Ian Schrager's designs on new boutique-hotel chain - San Francisco Chronicle
Chicago --
Ian Schrager, whose indefatigable pursuit of buzz over the last 30 years has produced memorable hotels like the Royalton and the Gramercy Park in New York, the Mondrian in Los Angeles and the Delano in Miami Beach, is about to open his first new project as an independent hotelier since the 2008 financial crash.
Schrager's new venture - which will have a limited opening today - is Chicago's faded but legendary Ambassador East Hotel.
"I'm in an opportunistic business," he said on a recent walk-through of the hotel's public spaces. "You can't have a hotel company without having a hotel in Chicago. I've always wanted one, but never found one to buy until now."
The hotel, which Schrager is now calling the Public, dates from 1926 and is about a mile north of the Loop central business district in the Gold Coast lakefront residential neighborhood.
Schrager acquired the Ambassador East in the spring of 2010 for $25 million from the Harp Group, a locally based hospitality investment and development firm that paid $44.5 million for it in 2005. Harp Group's lender, iStar Financial of New York, retains an interest in the project.
"Basically, it turned out to be an arranged short sale," said Adam McGaughy, a senior vice president of Jones Lang LaSalle and Harp Group's broker for the transaction.
He added: "It was very good timing for Schrager. At that point, no one knew what was going on in the market. The sky was still falling. He timed it just before the market for investment recovered later that summer."
Bargain for buyer, guests
Since then, Schrager has spent an additional $35 million on the renovation. When added to the purchase price, the total is just over $200,000 a room, a seeming deal in a city where luxury hotel properties regularly trade in the $300,000- to $400,000-a-room range.
And in contrast to other properties that Schrager has developed, room rates will also be something of a bargain. The Public has 285 rooms, about 30 percent of which are suites. Rates, at least in the beginning, will start at $135 a night, considerably below the average for the downtown Chicago luxury market.
Downtown Chicago currently has about 34,000 hotel rooms with overall occupancy expected to reach 71 percent this year.
"The whole idea is there has to be value," Schrager said. This means, he added, "No $5 Hershey bars in the minibar and no $20 pots of room service coffee. People won't accept that anymore."
Schrager described the Public as "a paradigm shift. The idea is to have a less expensive hotel where you still have great service, great design and an exciting food-and-beverage concept. Because I think the country's more complicated now. It's not going to be so much about upward mobility in the future."
Schrager hopes the Public will be the first link in a new chain of boutique hotels across the country.
This is Schrager's second try at creating a new boutique hotel chain in recent years. The first was a star-crossed collaboration with Marriott International for a chain called Edition, which was announced with much fanfare in 2007 but has so far resulted in the opening of only two hotels, in Honolulu and Istanbul.
Even though the Public's room rates will be lower than a typical Schrager property, Schrager said he is not skimping on design, which has been his calling card and a way of compensating for the small rooms and cramped bathrooms that he acknowledges are a fact of life at many vintage hotels.
"I'm able to take compromised conditions and through good design neutralize them," he said.
But those who remember outre touches like the giant log that served as a couch in the lounge of the Hudson Hotel in New York may be surprised by the overall restraint of the Public.
Design and history mix
15 Sep, 2011--
Source: http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFQDi2CwNEllhHzCiaYG64ev3OLQA&url=http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/09/14/BU3S1L45N1.DTL
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