Investors Buy Distressed Chicago Ambassador Hotel at Discount

A group of high net worth investors has purchased the historic Ambassador Chicago Hotel out of receivership after years of financial distress for the Gold Coast landmark.

A venture managed by Wheeling-based investor Marsha Forsythe acquired the 285-key property at 1301 North State Parkway, Crain’s reported, resolving a 2023 foreclosure lawsuit that accused the hotel’s previous owner — an affiliate of Chinese investment firm Gaw Capital — of defaulting on a $38.5 million loan when it matured last May.

The purchase price was not disclosed, but court records show the buyer reached a deal last summer to acquire the hotel for $30.5 million, or roughly $107,000 per key. It’s a sharp drop from the $60 million Gaw Capital paid for it in 2016.

The buyers have added the Ambassador to a cluster of independently managed hotels operated by the Chicago Hotel Collection, which also manages three other properties downtown and in Wrigleyville.

Seller Gaw Capital invested $11 million in renovations and rebranded the hotel under the Hyatt Joie de Vivre collection in 2020.

The pandemic forced the hotel to shut down for nearly a year, and it struggled to recover amid a slow rebound for the city’s hospitality sector.

Downtown Chicago hotels remain below pre-pandemic levels, when adjusted for inflation, despite some signs of a recovery. Revenue per available room was 11 percent higher last year than in 2019, but inflation-adjusted figures show the sector still lagging, according to CoStar.

The buyers must stabilize the hotel’s operations fast if they want to turn a profit. The hotel lost $1.2 million last year on $13.9 million in revenue, according to CMBS loan data from Bloomberg.

The Ambassador is now the largest hotel in the Chicago Hotel Collection’s portfolio. The company hasn’t revealed renovation plans but has stated the ownership will “honor the hotel’s storied legacy” while introducing upgrades.

— Judah Duke