Skift Take
Given a string of misfortune occasions, it can look like Ace Hotels is a jinxed brand. But any visit to its properties in New york city, New Orleans, or LA will expose an electric vibe that’s a pointer it can be restored and required to the next level.
Sean O’Neill
At the start of the year, Sortis Holdings said it would acquire Ace Group International, owner of Ace Hotels, for $85 million in cash. Now the offer is off.
The two sides had sued each other, with Ace executives claiming Sortis didn’t have the money to complete the all-cash offer. Sortis declared that Ace had, in bad faith, signed a partnership that broke the terms of the deal.
In August, the 2 sides reached terms to settle out of court, keeping the merger on track. However then fresh issues emerged.
“After the settlement contract, the [Ace] service experienced product changes, consisting of the loss of multiple hotel management contracts amounting to over 20% of the portfolio, along with the departure of a crucial employee,” the business stated in a statement to The Portland Business Journal. “These changes, coupled with the continued rise in interest rates because the execution of the original arrangement, factored into our decision-making.”
Skift has connected to both sides for comment.
UPDATE on Nov. 7: A remark from one side:
“Ace has constantly been, and still is, a well-capitalized, independent company with a special location in the market,” stated Brad Wilson, Partner and C.E.O., Ace Hotel/ Atelier Ace. “We pursued the Sortis opportunity as an off-market arrangement with buddies having typical interests and goals for the Ace brand. We had hoped the Sortis platform, as explained to us, would provide a pathway to accelerate development with synergies that, in the end, were nonexistent.”
“Since that time, we have actually proceeded with positive outcomes and are confident with our group and potential customers,” Wilson stated. “Ace has three soon-to-be-announced homes under building and construction, and we are signing new offers at a constant rate.” The bar at the Ace Hotel Brooklyn. Source: Ace Hotels.
Ace Hotel’s Impact
Buzzy lifestyle brands are the hottest sector of the marketplace, and there are simply few independent ones left after a current acquisition streak. That consists of Highgate’s purchase of Viceroy in late 2022 and Hyatt’s late 2022 acquisition of Dream Hotels Group.
Ace had an outsized influence on the way of life hotel idea regardless of its little size. It was ahead of the curve on turning lobbies into casual co-working spaces. And it was a case study on developing music-and-arts-themed places with strong ties to local vendors.
However the brand has actually had rough spots. In 2013, a co-founder, Alex Calderwood, died.
Then, in 2019, Ace took a financial threat by introducing the Maison de la Luz luxury residential or commercial property in New Orleans. Then the pandemic hit. Many of its places were in city locations harmed by the pandemic– strangling cash flow for a business with less access to cheap credit than large hotel groups and financial investment companies.
Ace Hotels had 10 open homes listed on its site on Friday, one fewer than in January.
Article was upgraded with a comment from Ace’s CEO.