Friday, August 3, 2012

Checking In: Celeb Hotelier Goes Public

Ian Schrager checked out of the New York hotel scene amid the financial crisis in 2010 when he divested his stake in the Gramercy Park Hotel. Now he's staging a comeback and wants to regain his status as the largest private hotelier in New York City. The celeb hotelier is 'in contract' to build two NYC hotels, and close to securing deals to develop five others under his new brand Public.

The legendary hotelier and former owner of Studio 54 is "in contract" to build two Manhattan-based Public hotels, the value-oriented brand he launched in Chicago in October 2011. The deals replace a canceled project announced last year to open a Public at 855 Sixth Avenue in Herald Square with Durst Fetner Residential.

At one time, Ian Schrager was the largest private hotelier in the city. Reached at his roomy Greenwich Village office last week, Mr. Schrager stated, "I wouldn't mind achieving that status again. I'm still ambitious."

Though Mr. Schrager declined to divulge many details,  the famed boutique hotel pioneer, said he is close to securing deals to develop five hotels under his new brand Public, which rejects much of the hip hotel-design concepts he helped to popularize more than two decades ago. He did confirm that all the hotels would be new buildings and added that other properties could land in Williamsburg and Coney Island—neighborhoods the East Flatbush, Brooklyn, native has become enamored with in recent weeks.

The latest activity comes on top of a deal he inked with Marriott International to help design its Edition hotel brand. Construction to convert the landmark Clock Tower building at 5 Madison Ave. begins later this year.

Mr. Schrager, who turned 66 last week, probably would have gotten heartburn if someone had told him earlier in his career that he'd be the architect of two hotel chains. The godfather of the boutique hotel was disdainful of anything that smacked of cookie-cutter corporate, touting instead the individuality of his properties such as Morgans, the Paramount and the Royalton with their one-of-a-kind appeal.

That was before Bill Marriott made him a lucrative offer in 2007 he couldn't refuse: to design Edition, Marriott International's first boutique-hotel brand.

Marriott could have tapped anyone for the job but chose Mr. Schrager because he was a pioneer in that category, whose ideas have been copied by everyone from Starwood Hotels & Resorts' W hotels to, well, Marriott. Edition is meant to be an answer to W.

Mr. Schrager has developed about 15 one-off hotels during his career—none of which he still controls today. In the case of the Gramercy Park Hotel, that property took a hit during the downturn when it defaulted on a loan.

Creating the Public brand has improved his ability to attract institutional funding. For one thing, Mr. Schrager's involvement with Marriott has given him institutional credibility, so lenders are more willing to back such projects.

The Public in Chicago, like Mr. Schrager's earlier hotels, has sophisticated design elements and features a destination restaurant, the Windy City's storied Pump Room, run by celebrity chef Jean-Georges Vongerichten. Room rates start at about $200 a night during the summer, although the same hotel room in New York could probably command twice as much. The property also introduced a new riff on room service, promising to deliver meals within 10 minutes. A paper bag with the order is placed outside the guest's room, eliminating the need to tip.

The service, called Public Express has already inspired a copycat in the Four Seasons Hotels, which recently announced a 15-minute room-service option.

Conceiving ideas that eventually become industry standards is among Mr. Schrager's greatest strengths. Now that he has the ear of corporate brass at Marriott, he is making unsolicited suggestions on how to increase the room rates at the company's budget chain, Courtyard by Marriott, by introducing classier food and beverage service.

"Ian is great at design and promoting a property, bringing in revenues and making these projects very exciting," said Richard Born, a principal of BD Hotels who was briefly a partner with Mr. Schrager in a proposed hotel that eventually became 40 Bond St., a residential building where Mr. Schrager resides with his wife and 2-year-old son.

However, Mr. Schrager also has a team of 25 in his company, including partner Michael Overington, who began his career with Mr. Schrager as an engineer at Studio 54 and now heads development at Ian Schrager Co.

"When I first started out, I suppose I was a one-man band," said the hotelier. "But I'm not anymore."