As tariffs and other federal policies cause confusion for travelers, the Illinois hotel and hospitality industry is warning of a possible downturn in business. 

Illinois’ hotels saw a stark decline in travel during and directly after the pandemic, but in recent years have seen improvements as people from around the world begin to travel again.   

Michael Jacobson, president and CEO of the Illinois Hotel and Lodging Association, told The Daily Line they had predicted that stark growth would begin to plateau this year as they near pre-pandemic levels. But now the industry faces uncertainty as federal policies threaten to interfere with travel.   

Jacobson said hotels and travel are lagging economic indicators, as most people or businesses plan travel months in advance. He said they still saw an increase of under 1 percent for the first quarter of 2025.  

But with tariffs creating concerns regarding the U.S. economy, travel is often the first thing people and businesses decrease in their budgets. The bottom line, Jacobson said, is that hotel owners do not know what the next month or years will bring.  

“Our industry doesn't do good with uncertainty, and that's what we're living through right now,” he said. “We have no idea. I mean, what if a lot of these policy decisions get reversed in the next couple of weeks?”  

Jacobson said tariffs also impact hotels’ costs.  

“Take, for example, our hotel renovations,” he said. “You stayed in a hotel that is dated and needs to be renovated. I'm sure you have. We all have the typical lifespan, or duration between renovations of a hotel is typically around seven to eight years from renovation to renovation.”  

With many materials coming from out of the country, renovations will cost more. He said many of the owners in the association are reconsidering their plans.  

Jacobson said if the industry begins to decline again, it will also lead to layoffs.  

“Labor is the biggest expense that every hotel faces,” he said. “Unfortunately, those are the men and women that are busting their butts and working in our hotels every day, that I think pay the greatest price, if this continues.”   

He pointed to nearly 300,000 jobs in Illinois supported by the hotel industry that could be impacted, including restaurants, rideshares, museums and airlines.  

Jacobson said some members of their association have already seen cancellations from international travelers and government workers.   

He said government workers make up a large portion of travelers for the Quad-Cities, Quincy and Metro East markets. He said future bookings of federal workers are 20 percent down year to year.   

One bright spot for Illinois is that the market does not rely too heavily on international travelers. Jacobson said they make up about 3 percent of annual travelers to Chicago, compared to 20 percent in New York City.   

The possibility of a recession has been discussed since the pandemic, but Jacobson said there is a fear in the industry that federal economic policies could accelerate that possibility.  

“If that were to happen, then it's a totally different ball game, because then business travel really starts getting impacted, where companies cut their travel budgets or put travel bans in place for their employees,” he said. “One of the first things people cut out of their budgets is their vacation budget. So again, we're holding our breath and cautiously optimistic that doesn't pan out, but it's something that is on our minds.”   

The Senate Special Committee on Tourism met Friday morning to hear from leaders in the industry and hear potential ways the state could assist the industry.  

Senate Bill 2053 was proposed by committee Chair Sara Feigenholtz (D-Chicago). The measure would change the required match for grants given to convention and tourism bureaus from 40 percent of the grant amount to 25 percent, lessening the burden on the bureaus. The grants are run by the Department of Commerce and Economic Opportunity and come from the Local Tourism Fund to promote tourism in the state.  

Jacobson said the biggest change the state could make to benefit the industry is property tax reform. He said they have some owners in Chicago who pay $40,000 a day in property taxes.  

“When you look at the ability to turn a profit and the ability to stay afloat during tough times, it's very hard to do so when you're paying that high of a property tax burden,” he said.  

Jacobson and other leaders said there is a silver lining for the industry, as upcoming events including the Route 66 Centennial and the 2026 President’s Cup in Medinah will likely bring travelers to the state.