Wydham Chicago
I have made several trip to the American Doll Store with my daughters. In fact, I have spent many many hours there.
We have stayed at several places too. I personally would recommend the Wydham Chicago, it's less than a 1/3 of a mile away and a very nice hotel. It is definitely within walking distance for your niece. We also have stayed at the Hyatt on Wacker and at the Marriott, which are both nice, but I like the location of the Wydham for my daughters when they were young. In addition, it has a small indoor pool for your niece if she would like to swim.
I hope you have a great time during your visit. I am thinking of taking my daughters next month for a long weekend. Unfortunately, I don't think too much of our time will be spent at the AD store, as they are teenagers now, and shopping is what they do best. We do have 6 of the dolls though, and the itty bitty twins, and I have to say, they were a great investment, as they were played with a ton.
One thing we did before we went, on two different occasions, was to have dresses made for our daughters with matching outfits for their dolls. We picked up patterns from Jo Anns and had them made. Everyone stopped our girls and complimented them on their outfits. They also wore them on the plane and received so much extra attention. Just a cute idea that they still talk about today. It was much cheaper than buying the matching outfits from the AD store.
Have a great time!