Skift Take

Ian Schrager opens up about his history in hospitality, and there's more to come at Skift Global Forum in New York. Trust us — you don't want to miss this interview.

More than 1,100 of travel's most forward-thinking insiders will gather for our annual Skift Global Forum in New York, September 27–28. In just a few years, Skift's Forums — the largest creative business gatherings in the global travel industry — have become what media, speakers, and attendees have called the “TED Talks of travel.”

Skift Global Forum 2018 will take place at Jazz at Lincoln Center’s Frederick P. Rose Hall in New York. This year's Forum speakers include CEOs and top executives from Uber, Airbnb, Delta Air Lines, Hyatt Hotels Corporation, Marriott International, and many more.

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“Nothing is off limits” when boutique hotel pioneer Ian Schrager takes the stage at Skift Global Forum in New York City on Sept. 27, where he will be speaking about the next generation of hotels, as well as sharing his general thoughts on where he thinks hospitality and travel are headed.

Schrager is perhaps best known for co-founding New York City’s world-famous Studio 54 nightclub in 1977 with his business partner, Steve Rubell, which became a magnet for celebrities. Seven years later, together with Rubell, Schrager opened their first boutique hotel, Morgans Hotel, in New York, marking the beginning of Schrager’s more than three decades in the hotel business.

After selling Morgans Hotel Group in 2005, Schrager has since formed a partnership with Marriott International to develop and expand a new luxury lifestyle hotel brand, Edition, and he has also embarked on launching a new hotel brand all his own, called Public.

We spoke to Schrager about topics including Airbnb, the concept of “luxury for all,” and how his Studio 54 days prepared him for a career in hospitality.

Editor’s Note: This interview has been edited for length and clarity.

Skift: So many people know you for being a boutique hotel pioneer and for dramatically disrupting the hotel industry as we know it. What do you think will be the next big disruption in accommodations?

Ian Schrager: I think the next new frontier will be technology, but in a way that will make your stay in a hotel and every transaction that happens in that hotel completely seamless and effortless. I look for that as a way of rethinking and changing the industry again, but I’m not talking about iPads in rooms or mood boards in lobbies, or any of those other kind of knee-jerk responses to technology.

I’m talking about every single transaction you have with a hotel, whether it’s booking, making inquiries, making reservations, asking for service, asking for advice in general about the area or the hotel — everything can be done with technology that is done in such a way that the technology doesn’t make people miss any of the personal interaction that we’ve become used to.

Skift: You’re not suggesting that robots will necessarily replace the hospitality experience?

Schrager: No. No robots.

Skift: So, what types of technology do you think have that power to enhance the guest experience?

Schrager: I think we should take the cues that we’ve seen in gas stations in pumping your gas without having the interaction with a gas station attendant. And, I see [it in] the same kind of technology that has made going to a movie theater very easy in selecting your seat. It’s very easy and seamless and [about avoiding lines]. I see the same kind of thing going on in the airline business.

I think those three businesses are good indications for the way technology can be harnessed to make the actual experience easier without friction or without frustration. And I think in those instances nobody missed the interaction of a gas station attendant, or a teller in a movie theater, or the person behind a desk giving you your airplane ticket.

The way I look at it … I say every single transaction, every single communication, every service you avail yourself of at a hotel is done effortlessly, instantly through the technology rather than going through human beings to deal with it.

I think the things you hear about the lack of personal touch is an absolute smokescreen. It doesn’t mean anything. Like, when we get on our iPhones or our cell phones and we want to know directions, or we want to get a telephone number, or anything that we do, nobody misses calling up the telephone operator and asking her for a telephone number, or any of those things.

Skift: With Public, you’ve made a very conscious decision to create a hotel that’s “luxury for all.” Do you think you’ve been able to accomplish that and how is that made possible today versus 20 or 30 years ago? What’s changed about how we as a society view “luxury” today?

Schrager: Oh, well luxury is completely different than it was in the past and it’s constantly evolving. It’s constantly changing the way everything else changes. The way kitchen appliances, and automobiles, and fashion, everything changes. So, luxury has to change also.

There’s a big divergence of wealth in this country and in other countries. … But, I don’t think that the level of wealth — with the kind of culture that we have, and the media that we have, and the access to information that everybody has — I don’t think the level of wealth distinguishes people anymore.

I think the level of sophistication permeates our society from all different levels. And I don’t think that the conspicuous consumption that we had in the 80’s, and wealth being such a fascinating thing to people the way it has been in the past, I just don’t think those things matter to people anymore.

So, I think when you go into a hotel in particular, I don’t think that those things like the white gloves, and the gold buttons, and the golden epaulets and even room service … it used to be that in the fine hotels in Europe they would have pantries on every floor and when you ordered room service you would get served a course at a time by the room service waiter as if you were in a restaurant. I don’t think people care about room service. And I think we’re going to see that eventually disappear.

I just think that people care about being taken care of and treated with respect and courtesy. In staying in a sophisticated room, they can kind of feel that you’ve made an effort to do something very unusual or sophisticated for them. And I think that kind of treating everybody the same and making a hotel room available [so that] If somebody can stay in a hotel room for $200 or $300 rather than $1,500, whether you’re rich or you’re not rich, people would like to take advantage of that value.

It’s just a completely different thing. In fashion, there was a period of time, I think it was about 10 or 15 years ago, where everybody wanted to have a logo or a brand on their clothes. It was a kind of sign. I don’t think people care about that or want that today. Things are constantly evolving and changing. And I think the hotel industry has to stay on top of that.

There’s a big difference in the population with the 1 percent and everybody else. I think hotels are going to follow that. I think there may be smaller, ultra-luxury hotels of no more than maybe 100 or so rooms that can really provide you with certain things and certain details you might really require. And then there’s going to be another hotel that’s perhaps just as sophisticated, but that’s for everybody. And with not a lot in between.

Skift: The Studio 54 documentary is coming out in October and prior to getting into the hotel business, you were certainly more well known for being the co-founder of Studio 54. How did your work in creating Studio 54 help you prepare for becoming a hotelier?

Schrager: It was critical. … You know, when you’re in the nightclub business, you don’t have any discernible product. You have the same music, the same liquor, the same products that everybody else has.

So the only way you can distinguish your nightclub from everybody else’s nightclub is by creating a kind of magic. Creating an elevated experience. Doing something. Creating some excitement in the air that makes your place different than everybody else.

It’s hard to define what that is exactly. It makes me think of when the Supreme Court Justice, Potter Stewart, tried to define pornography. He said, “Well, I can’t define it, but we all know it when we see it.” So, when you go into a nightclub and there’s been excitement in the air or electricity in the air, that magic, you know, everybody can feel it.

So, coming from the nightclub world where I didn’t have any product, I took that same approach in trying to create magic and an elevated experience when I went into the hotel business. It was never that I was trying to do a nightclub in the hotel. People were wrong about that. A lot of people wrote that. No. It was that I was trying to create something magical, an alchemy, some kind of electrified experience. So, when you walked in the lobby you felt you were in some place special.

Skift: What excites you most today about what’s happening in travel or hospitality?

Schrager: I’m very excited to work with Marriott because I’ve never done anything on a really, really large scale. I would work very hard on an individual asset and I’ve run maybe 18 hotels on my own. And I would work on something, and then open it up, and it would be a one of a kind. That would be that. And then I think a lot of people would circle, and come around, and appropriate the ideas. But I’ve never done anything on a really, really big scale, which has interested me.

So I think working with the Marriott people is very exciting for me and I think that I’m noticing with the big companies that they’re more and more trying to behave like small, quick-on-their-feet, nimble companies. So it’s like a big company trying to act like a small company and being responsive to the market, and being creative, and trying new things. And I just think that’s great. You know, instead of being a lumbering giant continuing to do the same thing over and over and over again.

There’s a method to doing something original. Some of them are more successful than others, obviously. I think Marriott is the best at that, but I think the public benefits from that. They get better products. They get more rewarding experiences. And, I think that’s great.

You know, I [also] think the industry is going to change with the increasing power of OTAs [online travel agencies such as Expedia and Booking Holdings]. And, I think I’d like to find out exactly where Airbnb lands — what’s going to be the business model? I think they’re kind of growing and I want to see whether they are competing more with hotels or more with OTAs.

Skift: I remember you saying once that you felt like Airbnb was kind of a threat in some ways to the industry. What are your thoughts on it now?

Schrager: They seem to be so present in every stage of the travel, like sticking their toe in the water and figuring out which direction, what is it they want to be when they grow up?

I think their model is very, very interesting, but I’m not sure where they’re going to ultimately wind up, you know? I’m not sure if they’re going to wind up being more and more like hotels; they are definitely competitive with hotels. The industry is finally there. There’s even been some, I think, some kind of fireworks between the hotels and Airbnb.

But we haven’t seen exactly where the OTAs and Airbnbs are going to wind up, you know? What are they ultimately going to turn into? When I look at the OTAs and I look at Airbnb and I see some of the stock market valuations for them compared to companies like Marriott, and Hilton, and others, it’s incredulous. I can’t believe it. I think it’s something to keep their eye on.

Skift: What do you think the hospitality or travel industry isn’t paying enough attention to?

Schrager: I think that [we] should be [paying] a little bit more interest in the area of taking cruises. I think we’ve left that industry to other companies.

I think Disney has been … I remember when they went into that business about 20 or so years ago, and, I think it has turned out to be an incredible success for Disney. And now Marriott is trying its version with Ritz-Carlton.

I think it’s a very lucrative, profitable industry. What I actually think is that the big hotel companies may turn out to be like the entertainment companies. They may turn out to be the manager of brands. Of all the collateral businesses that they get themselves into, renting rooms will be just one small part of it, and they can spread their wings.

There are lots of businesses that are part of the hotel industry that are going to be exploited now. And that could cover everything from retail to financing to credit cards. The really smart guys are exploring all of these other businesses. Renting rooms for a night is going to be only one part of it.

Don’t Miss Ian Schrager on Stage at Skift Global Forum

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Tags: ian schrager, sgf2018, skift forum, skift global forum

Photo credit: Ian Schrager speaking at C2 Montréal in 2012. The boutique hotel pioneer will be speaking at the upcoming Skift Global Forum in New York City on September 27. Karel Chladek for C2-MTL / Flickr

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