During an interview at the Stay Boutique Investment Conference, longtime New York hotelier Ian Schrager discussed the importance of tech innovation, working with Marriott International and markets he would like to move into with his company Public Hotels.
NEW YORK—The select-service hotel sector is to thank for advancements in boutique and lifestyle hotels, longtime hotelier Ian Schrager said during an interview at the seventh-annual Stay Boutique Investment Conference in New York.
Schrager, who opened a Public Hotel in New York’s Bowery district in 2017, and who’s owned hotels since 1984, credited the select-service sector with the idea of winnowing down hotel services to the essentials so that hotel operators like himself can commit more resources to design and technology as well as food-and-beverage programs.
“The most successful brands such as Courtyard by Marriott, Hilton Garden Inn and Residence Inn learned to edit and reduce the labor component in the hotel,” he said. “The idea is to go into a space and not dumb it down, and provide something sophisticated and stylish. This idea of luxury for all without the gold ribbons, and cutting out all the things people don’t care about, is the future of the industry. And it’s the future of the restaurant industry as well.”
Traditional luxury is shrinking
Schrager predicted that the traditional luxury sector would shrink, both in global presence and physical size, as labor costs rise and guests become more comfortable with ordering services on devices such as smartphones.
“Luxury hotels are going to get smaller. The 800-room hotels, the Plazas, I can see them getting as small as 80 to 120 really large rooms,” he said. “Traditional luxury, some of those customers are getting old. I think there’s an opportunity for luxury lifestyle, something that had the great service and refinement and all the things the luxury hotels have, but the bars aren’t pre-function rooms for a funeral.”
“Why do we need bellhops, when everyone has suitcases with wheels?” he added. “We don’t have any room service, because I think paying $25 for a pot of coffee and a baked good with a delivery charge of $7 is obnoxious.”
Schrager also championed technology advancements as a key component to offering more service at a lower cost, though took issue with technology providers who make hospitality management products that aren’t compatible with technology products from other companies.
“Technology is all-important, but it’s very difficult to achieve because none of the technology companies will talk to each other. You can’t take a point-of-sales system and have it talk to a revenue-management system. It’s very frustrating,” he said. “Every single transaction at a hotel, if it can be done smoother, quicker and cheaper with technology, it should be done. You should be able to get a hotel room the same way you get an Uber. Isn’t that obvious?”
Having first gained hospitality renown during the 1970s as the co-owner (with partner Steve Rubell) of iconic New York nightclub Studio 54, Schrager opened the first Morgans hotel in New York in 1984. A second New York hotel, the Royalton, opened in 1988, and hotels in Miami, West Hollywood, San Francisco, London and Boston followed. Schrager sold Morgans in 2005 to found his eponymous hotel company. He opened his first Public in Chicago at what was previously the Ambassador East in 2011, though he sold it in 2016. The hotel has been rebranded as the Ambassador Chicago.
In addition to Public, Schrager began partnering with Marriott International on the luxury-lifestyle badge Edition in 2007. That brand has 10 properties in cities such as New York, London, Miami and Shanghai, and is slated to add hotels in Rome, Singapore and West Hollywood, California, later this year.
“I have the option of either dealing with the New York City robber barons or dealing with the guys at Marriott, who are honest and without an agenda. It can get frustrating because (Marriott executives) don’t do anything without getting consensus, but we’ve gotten used to it,” he said. “We’re more alike on the inside than the red tie Bill Marriott wears and the black shirt I wear. And (Marriott CEO) Arne Sorenson’s one of the finest gentlemen that I’ve ever met.”
The New York native also said that, for geographical expansion, cities that attract substantial group business “no matter what” are particularly compelling.
“I’d like to do something in Austin, though I’ve never been to Austin, but the idea of it is appealing,” Schrager said. “I’d like to do something in Toronto and Vancouver.”