Ian Schrager on Creating Affordable Luxury

His casual black polo shirt and somewhat faded jeans could have fooled those not in the know. But when iconic hotelier Ian Schrager, founder and chairman of the Ian Schrager Company, was interviewed for the annual Stephen W. Brener Distinguished Lecturer Series in Hospitality Management it became clear to the audience of approximately 275 hospitality students and professionals that, for the father of the boutique concept, the look and atmosphere of his properties drive his work. Ultimately for Schrager, it’s about the product.

“A distinctive product is a magic carpet,” he told another iconic hotelier, Jonathan Tisch, chairman and CEO of Loews Hotels & Co. and co-chairman of the Loews board, who conducted the interview. The discussion was presented by the NYU School of Professional Studies Jonathan M. Tisch Center of Hospitality. The chat covered the span of Schrager’s 50-year hospitality career, which began with nightclub ownership in the 1970s when he and then business partner Steve Rubell created the legendary Studio 54.

Even in those early days, Schrager understood the importance of a place’s appearance and energy. “We weren’t comfortable with a place that seemed contrived for people to meet, we wanted it to feel more natural, but with a theatrical setting.”

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Sure enough, their concept was a smash hit, becoming the place where everyone who was anyone was seen. “We knew we had something special, it was a huge hit from day one. The celebrities helped but it was the energy of the place, and the socializing, that made it special. The people were old and young, black and white, wearing jeans and no shirt or a ball gown and a tiara. The energy came from the diversity of the people.”

After going on in the 80s to create the Palladium, another legendary nightclub, Schrager shifted to hotels. The jump made perfect sense for the magnate, he said. “Nightclubs, restaurants, bars, and hotels all are about hospitality, so it was a logical extension.”

From his first property, Morgans Hotel, to the Public and Edition brands he created in recent history—the latter through a partnership with Marriott—he has always seen how to turn properties into stories. “Every hotel had to have an idea. Morgans didn’t have a lobby so it had to be more introverted. Later, the Royalton had a big lobby and it was more extroverted. We wanted people to come not because the color of the room was different but because the personality was different.” 

He added, “Every hotel is a one off. The physical plant is different, the location and design is different. That’s the strength of it. That’s the edge. I never wanted to sell a good location or rate, I wanted to sell a product.”

In today’s market, while success doesn’t come easy, Schrager had some advice for the audience’s current and future hoteliers. “If your product makes sense and you can get the rate and occupancy you expect, you can open a hotel anywhere, anytime. But you have to reduce the labor component because that’s the biggest cost. You have to take advantage of technology and you have to rethink services. For example, now that we have with suitcases with wheels, maybe bellman aren’t needed. You have to come up with new ideas, but a good product will always be a good product and make money.”

Still, he noted, “It’s a fight to the death. You have to fight for it and I ruffle feathers, and I don’t care. If it’s not going to be great, don’t do it.”

Asked about failures, Schrager matter-of-factly, and not in boastful fashion, said he’s had none. But that wasn’t just from good ideas, it came with hard work. “I never had anything that didn’t work but I did have new ideas that push the envelope, and then you have to get people to understand. Morgans and Studio 54 were naturals but Palladium I had to work at it."

Now, what’s significant to Schrager is what he’s done to create affordable luxury. 

“If the population is evolving into the one percent and then everyone else, why shouldn’t hotels do the same? The one percent should be charged much higher rates, like thousands of dollars, but then there’s something for everyone else. Doing something sophisticated but accessible to everyone who gets it, and wants it, was the most important idea I ever had. It’s for people who want a big surprise.” 

The idea’s resonance was made crystal clear Wednesday during the question and answer portion of the evening. A recent NYU Hospitality school graduate, moved to tears, thanked Schrager for bringing luxury to the masses because her family hadn’t been able to afford staying at high-end hotels.

Schrager, clearly inspired, delivered a response that could apply to the ideas behind his hotel creations too. “It’s great to speak what you’re really feeling.”

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