The Associated Press reported that Mr Casteel was staying at the W Hotel, which overlooks the Ohio Street Beach and Navy Pier, which are major tourist attractions.
David Brown, the Superintendent of the Chicago Police Department, praised the hotel staff member who reported the room.
“So it was significant and very valuable and we ought to keep a lot of praise on that employee for letting us know so we could act quickly and potentially avoid a tragedy. Thank God for that hotel worker, who saw something, and said something, and I believe averted disaster,” Mr Brown said.
Investigators interviewed the hotel guest about the weapons found in the room.
"Out joint terrorism task force officers debriefed, interviewed this person along with a companion, and we are continuing this investigation," Mr Brown said.
Mr Casteel was charged with two counts of aggravated assault and was ordered by a judge to be held on a $10,000 bond.
“I understand through the state’s proffer and your attorney that you have permission to possess the firearms in the state of Iowa,” Judge David Navarro said. "However, clearly, we’re not in Iowa.”
Mr Brown said Mr Casteel does not have a criminal record. An investigation has not revealed why Mr Casteel had the firearms and ammunition in his room.
The deadliest mass shooting in US history involved a gunman storing a large number of weapons in a hotel room overlooking a crowded tourist destination.
The Mandalay Bay shooting in Las Vegas in 2017 resulted in 60 deaths and 411 injuries. Steven Paddock, the shooter, used more than a dozen AR-15s in the attack and fired out of the 32nd floor of the Mandalay Bay hotel onto a concert happening across the street.