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Schrager sells Morgans, takes show on road.

Schrager sells Morgans, takes show on road

Ian Schrager has sold his interest in Morgans Hotel and, he says, he's "taking his show on the road." Now that things are in control at the 112-room hotel at Madison and 37th Street, Schrager told REW, he's ready to set his sights on, among other places, Los Angeles, London, and the Caribbean.

Schrager, who with his partner, the late Steve Rubell, made a splash in the New York market with their "non-generic" small boutique hotels, sold his minority stake in the hotel to Royokan, a Japanese investment group. The operations of the hotel, however, are expected to remain much the same. Schrager still owns the Royalton and the Paramount Hotels in Manhattan with partner Phil Pilevsky.

Schrager said he will not be duplicating the exact ideas that are his New York hotels. His strategy, he said, is to conceptualize, not institutionalize. "I try to respond to what people want," said Schrager. "I don't dictate to them."

Schrager said many look at his reasonably priced Paramount hotel and compliment him for predicting the current recession. Schrager said he was responding to what people wanted and filling a void, rather than acting in anticipation of any economic swings. "You don't do a $75 million project based on a two-year dip in the economy," he said.

The demand for lower-priced quality, Schrager said, is also seen today with Armani opening "under $100" boutiques and the popularity of the Gap and IKEA.

In London, Schrager is planning a 754-room hotel, with an extensive health club, on the site of a former YMCA.

Schrager said the hotel "wants" to be less expensive, and it will be "quintessentially" London just as the Paramount is New York.

"I want the hotel to be quintessentially the place it is in," said Schrager.

In Los Angeles, he said, he is looking at two renovations.

Schrager said it was always the dream of he and Rubell to bring their ideas to the Caribbean to create "an adult playground" that is a total environment. "So when you go home you're truly rested," he said.

The resort would also be less expensive but not involve any less service.

"We're not interested in doing state-of-the-art, generic resorts with the same definition of luxury as everyone else," he said.

While the strategy of Morgans Hotel Group has traditionally been buy cheap and renovate, Schrager and his partner "Phil" are currently searching for a piece of land on the island of Jamaica on which to build from the ground up. Jamaica, Schrager said, is not quite as commercial as some of the other islands.

The mass market has really splintered, Schrager said, and hotels are really the last to undergo the transition. The industry has really not changed, he said, since Statler invented the modern hotel room.

"All things have to modernize and update," said Schrager.

On the home front, Schrager and partners have recently added 14 rooms in the existing parameters of the Royalton Hotel, and, on the roof, a 1,500-square-foot, glass-enclosedhealth club, designed by Phillippe Starck. Health clubs, for the exclusive use by guests, are also part of the Morgans and Paramount hotels.

"We don't treat these things as a profit center," he said. "We treat them as an amenity. We feel it's essential."

Morgans was the first hotel purchased by Schrager and Rubell in 1983. The hotel reopened a after significant renovation.

"I love it. It is my child, but I am a businessman first and foremost and it was a smart business decision."
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Title Annotation:Ian Schrager sells his interest in the Morgans Hotel
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:Oct 9, 1991
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Next Article:Empire still for sale.

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