Palmer House For Sale
By Rachelle Bowden on Nov 4, 2004 5:15PM
Hilton is putting the Palmer House Hilton, Chicago's oldest and second largest hotel, up for sale. Hilton purchased the hotel in 1945 for about $20 milllion and expects to sell it for about $250 million. As a condition of the sale, Hilton wants to retain management of the hotel. They're just looking to free up some dollars to finace a stock buyback or new investments. The price, which comes out to about $182,000/room, has surprised many hotel industry observers. Especially since the local hotel market has barely kept pace with 2003 results - occupancy rates are slightly higher, but room rates are slipping.
Now for the history lesson: Who was Palmer? And what's up with Palmer House?
Potter Palmer pretty much created "shopping" as we know it... and this is why we totally &hearts him. He made his first millions with a dry-goods store and created the first "bargain days", money back guarantees for any reason, the policy that the customer is always right, and free home delivery of all purchases. In the 1860s, Palmer got out of the business. He leased the building to Marshall Field and Levi Leiter for $50k/year.
In 1870, Palmer announced his marriage to Bertha Honoré and as a wedding gift, he presented her with a hotel: The Palmer House. At 8 stories high, it was the tallest building in the city. It had 225 rooms that were decorated with Italian marble and French chandeliers. Needless to say, Bertha agreed to marry the guy.
The Palmer House Hotel was completed but not yet opened when the Great Chicago Fire tore through town and destroyed it. In a single night, all of Palmer's State Street properties were destroyed. So then what'd he do? Palmer borrowed $2 million from an insurance company - up to then it was the largest amount ever loaned to a private citizen - and he began rebuilding State Street and the new Palmer House Hotel.
Palmer claimed the new hotel was totally fireproof. He even dared anyone to light a hotel room on fire, saying, "If at the expiration of [one hour], the fire does not spread beyond the room, the person accepting this invitation is to pay for all damages done and for the use of the room. If the fire does extend beyond the room (I claim it will not), there shall be no charge for the damage done."