The former Ace Hotel in downtown Los Angeles, which helped lead the economic revival on a historic stretch of Broadway a decade ago, reopened as a minimum-service operation similar to Airbnb, following a strategy that has increasingly become most common for struggling hotels in recent years. years
Now called Stile Downtown Los Angeles by Kasa, the vintage 1920s hotel tower has resumed limited operations after closing nearly six months ago. Downtown hotels were especially hard hit by the pandemic and some have changed owners or operators.
Ace Hotel Group had operated the 182-room hotel near Broadway and Olympic Boulevard since it opened in 2014, even as its ownership changed twice over the years. The stylish branding made the Ace a destination for travelers and locals alike who frequented its lively rooftop bars and restaurants.
Korea-based AJU Continuum, which purchased the hotel in 2019, announced last week that it had hired Kasa Living Inc. to operate the property.
Kasa, which is headquartered in San Francisco and has a national presence, “offers the consistency of a major hotel chain with the convenience and character of a modern short-term rental,” AJU Continuum said in a statement.
Ace Hotel said upon its departure that the Broadway hotel would be operated in the future as “a limited-service, rooms-only operation, managed through a technology platform.”
The limited-service model under which guests typically receive codes to enter their rooms through their phones is “basically an Airbnb on steroids,” said Donald Wise, a hotel investment banker at Turnbull Capital Group. “You're not going to someone's house or a condo, but to a box that has no more or less service than an Airbnb would have.”
The freestanding United Theater on Broadway, which is connected to the hotel, will continue to operate as an open venue hosting concerts, performances and special events, AJU Continuum said. The hotel will have a rooftop wine bar, but no restaurants.
The site has had multiple identities since its construction in 1927. Built with the backing of film luminaries Mary Pickford, Douglas Fairbanks, Charlie Chaplin and DW Griffith, it was originally intended in part to provide a theater for the United Artists film production company they founded . .
The Spanish Gothic Theater was designed by C. Howard Crane and the tower by Walker & Eisen, the team behind other local landmarks, including downtown's Fine Arts Building and the Beverly Wilshire Hotel in Beverly Hills. It had offices for rent and a theater where United Artists films were released, starting with Pickford's film “My Best Girl.”
Other notable occupants of the property over the years include California Petroleum Corp., Texaco and flamboyant preacher Gene Scott, whose broadcasts were heard nationally. He died in 2005.
The opening of the Ace in 2014 was a pivotal point in the downtown residential renaissance that helped spur nearby growth, said Nick Griffin, executive vice president of the DTLA Alliance, formerly the Downtown Business Improvement District.
“It evoked that particular moment in the center of the city, arriving as a kind of hipster paradise,” he said. “That area of Ninth and Broadway was a particularly trendy area with fashion and hotels at the intersection of Historic Downtown, the fashion district and downtown.”
Two other boutique hotels created in historic buildings followed the Ace into the neighborhood: the Hoxton Downtown LA and the Downtown LA Proper. Both are also on Broadway.
Short-term rentals in former hotels and traditional apartment buildings have been popping up downtown as business owners work to find financial footing, Griffin said.
“The new short-term rental model is kind of indicative of this moment in downtown as we continue to evolve and innovate post-pandemic.”
The Griffin Improvement District reported that average hotel occupancy downtown, which has plummeted during the pandemic, reached nearly 69%, up one percentage point from a year ago. That's close to what's generally considered a healthy rate, but down from late 2019, when occupancy was closer to 80% and average room rates were higher.
“The downtown Los Angeles market is still lagging, it hasn't fully recovered to pre-COVID numbers,” said consultant Alan Reay of Atlas Hospitality Group. “We're definitely starting to see more distress among homeowners.”
Challenges for hotel owners include a reduction in the number of business travelers to downtown offices as more people work from home, resulting in lower revenue. They also face high interest rates on their loans and rising labor costs.
Limited-service hotels like Stile can generate more profits for their owners while lowering rates for guests who don't mind fewer amenities, Reay said.
