chicago Business.