Ace Hotel operator sold to hospitality firm for $85M
Sortis Holdings plans to double company’s portfolio
A Portland-based hospitality firm now has an ace up its sleeve after picking up the hotel group behind a trendy chain.
Sortis Holdings is acquiring operator Ace Group Internationa for $85 million in an all-cash deal, the Wall Street Journal reported. The deal covers the brand and the hotel management company. https://www.wsj.com/articles/funky-boutique-operator-ace-hotel-reaches-deal-to-sell-the-company-11673741443
The Ace Hotels portfolio is nearly a dozen strong across the world, including properties in New York City, Los Angeles and Kyoto. Sortis, an experienced hospitality investor, hopes to more than double its hotel portfolio to 30, largely consisting of Ace-branded properties.
“There’s going to be a lot of turnover in the hotel world,” Sortis chairman Paul Brenneke told the Journal. “When turnover happens it creates the opportunity for a new brand to come in.”
In addition to building Ace hotels, Sortis also plans to acquire existing properties that can be folded into the Ace brand. The company largely focused on management contracts over assets.
The company’s previous bid at expanding by partnering with a developer had its own potential obstacles. David Paz’s Omnia Group is involved in a dispute with its former management partner over a lengthy quest to redevelop a flophouse at 225 Bowery Street into a niche hotel on the Lower East Side. The question of ownership went to court after Omnia missed payments despite agreements to operate as a temporary homeless shelter and individual Airbnb listings.
Ace Hotels cater to younger clients and leisure travelers, relying less on the business travelers that have oft-disappeared since the onset of the pandemic. Brenneke said he is ready to push Ace into new avenues, with plans for resorts and luxury camping properties away from the brand’s traditional downtown locations.
The hotel chain may target a niche clientele, it was not spared from the hospitality downturn brought on by the pandemic. A year ago, the Ace Hotel Chicago in that city’s Fulton Market district permanently closed its doors. Properties in Pittsburgh and London also permanently closed during the pandemic.
Ace opened its first location in 1999 in Seattle. The company was co-founded by Alex Calderwood, who died in 2013.
— Holden Walter-Warner