Image of the exterior entrance to the Ace hotel in Brooklyn. Source: Ace.

Image of the exterior entrance to the Ace hotel in Brooklyn. Source: Ace.

Ace Group International, the operator of a buzzy brand of 11 open Ace lifestyle hotels, will be acquired by Sortis Holdings, a Portland, Oregon-based hospitality firm, the companies said on Tuesday.

Sortis paid $85 million in cash for Ace Group, owner of the Ace brand, the luxury Maison de la Luz brand (with one property open), the minimalist lodging brand Sister City (which was temporarily open and could be brought back), and the management company, Atelier Ace.

Sortis’ Kelly Sawdon led the acquisition. Before she joined Sortis in 2021, Sawdon was a partner at the Ace Hotel Group and had been a key player in the brand since shortly after its creation by three friends (Doug Herrick, Alex Calderwood, and Wade Weigel) in 1999 in Seattle.

Sortis got to know the Ace founders during the pandemic crunch. In 2021, it became a co-owner of the downtown Portland Ace Hotel in Washington state. As a joint owner along with Ace executives, it helped to fund the company’s refurbishment during the aftermath of the coronavirus hit to travel.

The combined entity Ace and Sortis organizations will have 15 hotels under management. Sortis manages, and is half-owner of, the Mayflower Park Hotel in Seattle.

Sortis plans to roughly double the number of Ace hotels worldwide over several years, it told the Wall Street Journal, which broke the story.

Is Sortis a Good Home for Ace?

Sortis has been scaling up a set of lifestyle businesses. It has stakes in a handful of restaurants, coffee shops, the Rudy’s Barbershop chain (co-founded by a co-founder of Ace), and the Bamboo Sushi restaurant chain. It takes hospitality brands and provides capital access, real estate growth strategies, co-location opportunities, and a digital team for data analytics and e-commerce.

Combining Ace’s hotel offerings with other lifestyle and cultural offerings appears to be the goal, or what Sortis called “spirited cultural hubs” that embrace locals and out-of-towners and may be located at resorts and luxury camping properties as well as in cities. For example, Sortis recently bought a 2,400-acre area for resort development near Bend, Oregon.

Giant conglomerates have bought lifestyle brands but sometimes have struggled to keep the brands’ innovation and buzz. People debate whether the W and Kimpton brands, for instance, have the same vigor as they did before they were acquired respectively by Marriott International and International Hotels Group (IHG).

The small size of Sortis and its experience with food-and-beverage brands, which is a key component of lifestyle hotels, may help Ace’s brand to thrive as it scales up in size.

Almost everything will come down to the chemistry between the new owner and capital provider and the management team.

“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.

Is $85 Million a Good Price?

Sortis is essentially buying the brands and the management contracts.

It didn’t say Ace was profitable, and Sortis usually specializes in distress or value alternative asset investments. Those facts suggest that Ace isn’t currently operationally profitable given investment in opening new buildings and catching up to property upkeep issues during the pandemic. (It was unclear if Ace Group International CEO Brad Wilson would continue with the brand in that role.)

Sortis didn’t reveal the duration of the management contracts or the actual fee streams of those contracts. That lack of information makes it trickier to benchmark against other recent purchases of hotels with established track records on a per key, or room, basis.

Ace Hotels’ Legacy

Ace Hotels: 5 Key Moments

Ace Hotels Consolidates Ownership After Years of Turmoil

How Alex Calderwood’s Ace Hotel Changed the Way We Travel

What It Was Like to Work With Ace Hotels Co-Founder Alex Calderwood

Sortis appears to be primarily buying the Ace brand and investing in its potential performing at scale, so the $85 million valuation reflects a financial potential beyond just what the numbers from the current contracts would dictate.

Presently, U.S. hotel development is quieter than usual. Turmoil affecting lenders is making financing more elusive despite a boom in domestic travel. That dynamic may impel a player like Sortis to buy a company with nearly a dozen open assets in a domestic market to sprint ahead of other players.

Buying is an alternative, given that now is not an optimal time to create new brands from scratch and demand for lifestyle properties exceeds supply.

Buzzy lifestyle brands are the hottest segment of the market, and there are just not many of them that are still independent given a recent acquisition streak, such as Highgate’s purchase of Viceroy in late 2022.

Given the scarcity, if you are a hotel company or investor that wants to make a play in the segment, you have few options left to buy, driving up valuations. And when you look at the analysis of buying versus building a brand from scratch, the pain and cost of building a brand from scratch is enormous and the cost is enormous, and it’s always going to take longer than you think, experts said.

CORRECTION: The article originally said Sortis bought two hotels in New Orleans, the Whitney and the Frenchmen, when it had just lent money to the property owners.

Ace Hotel Chain Acquired for $85 Million by Hospitality Firm Sortis: Analysis

Ace Hotel Chain Acquired for $85 Million by Hospitality Firm Sortis: Analysis

boutique hotels in the U.S.”>

Complete Oral History of Boutique Hotels

Read Skift’s comprehensive history of boutique hotels in the U.S.

Read More

Get breaking travel news and exclusive hotel, airline, and tourism research and insights at

Related Posts