The hotel is located in the heart of Chicago's Loop district, in a historic 26-storey art deco building.

The building's original features have been maintained, such as a 1920s oak cigar bar, which now serves as the hotel's front desk.

There are 250 guest rooms, including 40 one-bedroom suites and two Penthouse Suites.

Virgin Group founder Richard Branson told The New York Times the hotel will be four-star and rates in Chicago will start from a relatively cheap $US209.

It has also promised more bells and whistles when it comes to adding value to the already reasonably-priced hotel rooms.

"Our guests won't pay for Wi-Fi," Branson said. "There won't be hidden charges, and you won't get charged $10 for a chocolate bar you know you can buy at a store for $2. And you'll get great service."

There will be no early check-in fees or late check-out fees, room service delivery fees or business centre transactions charges.

Also unique to Virgin, the guest rooms will feature an ergonomically-designed bed that allows business travellers to set up a computer for work or streaming a movie, for example, in comfort.

Branson said an incredibly comfy bed is "very important."

"There will be an element to it that no one else has. You'll be able to sit in bed and work, watch TV, relax. It is going to be a playpen and a traditional bed. We're calling it the Lounge Bed."

The rooms have been divided into two spaces by sliding doors. The first includes a full vanity, make-up desk and mirror, and an extra-large shower with a bench. The lounge and bedroom features a Virgin-red SMEG mini-fridge, LG Smart TV, and a swivelling table.

The room's special features were ironed out by a Virgin team which examined things people do and don't like about hotel rooms.

"I hate not being able to easily turn off the lights when you are tired and just want to go to sleep," Branson offers. "I was at a hotel in New York and the TV didn't work. I couldn't get a cup of tea at 6.30am because breakfast was served from 7am."

Patrons won't have to venture too far to eat, for Chicago's hotel will contain four restaurants. The first, a two-story Commons Club, will be the hotel's central point. Designed to feel like a private club, it will be open to all guests to dine, drink, work or mingle, over breakfast, lunch or dinner.

Miss Ricky's, an all-American diner, will be open 23 hours a day, and there is also an additional rooftop bar and lounge.

Three modular spaces on the third floor will be able to accommodate social events, dinners or meetings.

A spa and beauty salon is slated for spring.

As for the choice of city, it was a case of finding the perfect site in Chicago's Old Dearborn Bank building.

"We'll work it out with Chicago, and then expand on it," Branson said.

Plans to open a second hotel in Nashville in 2016 and a third property in New York in 2017 are afoot. They hope to have 20 city locations set up by 2025, including New Orleans, and other cities Virgin fly to such as San Francisco, Los Angeles, San Diego and Dallas.

The hotels are an addition to the chain of luxury boutique properties around the world the company possess, called Virgin Limited Edition.