Schrager has a lot of strong opinions on the current state of the hotel industry and, given his track record of success, it's probably not a bad idea to listen to them.
Ian Schrager, the iconic hotelier best known for Studio 54 and pioneering the modern boutique hotel in the 1980s, has a warning or two for the hotel industry.
“It’s a ‘me too’ industry, and it’s unfortunate,” he told Skift, shortly after receiving the 22nd Annual ISHC Pioneer Award from the International Society of Hospitality Consultants (ISHC) on the final day of the Americas Lodging Investment Summit in Los Angeles last month.
Schrager was referencing the hotel industry, a sector of which he’s been involved in for more than five decades, and bemoaning the lack of innovation he’s seen in recent years.
“I think they’ll wind up getting into the same rut they were [in] 30 years ago, but it’d be a lot of different colors,” he continued. “But it’s a ‘me too’ industry. Maybe because it’s so capital intensive. I don’t know why, but it’s an industry that lags the cultural growth curve rather than leading it like the technology industry does.”
He continued, “I think the industry is at a crossroads again. They were at a crossroads when I got started last time as well [referring to the early 1980s]. I think it’s under siege. I think Airbnb is a major threat. I don’t think that that’s the conventional wisdom; I think the industry is in denial. And I’m not data driven, I just … They’re coming for our kids.
“Airbnb is coming for our kids. But a lot of people with the data, with housing stocks, or those other kinds of data, they’re not quite so sure. And I think that with the sharing economy, we have to rethink what we do, and we’re still clinging to some of the old notions of a hotel and with rate services. I think people change. Times change.”
Break the Rules
So what does Schrager think the industry should be focusing on instead? It’s simple: breaking the rules.
“The willingness to break some rules and go off into new things,” he said. “That’s what I think [is needed]. It’s hard for a public company; they’re not willing to make the kind of mistakes that others can.”
Schrager pointed to examples in film and music as a blueprint for how hotels should proceed.
“Like what the film industry did, and the music industry did — they went out and associated themselves with smaller companies and let the smaller companies go out and do things while they as a big company waited and soared,” he said. “A perfect example of that is with Disney and Pixar. So maybe that’s one way. But I think we’re an industry that needs to get out there and set the standard, rather than follow the standard.”
Competing Against Airbnb
And he’s still a believer in the power of the lifestyle hotel.
“I think the lifestyle space, the boutique space, is the best way to compete with a disruptor [like Airbnb]. Because they can’t do what we in the lifestyle space. They can’t provide that exciting energy and all that. And even if you say, well, they can tell you where to go to get that, but it needs to still be on brand. It needs to be consistent with the ethos of the whole place. That they can’t do.
“And so, I think with bed and board, it’s always been a bed and board business. Having great restaurants was not my invention. They did it in Roman inns, and English inns, and in the plaza a 150 years ago. It just got, we lost sight of it.”
Schrager is known for being a trendsetter in his own right and his achievements include transforming nightlife with Studio 54 in the 1970s, and changing our expectations of a hotel experience with his boutique hotels in the 1980s. And he’s also known for always being willing to speak his mind.
Looking ahead to the future of hospitality, Schrager said he hopes the next generation of hoteliers is as hungry for innovation as he remains.
Schrager himself continues to work on new projects, including additional EDITION Hotels with Marriott, as well as opening a new PUBLIC hotel in New York City later this year. He’s also dabbled in residential projects and he said he’s particularly fascinated by the concept of co-living and co-working spaces as a new source of inspiration for hotels.
“… The technology, you’d think it adds contact and community, and it does in a certain way, but it isolates you from the actual face-to-face human contact,” he said. “So I think people are seeking that in their work, and seeking that with the way they live, and that’s why I think that happens. It just doesn’t happen for no reason. And that’s what I think, for me. I mean I’m not data-driven, I’m intuitively driven, and that’s what I think.”
An Antiquated System
Another thing he hopes the hotel industry will eventually do away with? Those star ratings.
“The PUBLIC hotel [in New York City] we’re working on right now, that we’re opening in May/June, is a luxury hotel that just happens to be very reasonably priced,” he said. “That is a major social/cultural implication. I think this one-, two-, three-, four-, five-star system is an antiquated system. I think that’s what interests me — disruption. Disruption — not having a thousand hotels, not executing grades — but disrupting, and doing something that stands out.”
For Schrager, receiving the Pioneer Award from the ISHC was yet another reason for him to continue trying to reinvent the hospitality space.
When asked about his legacy as a hotelier, Schrager simply said, “No, I’m not big on legacy, frankly. The legacy is my children. I like to think I’ve changed the industry, not only with the lifestyle hotel, but I think the entire industry has changed and evolved because of what we did, which is gratifying to me. I would like to do it again. Which is why I think I’m so hungry and ambitious.”
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Photo credit: Ian Schrager at the annual Americas Lodging Investment Summit conference in Los Angeles on January 25, 2017. Americas Lodging Investment Conference