Alex Calderwood started his company less than ten years ago but it has already become a symbol of excellence, at least in the US.
With no business background but a strong passion and dedication for what he was doing, together with his partners Wade Weigel and Doug Herrick in 1999 he started his first Ace Hotel in Seattle with a starting capital of less than $ 2 million raised with a mix of debt, investors and personal funds.
Unconventional as its founder, the Ace Hotel is filled with creativity and naivety, pieces of art and hi tech solutions. Every room has a high speed wifi connection and a flat screen tv, but you might sleep in a bunk bed and find beside the bible a copy of the Kamasutra.
The Seattle boutique hotel has only 28 rooms gained from an old building and transformed in bright rooms to which you can access by walking through narrow, arty-minimal corridors.
The Hotel was such a success that started having positive cash flows after the first year and maintained a successful performance during its second year as the occupancy rates were on the same levels of those of the most established hotels in town.
After the success of the first Ace Hotel Calderwood decided that times were mature to start expanding the business in other american locations. He opened in Portland, in 2002, in Palm Springs in 2009 and in Manhattan earlier this year.
Manhattan branch has been already a blast. Hotel reviewers have rated the Ace hotel as the most successful model for hotels in New York.
What is so special about the Ace hotels is that the experience is not merely limited to hospitality but the hotel itself becomes an attraction for the visitor who can enjoy an 100% experience which includes art, lifestyle and fashion. Yes, because Calderwood creates a link between his hotels and the local art and cultural community. In New York for instance, there's a dj set in the hotel bar and the hotel was given to young directors to shoot their movies.
Calderwood also created a barbershop which can be found in the Hotel and a line of limited Converse shoes which he also developed in Japan.
Below we report an some bits of an interview made by the Us magazine “Entrepreneur Magazine” with Calderwood, who explains us more in depth what Ace Hotel is.
You opened up two hotels during a downturn. Did anybody tell you that wasn't a good idea?
I think in any industry, if you are offering something special and have an understanding of your customer, in good times and bad, you'll adapt and prosper. We are flourishing because our positioning and our brand [coincided] with a shift in what people are looking for. If we had been a more generic product offering, I would have been more freaked out.
But your hotels were immediately successful. How did you achieve that?
I can't give away my secret sauce! Ha--I wish I knew. But one thing that's served us well is that we've paid particular attention to embracing the local community. From the point we start, we build relationships with the community by reaching out to local vendors and artists, to get them as emotionally invested as possible. You try to become part of that fabric.
How does a hotel gel with a local community?
A hotel can be a catalyst for visitors to a new city. It's a place where locals and out-of-towners can interact, and often the people who want to stay at a property like Ace are curious about the local scene.
Ace's business model is very successful, yet you've said before you don't consider yourself a good business person.
I didn't attend business school, so there are a lot of basic things that would have made the process easier if I'd known how to raise capital or anything about debt markets. I think my team and I would have made more money if we'd done things a more traditional way.
I think we're very entrepreneurial, though. What we're good at is taking assets that are either distressed or complicated--in some way not appropriate for traditional hotel operators--and embracing the challenges as opportunities to create value.
How so?
In Portland, the building we bought had a smaller and older elevator, and there was a shared bathroom component. It's also on Stark Street, which is an area that, at the time, would probably have scared off more traditional operators. But we knew from our experience in Seattle that our core customers--creative professionals and cultural enthusiasts--would be open-minded to being in edgier locations. And in New York, we got the Breslin, a really amazing turn-of-the-century historical landmark in a small little neighborhood. You can overlook it because at the street level, it had become an area of wholesale knockoff goods, and it didn't look that pretty. But even if the culture's not quite there, you can tell when a place has good bones.
Can Ace foster that culture?
To an extent. It takes time, but we do start by looking at the context of the building and the city. We try to create a sense of place in the city you're in. Every hotel is different, but there's a similarity of spirit in the design--an honesty of materials and a simple approach that celebrates the original architecture.
How else does Ace do things differently?
We're resourceful in the development process. When we take over these old buildings, we try to use as much of the existing architecture as possible. We don't do gut renovations. In all the hotels, we used what was there, so we have all these quirky room layouts. It drives our salespeople crazy. In New York, for instance, there are like 54 different room types. But we see that our customers enjoy it, because each time their room is a little bit different.
So there are benefits to not doing things the "right" way.
Sure. We didn't come with any baggage of "this will or won't work," and it's served us well over time. I mean, financially, the [Seattle] building was a good purchase, but it was a very, very old building. We didn't think we would do more than one. I owned the Rudy's Barbershops with Wade, and we thought Seattle would benefit from this kind of hotel--so we said, "Let's just do it."
And you dove right in.
Yes. Naiveté had a lot to do with it, but I think that unconventionality is one of our strengths. As we've become a bigger company, we hear more and more that this isn't how we should do it. But I never [stop] asking, "Why not?" or being willing to experiment. Like with our turntables.
Turntables?
I wanted to put turntables in our Portland hotel rooms, and there were a lot of questions about it--about the needles and what would happen if people stole the records. So I just said, "Let's try it with inexpensive records and charge them like a minibar item, and we'll keep the needles at the front desk." If it didn't work, it wouldn't be that big of an investment.
And?
It's now a signature element of the company. We have turntables in three of the hotels, and we repeatedly get feedback about them. In fact, I just bumped into a boutique hotel operator who asked me if I'd mind if he put turntables in his rooms.
Is the company going through a transition phase?
Yes, we're completely restructuring. When we did Seattle and Portland, it was a small group and a design-build--but very satisfying. New York and Palm Springs were more conventional processes because we had development partners. We learned good things from both ways, and now we're rethinking the best way to blend both.
What's been the most difficult part of the process?
Every business decision comes down to creating a positive working dynamic. We've been fortunate in finding really good talent, so the challenge will come in the next phases in doing more hotels, because it's not possible for me to be everywhere at the same time. We're discussing how to keep the same spirit because right now I'm involved in every aspect of the organization. That's going to have to shift, but I want to stay lean and mean and make sure the resources are focused on the creative side.
Will it be difficult to let go?
It won't be terrible. I'm not the clearest communicator, so people who thrive here have to like figuring things out on their own. What I'm good at is finding talent on a lot of levels and giving people encouragement and latitude to be entrepreneurial. It may not end up exactly how I would have done it, but I can accept that.
How does the focus on the creative process help your business?
I love the art of business, and I work like any creative professional. Finding artists or even buildings is an organic process, so I'm always looking around, asking for recommendations. Last night I was reading a magazine and I ended up tabbing one of the artists. I don't have anything for him now, but he sounds interesting, and now his work is in my brain. Something will come up that he'll be perfect for.
You're going to make staying at an Ace hotel an immersive experience.
Exactly. There's not a big expansion plan, but I visualize our business going deeper. We want a collection of hotels--but not a chain.
Any parting advice?
Follow your instincts and do your own thing. What we do works for us, but if you're chasing after something, you've already set an expectation. In any creative field, it's fine to be inspired, but you should figure out your own spin.
I think that the direct words of who actually made and built the success of our story is the best way to transmit this to you; no commentaries could be better and could not communicate the same enthusiasm and excitement of the founder.
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