July 27–When Ian Schrager bought the landmark Ambassador East hotel in Chicago's Gold Coast neighborhood in 2010, the plan of the New York City nightclub owner turned hotelier and real estate developer was to restore the hotel to its original glamour with a modern touch.
The restoration and renaming to Public happened, but those go-go days of decades earlier, when the hotel and its Pump Room restaurant was frequented by A-list celebrities such as Frank Sinatra, Humphrey Bogart, Lauren Bacall and Marilyn Monroe didn't entirely take off.
Last year, after a five-year run Schrager, who paid $25 million for the property, sold it to investors Shapack Partners and Gaw Capital for $61.5 million, a price considered less-than-stellar in Chicago's superhot hotel market.
Now a new hotelier is aiming to do what Schrager didn't. Journal Hotels, which has restored several properties in Los Angeles, has reimagined the hotel and restored part of its name: Ambassador. The company also is bringing back Rich Melman's Lettuce Entertain You Enterprises to reconceptualize the Pump Room, which it ran for 22 years.
But it remains uncertain whether the second reboot will be be the charm for a hotel that's not only off the beaten path, but surrounded by a flush of other small, trendy hotels.
Ambassador is Journal Hotel's first Chicago property — the company has restored the Hollywood Roosevelt and the MacArthur in Los Angeles, among others.
The choice to snap up Public was an easy one for Gaw, because it isn't common that hotels with the history of the Ambassador East come up for sale. Chicago, being a "strategic market" with a flush of tourists is an asset, said Stephen Brandman, CEO of Journal Hotels. Journal is part of Gaw.
"There are a lot of beautiful things in the hotel," Brandman said."Everything we're trying to do is bring out reinforce the beauty of the hotel."
The 285-room Ambassador East opened in 1926. It was a companion to the Ambassador, across the street, which is now a condominium building. The Pump Room followed in 1938 and quickly became a hub for celebrities stopping through town.
At the hotel, A-listers often set up residence. Eunice Kennedy's father, Joseph, held an apartment for her there for when she worked in Chicago as a social worker. The likes of Lana Turner, Doris Day and Helen Hayes were famous residents. Journal Hotels hopes to recapture some of that glory.
Schrager is famous for his sexy-chic hotels such as the Hudson in New York City, where models and moguls mingled in the hotel lobbies. In the 1970s and '80s, he rose to stardom as the force behind New York City hot spots Studio 54 and the Palladium, where stars such as Michael Jackson, Bianca Jagger and Diane von Furstenberg danced and held court.
When Schrager opened Public in 2011, his aim was to make that glamour accessible and friendly to people who aspired to be cool but lacked the star wattage and deep pockets of celebrities.
But in Chicago, Public was up against a growing crop of trendy, hipster hotels popping up closer to the hubbub in River North and near North Michigan Avenue. Even though Public had Schrager's reputation behind it, the brand's debut sputtered.
Schrager's talent is in creating memorable, aspirational and coveted spaces, not operating a hotel, which requires keeping costs down to turn a profit, said Robert Cole, a senior research analyst of hospitality and leisure travel at Phocuswright, a market research firm.
"He got the idea that the nightclubs of the '80s would be the hotels of the '90s," Cole said. "Ian is very much into creating environment, but where his hotels fall down is having to keep them up. If you have lambswool that's very cool on your chairs, it's very cool, but keeping it clean can get complicated and expensive."
Brandman is betting he can recapture the hotel's glory with his plans to restore the hotel, beginning with the name change.
"We are trying to be respectful to the building and bring back that time that it was at it's height."
Plans include improving the public spaces and installing new elevators, said Brandman, a veteran hotelier who previously was the CEO of Commune Hotels and worked on the development of Hotel Sax and Hotel Lincoln.
Melman, meanwhile, won't provide any details on plans for the Pump Room, but the "reconcept" of the restaurant is expected to debut in the fall.
Lettuce previously ran the space from 1976 to 1998. "Lettuce has a lot of history at this location," Melman said in a statement. "Our first restaurant here was exciting and so much fun that I'm thrilled to be doing it again in a more modern way."
History and glory aside, there's still the matter of attracting guests to the hotel, which has been an uphill battle for the past few owners of the property.
Lifestyle hotels, are "… just about how people see themselves. (It's) a broad range of customers (who) are looking for an interesting experience," Brandman said. "We want to make it approachable, rather than defining ourselves as a luxury hotel."
Attracting that dynamic is competitive in Chicago, where in recent years several boutique hotels are in busier, trendier neighborhoods than the Gold Coast, which is more posh than party.
"The uniqueness of the neighborhood is both a challenge and opportunity," said hotel consultant Ted Mandigo.
It enables the hotel to command a higher rate, but it also calls for the hotel to be quieter and less vibrant. "There's a fine line of balance that needs to be achieved," he said.
That could be tricky for Journal, because as the company aims to keep room rates down and make the hotel more accessible, tighter margins will limit profitability.
Room prices at the Ambassador will start in the low $200s. Other local boutique hotels such as Acme and Hotel Monaco are roughly in the same range, although cheaper rates can be found on travel websites.
Brandman's success will depend on his ability to create that essential hip ambiance for travelers on a budget, industry watchers say.
Journal's track record of successfully revamping historic hotels is in its favor. "It seems to be their sweet spot," Cole said. "They've figured out how to run these hotels, probably more efficiently than Schrager."