The American Colony Hotel was founded in Jerusalem by Christians from Chicago in 1902 in the villa of a member of the al-Husseini family. On December 9, 1917, the Turkish governor of Jerusalem took a white sheet from the hotel, then serving as a hospital, and used it to surrender to the advancing Allied armies. Today, it is a popular haunt for foreign journalists and is known as a good place to gather information regarding the Palestinians.
Source: Bard, Mitchell G. and Moshe Schwartz. 1001 Facts Everyone Should Know About Israel. Rowman & Littlefield Publishers, 2005.