The Ace Hotel in downtown Los Angeles will welcome its last guests at the end of January before ceasing operations.
The announcement was made on the hotel’s Instagram page, reading in part:
There’s no place like this place. We could fill a library with our love for Los Angeles and, in particular, 929 S. Broadway — our magical home, which was really yours. The Spanish Gothic-style rooftop crown, a beacon — summoning mavericks, mystics, sun-seekers and four-on-the-floor dancers. Since 2014, you’ve answered the call with fervor and feeling and so much love.
It’s been an honor to inhabit these hallowed halls and The Theatre for ten golden years, which feels as good a run as any. We hope to be back before long and leave remembering something Mary Pickford, metaphorical matriarch of Ace DTLA, said: The future is yet in your power. . . Thank you Los Angeles, and goodnight.
The hotel will close its doors on Jan. 31, 2024. It originally opened in 2014, a conversion project of the California Petroleum Building. In addition to the hotel, it boasted the Theatre at Ace Hotel, a restored, 1,600-seat movie palace from the 1920s with a three-story grand lobby, originated by Mary Pickford and Charlie Chaplin. It was a popular nightlife venue that hosted concerts, stand-up comedy and more. The property was originally built in 1927 to house the United Artists film studio.
The 182-room hotel had been owned by real estate investment trust Park Hotels & Resorts, before it sold it in 2019 to
South Korea’s Aju Group for a reported $117 million, or around $643,000 per key. Though Ace Hotel Group will end its tenure as manager of the hotel, it’s being reported that the hotel will not close permanently but be turned over to “a limited-service, rooms-only operation, managed via a tech platform.”
A crop of tech-first operators have sprouted of late, promising streamlined operations that, if successful, drive more profitability to owners. One such company, Kasa, whose identity is that of tech-enabled hospitality platform, has a prior track record with former Ace properties. In 2021, it became operator of the prior Ace Hotel in Pittsburgh. The property is now known as The Maverick by Kasa and features mobile, self-check-in and a virtual front desk.
Ace Hotels grew out of the Pacific Northwest to be a global phenomenon, favored by a hip clientele that filled its darkish, communal lobbies, sipping on Stumptown Coffee while punching away on laptops that put the space aglow. The brand was the seminal invention of Alex Calderwood, who died in 2013.
Earlier this year, in January, it was announced that Sortis Holdings, an alternative investment manager, based in Portland, Ore., was acquiring Ace Hotels, including brand IP and Atelier Ace, the hotel company’s management arm, for $85 million. However, the deal collapsed in November, a result of bad economic timing and, moreover, a legal spat between the two entities that arose in preceding months. A deal seemed to be back on track after the two sides settled out of court, but then, in a statement to The Portland Business Journal, Sortis said: “After the settlement agreement, the [Ace] business experienced material changes, including the loss of multiple hotel management contracts totaling over 20% of the portfolio, as well as the departure of a key employee. These changes, coupled with the continued rise in interest rates since the execution of the original agreement, factored into our decision-making.”
A statement to Skift from Brad Wilson, partner and C.E.O., Ace Hotel / Atelier Ace, read: “Ace has always been, and still is, a well-capitalized, independent company with a unique place in the market. We pursued the Sortis opportunity as an off-market arrangement with friends having common interests and goals for the Ace brand. We had hoped the Sortis platform, as described to us, would offer a pathway to accelerate growth with synergies that, in the end, were nonexistent. Since that time, we have moved on with positive results and are confident with our team and prospects. Ace has three soon-to-be-announced properties under construction, and we are signing new deals at a consistent rate.”
Now, after losing management in Los Angeles, Ace Hotels numbers 10 hotels. It is striking that a hotel group with such a limited footprint has such a loyal following amongst the traveling ranks. It seems ripe for acquisition by larger hotel companies or private equity, which can help scale it globally. Companies like France’s Accor are known to be acquisitive. It’s made similar smaller-scale bolt-on deals in the past, like its 2018 acquisition of 21C Museum Hotels.
It is unknown had the Sortis deal not fallen through if the Ace Hotel in Los Angeles would have been saved. Downtown Los Angeles had been going through a revival ever since the addition of L.A. Live and attendant hotels that began to crop up around it, from the luxury Ritz-Carlton and InterContinental to more lifestyle concepts, such as The Hoxton and Proper. However, like many U.S. cities, the pandemic crushed business, from restaurants to retail and hotels.
According to STR, Los Angeles RevPAR in October reached $153, with occupancy hitting 76% combined with ADR of $202.