The "Father of the Boutique Hotel" Just Opened a New Hotel in New York. What's Its Selling Point?

This time he isn't trying to upend the traditional hotel business. He has aimed straight at Airbnb, the rival hotels now consider their biggest threat.

Last week the Public hotel opened on New York's Lower East Side. The authoritative British design magazine Wallpaper* said its founder, Ian Schrager, has finally put into practice the boutique-hotel idea he proposed 25 years ago, while The New York Times described the 70-year-old Schrager as a "populist", saying his Public hotel means to give everyone a reasonably priced taste of luxury in a downtown neighborhood where room rates have shot up.

Public occupies the lower half of 15 Chrystie Street, a new building by the famous Swiss architecture firm Herzog & de Meuron, with 370 guest rooms. The upper half was built as 11 floors of luxury condominiums — another way for the developer to make money.

This time Schrager wanted to drop the signature services high-end hotels like to advertise and concentrate on the details that are "really important, and what the guest needs," especially at rates starting at $200 a night (a recent promotional rate was $150). "Create a five-star experience on a two-star budget."

Every room here looks elegant and finely made, with almost no furniture. Even the most compact room type has a separate lounge area and a work area, and details like hidden reading lights and USB ports are handled properly.

According to Schrager, each room at Public cost about $350,000 to build, while a room in a typical luxury hotel can cost close to $1 million.

To hold costs down, Public has only 50 full-time employees. Much of the work is contracted out, including cleaning and the telephone operators, who in fact work in Las Vegas, where wages are lower than in New York.

Nor will you find hotel staff assigned to narrow specialties — room service, luggage, the front desk. In their place is a specially trained "public" team that can answer whatever a guest needs at any hour. More often, though, Schrager wants guests to solve basic problems through the app Public built itself: unlocking the room with MobileKey, ordering food and drinks from the hotel's restaurants, and so on.

Schrager says: "When I first went into the hotel business, what inspired me was entertainment or fashion, not the hotel business. Now I'm inspired by the tech industry."

"Populist luxury" is the key Schrager set for the whole hotel. Beyond rooms full of small considered touches, it is Public's shared spaces that really try to pull guests in. There are restaurants, a grocery, boutiques, a café, a bar, a terrace, an outdoor garden and other kinds of space. A guest staying here can eat food overseen by the celebrated chef Jean-Georges Vongerichten, and also get a taste of the atmosphere of Studio 54, the famous nightclub Schrager started years ago.

Schrager says: "The Public hotel is a small world of its own that holds everything this city has to offer. It has the social, public space Airbnb can't provide. This is the future of the hotel business. People want the money they spend to be worth it; the evening you have here is complete, and there's no need to leave for somewhere else."

At first glance the model looks a little familiar. The W Hotels we wrote about not long ago always like to dress their shared spaces up as nightclubs and lounges, and the inspiration for that is said to come from Morgans, the boutique hotel Schrager helped plan in New York in the 1980s.

Last year Schrager made the authoritative British design magazine Wallpaper*'s list of "20 of the world's top creative disruptors" (Game-Changers: Top 20 creative world-rockers). Others on the list included the British architect Thomas Heatherwick, "Spice Girl" Victoria Beckham and Apple's senior vice president of design, Jonathan Ive.

Wallpaper* argues that over the past 30 years Schrager has remade the hotel industry: it was he who, with the Morgans hotel in 1984, created the idea of the "boutique hotel." After that, the Morgans model and the thinking behind it grew up in many places — the Royalton, the Paramount and the Hudson in New York, the Delano in Miami, the Clift in San Francisco, the Mondrian in Los Angeles, and St Martin's Lane and the Sanderson in London. Behind these hotels, all of them selling a fashionable way of living, Schrager was the creative force.

The New York Times went further and called him "the Steve Jobs of the hotel industry".

But bringing nightclub culture, and more of a way of life, into hotels was not an idea that came to him in a flash.

In the 1970s Schrager, a graduate of the law school at Syracuse University, worked in real-estate law for a few years and then opened a nightclub, Studio 54, with his college friend Steve Rubell. They brought in the interior designer Ron Doud and the lighting designer Brian Thompson, hoping that design could produce the easy, uninhibited, theatrical feeling of a disco.

The late 1970s were Studio 54's golden days. People from show business, art, culture and even politics were regulars, and it was no surprise to see Andy Warhol, Michael Jackson, Elizabeth Taylor or Debbie Harry there.

Schrager himself was never lost in club life; he would usually have some vodka to loosen up and then leave. Rubell, his partner, was a boastful man who often danced, got drunk and even took drugs in the club. In an interview with New York Magazine he said: "We're doing very well. I figure only the Mafia could do better than us, but I can't say that out loud. The IRS doesn't understand. It won't hurt them, ha ha ha."

Rubell soon paid for the boast. In December 1978 the IRS raided Studio 54 and found close to $1 million in receipts hidden in garbage bags; another $2.5 million in cash was estimated to have already been skimmed. Schrager and Rubell were convicted of tax evasion, and the two spent more than a year behind bars in Alabama.

Schrager did not waste the time in prison. The idea of "merging nightclub culture with hotels" came to him there. And not only nightclubs: bars and restaurants, he thought, belonged in hotels too.

When he got out in 1981, two New York billionaires were in the middle of a hotel-building rush. One was Donald Trump, now the U.S. president, who was putting up his Grand Hyatt; the other was the real-estate magnate Harry Helmsley, who had renovated the Palace hotel.

Schrager did the math: "Neither of those two big shots is going to do what we want to do. This is a very good opportunity." He was tired of New York hotels that looked orderly and put on airs but had nothing worth remembering.

To pay off his debts after prison, Schrager and Rubell sold Studio 54 and spent $6 million on a 50% stake in a hotel on Madison Avenue, planning to turn it into the world's first boutique hotel. "The biggest thing Studio 54 gave me was that I got to know people in many different fields — I could call almost anyone for help," Schrager said.

In 1984 the Morgans hotel opened.

That was only their first attempt at the boutique hotel. Not until the Royalton opened in 1987 was Schrager's theory of "lobby socializing" really put into practice — and it was also the most thorough transplant of Studio 54's popular club culture. It is worth noting that this was Schrager's first collaboration with the French industrial designer Philippe Starck; together they turned the hotel lobby into something like a fashion runway, meant to draw the coolest, most stylish people in all of New York.

By 1988 Schrager found he was New York's largest private hotel operator, with 5,500 rooms. But Rubell, his partner, was gay, caught HIV and died a year later. The huge success came with grief: "I miss him a lot. If we could have kept going together, we would surely have done even better."

After that Schrager's "boutique hotel" idea left New York and settled in many cities, and the people he worked with were all giants of design — Philippe Starck, Julian Schnabel, John Pawson.

Nearly all of these hotels were converted from cheap ones with cramped rooms, but Schrager used every design trick to make the rooms look relatively bright and roomy, then transplanted what he had learned building nightclubs into the hotels' shared areas, adding bars and restaurants and raising the level of service. These measures — a lot of effect for the money — kept returns flowing to the Morgans Hotel Group.

Morgans also drew more and more imitators. Some were independent operators, like Alexander Calderwood, who founded the Ace Hotel; some were big hotel groups, all of which launched boutique brands of their own. Starwood's W Hotels probably handled the nightclub style best, while the Reserve brand from The Ritz-Carlton Hotel Company, the Andaz brand from Hyatt Hotels Corporation and Starwood's two other brands, Aloft and Element, all came later.

Even Schrager himself teamed up with Marriott to develop the Edition boutique brand. Five Edition hotels are open so far — in London, Miami, New York, Istanbul and Sanya — with more than 10 other projects under way around the world.

He is still the innovator who hates sticking to the rules. In 2005 he left Morgans, saying he "didn't want to manage a hotel group, only to design and develop hotels," and set up his own company, Ian Schrager Co., to keep looking for a breakthrough in the hotel business, adjusting the style and the form of service to fit the times. He regards the Gramercy Park Hotel in New York as the work that fit perfectly the era just before the global financial crisis: a Baroque style carrying strongly colored Renaissance tones, full of artistic force.

After the crisis broke, he turned around and launched the affordable hotel brand Public Hotels, his first brand project since becoming an independent hotel owner.

The first Public, in Chicago, best expressed his idea of "populist luxury": no unnecessary services, with attention to what is useful and worth the money. He believed he had set a new industry standard: "This brand is defined by the unique experience it creates, not by a business category or a price point."

But in 2016 the Chicago Public, poorly run, was sold to the Hong Kong private equity fund Gaw Capital Partners. The Public Hotels brand is still operating, and the newly opened Public on New York's Lower East Side that we mentioned at the top of this article is his new work, four years in the making, defining a fresh luxury hotel experience through bold design, convenience, efficiency and lively public social space.

This time he is no longer trying to upend the traditional hotel business. He has aimed straight at Airbnb.

Today the whole industry treats Airbnb as its biggest competitor. Airbnb has taken a large share of the young consumers in the hotel market — people who choose to stay in local homes while traveling and get a local experience at a lower price.

But as Schrager sees it, the best way to compete with a powerful idea, such as Airbnb, is to offer another powerful idea. What he wants to offer is a social space, because that is the one thing Airbnb cannot do.

Images not otherwise credited: Wallpaper, Ian Schrager Co., The Associated Press, The Daily Mail, Dezeen