A sale close to that dollar figure would be a fraction of the $61.5 million the Gaw venture paid for the property in July 2016, when it was known as the Public Chicago. It’s unclear how much Gaw spent on upgrades to the hotel and its restaurant after that, though information in the flyer suggests the company invested roughly $11 million in the property. Gaw rebranded the hotel as the Ambassador Chicago, a nod to its history as the storied former Ambassador East hotel.
The property stands to be a painful example of the pandemic’s battery on the hospitality market. While leisure travel demand has come back in a significant way this year, sluggish business travel and rising property taxes have substantially devalued downtown hotels, causing owners to surrender properties to their lenders in the most dire cases.
Gaw enlisted Chicago developer Shapack Partners—with whom it previously teamed up on the development of the Soho House Chicago in Fulton Market—to try to boost the hotel’s value after the 2016 purchase from a venture of boutique hotel pioneer Ian Schrager. Schrager had revamped the property and rebranded it as the Public, but the concept never took off, and Schrager ultimately sold the hotel to Gaw for what was then considered a low number amid a hot hotel market.
After restoring the Ambassador name, Gaw hired Lettuce Entertain You Enterprises to operate the hotel’s famous Pump Room restaurant, which it reopened as Booth One in 2017. But in a setback to the property’s revival, the restaurant closed in 2019 and the owners and Lettuce parted ways. The restaurant, which is open, is now called the Ambassador Room. Shapack Partners is no longer involved in the hotel, and a spokesman for Shapack did not respond to a request for comment.
In March 2020—just days before the start of the pandemic—Gaw announced a plan to further renovate the property as the brand linked up with the Hyatt Hotels’ Joie de Vivre, or JdV, lifestyle hotel collection. The hotel then closed for nearly a year as a result of the public health crisis.
Now RobertDouglas is marketing the hotel as an opportunity to either capitalize on the renovations to the property over the past decade and continue operating it as a hotel, or potentially turn it into something else. “Given the property’s size and location, (it) may be appropriate for a number of mixed uses,” the flyer said.
One source familiar with the building said RobertDouglas is playing up the property as a conversion into a residential use, such as apartments or senior housing.
A Gaw Capital spokesman did not respond to a request for comment, and a spokesman for RobertDouglas declined to comment.
Gold Coast hotel owners have found buyers for their properties during the pandemic, though prices have been far lower than they would likely have been before 2020.
The Thompson Chicago hotel and the Talbott Hotel in the neighborhood were both sold last year for close to $300,000 per room. Each deal generated enough money for the sellers to pay off the debt they owed on the properties, but the Talbott’s purchase price was way below the previous owner’s total investment in the majorly renovated building.
Occupancy at downtown hotels averaged 76% in September, up from 56% in September 2021 but below the 84% average in September 2019, according to hospitality data and analytics firm STR. Revenue per available room, a key performance metric that accounts for both occupancy and room rates, averaged $204 last month, slightly higher than the $199 average in September 2019.
September marked just the second month since the start of the pandemic in which average RevPAR topped the 2019 figure.
The Ambassador East originally opened in 1926 and stood as a Chicago institution for decades, known for celebrities dining at the Pump Room and names like Frank Sinatra and Marilyn Monroe staying in its suites.