ACE Is One of the World's Coolest Hotels. How Did That Become a Business?

"Look at how the most interesting people in different cities live, and whether any of it can be turned into a business idea."

Ryan Bukstein, 38, ACE's director of marketing and public relations, stepped onto a MINDPARK stage a full 10 meters wide, ready to talk about something close to mysticism: how culture makes money.

He wore a black MUJI jacket, black straight-leg jeans and black canvas sneakers, the collar of his white shirt casually open. It looked a little like the uniform of his late boss, Alex Calderwood, who co-founded ACE Hotel. People used to say that Calderwood's outfits at industry forums — a tie added at most — made him look both easy to do business with and cool: rather like the secret of ACE itself.

ACE is one of the coolest hotel brands in the world. It has nine of them (Seattle, Portland, New York, Palm Springs, Los Angeles, London, Pittsburgh, New Orleans and Chicago), eight of those in the United States, where it started. By size alone, ACE is not a big brand. Its reputation runs far ahead of its size. It has more than 150,000 followers on Instagram. In 2016 Monocle ranked ACE third among the most popular hotel groups, behind only Four Seasons and Mandarin Oriental — both founded in the 1960s, and Four Seasons alone runs more than 100 hotels worldwide.

Rooms at the third-place hotel are not cheap, but they are not absurd either. In New York a bunk room costs US$169 a night, a suite about US$800. New Yorkers consider that acceptable. In London, ACE's plainest single room is £254 a night.

The Guardian described the guests here very neatly: young, or youngish, carefully dressed down.

Alex Calderwood always insisted that ACE did not serve only the coolest and most fashionable people, but the labels stuck to it anyway: retro minimalist design, a pop band playing in the lobby, a lobby that doubles as an open workspace where you can also order a drink and that sells the most independent-minded small local brands on the side. That is ACE.

When Ryan Bukstein put a run of carefully shot photographs on MINDPARK's enormous screen, he was making that same point — the ACE in Los Angeles has a 600-seat theater — in Chicago, people love the hotel's roof — startups and freelancers have taken over the lobby in New York — the Kyoto ACE, opening in 2019, will hold three restaurants. The pictures changed fast, and the audience sank into a new kind of city life. ACE is its tutor.

1.

People often think ACE started in Portland, Oregon. The mistake is understandable.

The first ACE opened in Seattle in 1999, a small inn. When the founders bought the building it still smelled bad, its walls yellow and carrying nothing but stains and obscenities. Converted into the ACE, it kept a friendly, cheap feel: bunk rooms next to luxury suites, the cheapest going for US$65 a night. Bands passing through Seattle sometimes stayed there. The rooms held well-chosen secondhand furniture, and Shepard Fairey decorated them. He was a nobody then; he became famous only in 2008, for an Obama campaign poster that mixed Andy Warhol with Che Guevara.

Travel and design magazines wrote about this ACE and praised it for breaking the line between star-rated hotels and cheap ones. But apart from Alex Calderwood, the other two partners, Wade Weigel and Doug Herrick, had no real wish to enter the hotel business. They just thought it was fun.

It took eight more years for a proper boutique ACE to appear, in Portland, with 79 rooms. That is also where ACE got the record player and record library that so many people wrote about. ACE had changed: more polished, easier for a wide public to take. "We knew nothing about hotels at the start. We went on instinct, and we put in very little money. With the second hotel, in Portland, we began to pay attention, as if we were building a global brand," Bukstein told QDaily in an interview this April.

Traditional hotel brands went global on two things: standardized operations and an asset-light model. The first lets them copy fast and keep costs down. The second means a third party invests in and owns the building while the brand supplies standard, reliable service and management, and takes its profit from management fees and a share of the results.

ACE, the newcomer, followed the second convention. It owns almost no property, though it always manages to find buildings that already come with a story. Its third hotel sits in a 1900s building in New York, the result of working with GFI, an old hand at hotel investment and development. GFI likes turning well-placed old Manhattan buildings into fashionable hotels; an 1883 landmark on Beekman Street, near the World Trade Center and the Brooklyn Bridge, was also its work. Right after New York, the two opened the ACE resort in Palm Springs together: 179 rooms and five acres of grounds.

In these conversions ACE usually does not have to design the facade. For the newest project, in Kyoto, it brought in Kengo Kuma, a Japanese designer known worldwide who has done few hotels — his first was The Opposite House in Beijing. "We've been friends with Kengo Kuma for more than ten years." ACE does like to work with friends. "He is a designer who can make something new and something old at once. At first it feels new and unusual, but ten years on it still feels like part of the city, as if something in it lasts," Bukstein said. Alex Calderwood had always tried to do the same.

"But you haven't seen the interiors yet. Very Japanese, and very modern."

This is ACE's strength, and the part people most look forward to. It breaks the other rule of the hotel business: standardized operations. Ryan repeated the team's belief: "If you repeat yourself everywhere, you lose the brand. I know that's funny, because other brands do the opposite." "We define ACE as particular, and as changing," Alex Calderwood told HYPEBEAST in 2012.

In its two newest hotels ACE tried opposite styles. In New Orleans it worked with Roman and Williams, a New York architecture and interior design firm, on an ornate Art Deco look: oversized retro refrigerators, big wardrobes faced with oil paintings.

In the Chicago rooms, by contrast, ACE worked with the Los Angeles studio Commune Design to bring back plain, useful Bauhaus: clean lines, big blocks of color, huge floor-to-ceiling windows, which at the start were there to show off a breakthrough in building technology. Bauhaus began in Europe, but Americans took to it first, and Chicago was one of the places that mattered — home to the boxy Willis Tower and John Hancock Center.

"We build a new story on top of history," Bukstein said.

2.

Some people love it. Others distrust all that liveliness. The New York Times interviewed people who hate ACE — every one of them an ACE guest.

One couple at the New York ACE complained that on weekend nights the place was so crowded they had to show a room key to get in. Some guests were turned away by mistake. The complaint is that a lobby culture open and appealing enough to draw crowds has eaten into the space of the people actually staying there. ACE has always been pleased by the crush in New York: startups and freelancers, it says, settle in and will not leave, held there by the long tables and the drinks at the bar.

Another couple told the Times they hated ACE for being too fashionable, and yet loved its house whiskey, cut with a little homemade pickle juice — no pickle juice anywhere is better than ACE's. By Ryan's figures, 35% to 60% of ACE's revenue comes from food and drink.

Service is another worry. After the MINDPARK talk mentioned at the top, someone in the audience asked: "ACE Hotel pays attention to local culture, art and ways of living, cares about design and merchandise, and does event marketing. As a hotel, might it end up putting design first and service second?"

"For us, everything is connected," Ryan answered. "From the moment you walk into our hotel, everything is designed. Service is the most important thing, but it is important and not important at the same time." "Beautiful rooms alone are not enough. We have to fill the space, make people want to stay in it, make everyone in it feel connected. That is our standard, and we can apply it in different spaces," he added in the interview that followed.

ACE's particular kind of service does lie in how it makes space, not in the basic fittings. The industry has talked for years about "destination travel" — the hope that people come for the hotel rather than for the sights around it — and almost nobody manages it. The usual method is to build in a tourist city thick with attractions and, inside, put up a tolerable imitation of a local resort with a few modern touches: a bar, say, or a jazz band in the lobby at night. That is what Sheraton did with the resort it opened in Xishuangbanna a few years ago. Homestays do much the same.

City life itself, in their view, seems to offer travelers little fun. On this point some of ACE's methods, old-fashioned as they are, still make a real difference. It starts with the sites they choose: they want the hotel to be a "node" from which people can go out and explore the city. In New York that produces what Ryan calls "flowing between work and play" in the lobby — people coming and going, stopping and starting.

In Los Angeles, ACE moved into the old United Artists Theatre, a Gothic Revival building. It brought the theater back to life, with tickets for its shows priced from free to expensive. "That helps us reach more people," Ryan said.

London is the best example. The lobby of the ACE in Shoreditch sells things made nearby. What wins people over more easily is the entrance: to get in you walk through a flower shop. Alex Calderwood praised the florist in an interview, and could give her name. "Hattie Fox," he said. "She's a really great woman. She's odd, she has her own view of life — what to do in which season, which flowers to use. She's very English."

Before he took on the London project, Alex stayed in that same building whenever he came to town; it was a Crowne Plaza then. He liked to walk a city and drop into its shops. "Look at how the most interesting people in different cities live, and whether any of it can be turned into a business idea," said Lovejoy, a friend of Calderwood's for many years, in an interview with The Guardian. He scribbled on sticky notes, took piles of photographs, then dropped them all on Atelier ACE, the in-house creative team set up after the New York hotel opened, which works on the design of the hotels, the design of the merchandise and the hunt for partners. The London renovation formally began in 2012.

Alex could name where nearly every object came from. The sellers and companies were not anonymous links in some settled hotel supply chain; each had a quality of its own — a century-old local brand, say, or a firm that used to supply bolts and gears to factories, whose products nobody had thought could freshen up a hotel. Take the cork ceiling in the London ACE: cheaper than fancier ceiling treatments, and just as striking. New does not have to mean expensive. ACE found local craftsmen to make its leather-wrapped copper handles.

Put all of this together and the styling of the big companies starts to look insincere — or, more precisely, ACE has found a crowd that is fussier about style.

3.

ACE was Alex Calderwood's childhood nickname, and he gave it to the hotel business among his many ventures.

He never meant to succeed only in hotels. He grew up in Seattle and tried many things young. Managing a clothing store, he gave the interior an odd style of his own. In 1993 he opened Rudy's, a men's barbershop of the traditional kind, and already showed his taste for the young old-fashioned: he bought traditional barber chairs and laid a tiled floor, then played loud music and papered the walls with flyers for bars. Rudy's now has more than a dozen shops across the United States. In 1999, before ACE, he also opened a bar in Seattle and became well known in the city's music scene. That helped launch the first ACE.

Ryan Bukstein, now the head of public relations, met Alex in 1999 as a 19-year-old intern who, like Alex, loved music and wanted to make a career of it. Alex was 33. He told Ryan that running a hotel would not stop them doing music. ACE later turned that into the slogan it uses now: the hotel is a platform. Asked about MUJI and IKEA both planning hotels, Ryan reached for exactly that line. "They are going from lifestyle brand to hotel brand. Our route is different. We were a lifestyle brand from the start; the hotel is just the platform."

Alex Calderwood died in 2013, not long after the London ACE opened. It was not a natural death; he had told The New York Times he was addicted to alcohol. Former colleagues and friends said in later interviews that ACE was growing so fast the staff were worn out, Alex most of all. His early partners Wade Weigel and Doug Herrick had already sold their shares to him in 2012. "We have a lot of big bosses now. Life at ACE has changed," Weigel told the press.

They also mentioned the pressure developers put on ACE — a warning to anyone who disrupts an industry: popular as ACE is, it may still have little say.

Asked how developers and investors see ACE, Ryan said: "I think a lot of developers have seen that what matters in the future is getting people involved. They come to ACE because they think we can do that. As for whether they understand how we do it — sometimes they do, sometimes they don't. Both." He thinks they still have much to learn about business, starting with how to persuade the people with the money.

Some sharper operators want nothing from ACE but its fashionable name. That is why its plans in Japan sat on the shelf for years. Alex had wanted a hotel there more than twenty years ago. "Since ACE Portland we've been very popular in Japan. A lot of Japanese people came to us and invited us, but it still took this long, because we wanted control," Ryan said. Most Asian developers wanted ACE only as a licensed label. Then came NTT, Nippon Telegraph and Telephone.

The new ACE Kyoto sits in Shinpukan, a mall in the center of the city. The building was once the Kyoto Central Telephone Office, finished in 1926. NTT's urban development arm turned it into a mall in 2001; it closed in 2016 for renovation.

Ace Hotel will take the second and third floors of the existing Shinpukan building, plus floors two to seven of a new building beside it, 213 rooms in all — and with them the job of bringing the building and the businesses around it back to life.

4.

From here, ACE plans to open two or three hotels a year. That will be hard. Even leaving out the first Seattle inn, it has opened eight hotels in eleven years, and a new hotel usually needs two or three years, or longer, before it makes money. Ryan told QDaily that ACE now puts several million dollars more into a hotel than it used to. It has taken on no outside investor so far.

ACE's other challenges include whether it can be what it was now that Alex Calderwood is gone, and whether its stress on experience will end up as one more shallow form of consumption. "We have to be very careful."

ACE also minds being copied. More and more hotels want to be a social center for their city, and they all seem to have picked up, effortlessly, on Instagram, what fashionable design looks like. Ryan used the word "copying" many times in the interview, but his conclusion was this: "What separates us from other hotels is something you can't see. It's like those bands that cover the Beatles — one listen and you know they're not the Beatles."

About the MINDPARK creative conference: the event was held in Shenzhen from April 20 to 23, 2018, on the theme of "The Future City." Through idea forums, urban practice projects and other formats, it brought creative people, designers and managers from around the world together to think through the patterns and trends that run from the individual to the environment, from growth to consumption, and from brands to industries — to build working models for the future city and look for the key to building future cities in China and beyond.

Cover image from the ACE website