Apr162014

Hilton Chicago and its Stevens Hotel scandalous history

Hilton Chicago has the reputation for hosting every President of the United States as a guest from the time the Stevens Hotel opened in 1927. There is a fascinating early hotel history from 1927 with the Stevens family of Chicago who built the immense hotel only to lose it in bankruptcy with the Great Depression. The Stevens was the largest hotel in the world when it opened its doors to guests. Six years later, Ernest Stevens was on trial for embezzlement, his brother committed suicide after the family’s insurance business went bankrupt and the U.S. Army purchased the Stevens Hotel in World War II to house soldiers. In 1945, the property was acquired by Conrad Hilton and the immense hotel property has carried the Hilton name for more than sixty years.

Stevens Hotel was conceived in the roaring 20s and designed to be the largest and one of the most opulent hotels in the world. Within six years of its grand opening, the Stevens family name was rocked by embezzlement scandals and suicide that brought down their Chicago family business empire.

The Stevens Hotel opened in 1927 on South Michigan Avenue across from Grant Park in Chicago. The 28-story hotel had 3,000 rooms, fine shops, cavernous ballrooms and even mini-golf on the roof.

The landmark Chicago hotel was built by the Stevens family who had built their family wealth with the Illinois Life Insurance Company. J.W. Stevens had already built and owned La Salle Hotel that opened in 1909 with 1,000 rooms as one of Chicago’s finest hotels in the loop. La Salle Hotel was demolished in July 1976.

Supreme Court Justice John Paul Stevens was son of Ernest Stevens, the hotelier who was tried and convicted of embezzling millions from the family’s insurance company to financially prop up their family-owned Chicago hotels. Ernest Stevens’ conviction was later overturned on appeal to the Illinois Supreme Court, however, the family was bankrupted and two of Chicago’s finest hotels went into receivership.

Hilton Chicago

Hilton Chicago is currently the third largest hotel in Chicago by rooms (1,544 rooms), behind The Palmer House Hilton (1,639 rooms) and Hyatt Regency Chicago (2,018 rooms). Conrad Hilton purchased both Stevens Hotel and The Palmer House properties in 1945.

The hotel was at risk of being demolished in the 1970s. Hilton Hotels closed the hotel for more than a year in 1984 for the most expensive renovation to that date in hotel history at $185 million. The size of many rooms doubled and reduced the total hotel rooms from 3,000 to 1,544.

Hilton Chicago-2

Hilton Chicago main entrance on South Michigan Avenue.

Many of the historical details in this piece about the Stevens Hotel are taken from a 2007 article, “Heartbreak Hotel” by Charles Lane in ChicagoMag.com. The three page article is a fascinating read.

The Stevens family wealth began with J.W. Stevens, an Illinois-born man who came to Chicago in 1886 and made a fortune in the insurance business. His two sons, Raymond and Ernest worked the family businesses and eventually assumed leadership with Raymond leading Illinois Life Insurance and Ernest, ten years younger, managing Hotel La Salle.

Patriarch J.W. and son Ernest developed the Stevens Hotel Company in 1925 to raise capital for building the Stevens Hotel. Raymond was more cautious about the investment opportunity. The hotel was anticipated to generate $2.8 million in revenue annually when it opened. Illinois Life Insurance invested $3 million in Stevens Hotel Company bonds to back the construction project.

Ernest planned the hotel building with 28 floors and 3,000 rooms. Stevens Hotel cost nearly $30 million when constructed.

Hilton lobby

Hilton Chicago lobby features grand staircases on either side of the main entrance.

Hilton Chicago lobby-2

Opposite side of Hilton Chicago lobby. Both ends of the lobby have double spiral staircases.

The Stevens Hotel grand opening on May 2, 1927 was a Chicago society event and was followed that same week with a Motion Picture Association Ball featuring many of Hollywood’s stars. In August 1927 a gala event for Charles Lindbergh was held at The Stevens Hotel.

Still, the hotel lost $1 million in 1928 and another $500,000 in 1929. The stock market crash of October 1929 and the Great Depression bankrupted 80% of hotels in the USA and the Stevens Hotel was one of those casualties.

Despite cash infusions from J.W. Stevens personal wealth and the Illinois Life Insurance Company covering interest payments through 1932, the Stevens family declared bankruptcy. In January 1933 auditors found $13 million in Illinois Life Insurance assets from 80,000 clients were tied up in the Stevens’ family two Chicago hotels.

Lobby front

Family patriarch J.W. Stevens, at age 79, had a stroke in March 1933. Five days later, his son Raymond who had authorized the money transfers from Illinois Life Insurance assets and owed $200,000 to the court-appointed receiver for the insurance company, committed suicide by gun at his 24-acre estate home in Highland Park, The Meadows. His bid to trade his estate for debt-relief had been rejected.

In September 1933, Ernest Stevens’ trial began for embezzlement of Illinois Life Insurance funds. The treasurer for Illinois Life Insurance, Ernest Stevens’ cousin, testified for the State, admitting the loans were made and although not illegal, they were inappropriate. Ernest Stevens, in his defense, stated the loans were only meant to sustain the hotel and the Life Insurance Company through the depression years and not for personal gain. Ernest Stevens earned a salary of $72,000 as manager of the Stevens Hotel.

Hilton Chicago ceiling

Hilton Chicago lobby ceiling is reminiscent of Caesars Las Vegas, except the clouds are stationary.

The jury found Ernest Stevens guilty of embezzling $1.3 million and he was sentenced to one to ten years in prison. One year later the Illinois Supreme Court ruled Ernest Stevens had been wrongly convicted as the evidence did not indicate fraud, just bad investments made in good faith.

Ernest Stevens was financially ruined. His four sons went on to prominent careers, including John Paul, seven years old at the time the Stevens Hotel opened, who later became a United States Supreme Court Justice appointed by President Ford in 1975.

The Hotel’s Story

Hilton Chicago sign

The Stevens Hotel went into receivership and its real estate value declined until it was worth only $7 million by the late 1930s. During World War II, the U.S. Army bought the hotel for $6 million to use for military housing. In January 1944, the hotel was sold to a Chicago businessman developer for $4.91 million who restored the property into a hotel once again. A year later the hotel was purchased by Conrad Hilton for $7.35 million according to this 1953 magazine article with more history on the deal. Conrad Hilton and investors purchased both Chicago’s Stevens Hotel and The Palmer House in 1945.

In 1951 the hotel was renamed The Conrad Hilton Chicago.

The 1968 Democratic National Convention brought 10,000 anti-war and civil rights protestors to Chicago where they were confronted by twice as many police and National Guard soldiers and there were riots in Grant Park across from the Chicago Hilton. By the 1970s the hotel was showing signs of age and demolition seemed a possibility. In 1984 Hilton Corporation invested $185 to renovate the massive hotel and the name was changed to Chicago Hilton and Towers when the property reopened October 1, 1985.

Walking into History

Walking into the empty ballroom of the Hilton Chicago, the style is another mind-blowing view into the city’s hotel past and present. Chicago is a city of fantastic historic hotels and several of them are part of the Hilton chain.

Hilton Chicago Grand Ballroom

Hilton Chicago Grand Ballroom

Hilton Chicago chandelier

Hilton Chicago Ballroom chandelier.

Hilton Chicago ballroom closeup

Close-up view of Hilton Chicago ballroom detail.

Hilton Chicago art

Another close-up.

Hilton Chicago fountain

Entrance from lobby to ballroom at Hilton Chicago.

Hilton Chicago-4

Hilton Chicago street view from Balbo Avenue shows there are many rooms without a view, except into other hotel rooms, a common issue in older hotels designed in this style.

Chicago Hilton is HHonors category 7.

About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

More articles by Ric Garrido »

Comments

  1. I’ve always seen this building in Chicago and wondered what the deal was — gotta love Chicago architecture.

    Thanks for researching and sharing.

  2. @Pat – I have seen the Hilton Chicago building many times in the past few years and I also wondered.

    It reminds me of the Westin St. Francis in San Francisco. I always feel sorry for the guests at the Westin St. Francis in the interior dark rooms with no view except other bedrooms and brick walls.

  3. We have stayed there a couple of times – once for an extended stay. The hotel is gorgeous, the rooms are quirky due to the age of the hotel and the fact that many were once 2 or 3 rooms made into one. The service was so/so and the lounge was a total joke (even by US lounge standards). I would stay there again but just have more limited expectations service/lounge wise.

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