Green’s Dictionary of Slang

designed to create a relaxed atmosphere; thus chill-out room, that part of a nightclub where people can relax and chat rather than dance.

1996		Nicholas Blincoe ‘Ardwick Green’ in Champion Disco Biscuits (1997) 4: What I’m talking about is a chill-out club, you know [...] just a place to get mellow and take the edge off the come-down.
1999		Indep. Rev. 22 July 9: It also had a ‘chill-out’ room years before any other business did.
2000		Indep. Rev. 27 Jan. 12: The success of chill-out music such as Morcheeba’s Big Calm.