In Ace Hotels, Sortis Holdings acquires an originator of the hip hotel vibe

Ace Hotels, which 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, has been acquired by Sortis Holdings, an alternative investment manager, based in Portland, Ore., for a cash consideration of $85 million, which includes the brand IP and Atelier Ace, the hotel company’s management arm.

The transaction is expected to close at the end of Q1 2023.

Sortis Holdings already has exposure to Ace: it owns the Ace Hotel Portland, along with Rudy’s, a barbershop chain that was started by Ace Hotels founder, Alex Calderwood, who died in 2013. The Rudy’s Barbershop, for instance, in New York is located adjacent to the Ace New York, on west 29th St. in Manhattan.

Beyond Ace Hotel Portland, Sortis owns an assortment of boutique, lifestyle and independent hotels, including the Mayflower Park Hotel in Seattle and the Woodlark Hotel in Portland. It also owns the Alum brand, hotels and residences in college communities, which are still under development in locations such as Eugene, Ore., College Station, Texas, Ann Arbor, Mich., and Columbus, Ohio.

“The Sortis platform is rooted in innovation, purpose and impact, and aims to foster consumer brands that are at the forefront of culture,” said Paul Brenneke, Executive Chairman of Sortis. “Our acquisition of the storied Ace Hotel brand, long known for embodying and celebrating the unique culture of each of its destinations worldwide, provides us with an opportunity to advance this vision by scaling the legacy brand in a thoughtful way.”

Ace Hotels currently numbers 11 operating properties, including Los Angeles, New York, Kyoto, Japan, and one in New Orleans under its luxury banner, Maison de la Luz, and Sortis intends to scale up the brand further. With the array of adjacent brands Sortis owns, from coffee to beauty/wellness, it’s a good bet that they will embed some of those brands into the Ace ecosystem. “Sortis is uniquely poised to amplify the Ace Hotel brand as a series of spirited cultural hubs that ignite neighborhoods and foster collaboration,” a press release said. It further told The Wall Street Journal that it intended to more than double the number of hotels in its currently portfolio to 30, with the majority being Ace Hotels.

Sortis added that the mode of expansion could be through acquisitions and conversions of exisiting hotels to the Ace brand. “There’s going to be a lot of turnover in the hotel world,” Brenneke was quoted as telling The Wall Street Journal. “When turnover happens, it creates the opportunity for a new brand to come in.”

Like many other hotel companies, Ace Hotel group has been asset light, focusing on building the brand through management contracts. The acquisition by Sortis includes one lease for the Seattle location of Ace.

Sortis Holdings’ hospitality partner Kelly Sawdon led the acquisition. Prior to joining Sortis in 2021, Sawdon was at Ace Hotel group for 15 years, as a partner and chief brand officer. “From the very beginning, Ace has had evolution built into its DNA,” Sawdon said. “This acquisition marks an exciting turning point for the brand — tapping some original key players to usher in Ace’s next chapter of growth.”

She added that Sortis will be able to “help evolve Ace’s position as the hospitality powerhouse it has always been, synonymous with community, creativity and culture.”

Ace Hotels was founded in 1999 with the first property opening in Seattle. It grew west and internationally thereafter, gaining a rabid fan base, from hipsters to financiers, all attracted by the hip design, delivered by the likes of design firm, Roman and Williams, which has worked on several Ace properties, including New York, Brooklyn and New Orleans.

The brand captured the zeitgeist of the early aughts, and forced larger brands, from Marriott to Hilton, to jump into the “lifestyle” space. Starwood Hotels & Resorts’ seminal W brand launched in 1998 and quickly scaled up from there, though its designs were decidedly different from those of Ace.

Paying homage to Ace’s hipness, a 2011 episode of the sketch comedy show “Portlandia” is set at the fictional Deuce Hotel, where the staff hand out complimentary turntables and typewriters to all guests. It was purportedly a parody of the Ace Hotel Portland.