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Hotels Magazine | March, 2008

‘UN-BRANDED’ EDITION

By Peter Slatin

Schrager, Marriott disclose more details on concept, announce nine deals.

NEW YORK CITY When most hotel companies announce a new brand, they host splashy launch parties with logos, colorful renderings of the façade and guestrooms, and present a host of support material to pique the interest of potential investors. Generally, Marriott International would be no exception to this rule. However, on January 29 in Los Angeles, the launch event for Edition by boutique hotel icon Ian Schrager and Marriott exhibited just how this might be the true “unbrand,” even if it does come from Marriott.

Beautiful models were serving expensive champagne and caviar, hip dance music thumped in the background and the only Marriott red in a sea of black and white was seen briefl y on J.W. Marriott Jr.’s tie.

“There are no renderings because each property will be designed differently,” says Schrager, who along with Marriott announced the first nine signed development deals that will see the expected opening of the fi rst lifestyle properties in 2010.

“When we get to the schematic phase, renderings will be available to show, but each property will be different by defi nition. We will have different designers and different locations will require a different approach. A 300- year-old building in Paris will look and feel quite different from a new-build in Los Angeles. Each property will have its individual style, but some things will be universal with Edition—a common attitude and DNA.”

As it stands now, Editions will average in size from 150 to 200 rooms, with project types ranging from new builds to conversions and renovations. Schrager, now age 61, considers the brand a 4-starplus offering and envisions an average daily rate three years from now, when a hotel is open in New York City, somewhere between US$400 and US$600. At this stage, Schrager couldn’t be pinned down on an estimated cost per key, saying it will depend on the market.

“We run projections and see what sort of cash flow the hotel can throw off to the developer as we want them to make plenty of money,” he says. “We get the developer’s investment criteria and backin how much money we can spend doing the hotel, making sure we have enough to spend to make it special. If it is not special, we won’t do the deal.”

While Schrager’s original hotels put great emphasis on visuals to make the product distinct, this time he plans to layer on great service so “guests don’t have to sacrifi ce to stay in the coolest place in town.” Because of volume one might expect a “dumbeddown” design, but Schrager says Edition is going to be “just as inspired, innovative and visually exciting, except it is going to be designed to reach a bigger market and perhaps not as quirky as what I did.”

So, is this really Marriott’s answer to Starwood’s W brand in disguise? Schrager says no. “Marriott has a history of waiting to see if something is a real business, then coming in with pinpoint execution and dominating market. I respect what W has done, but it is derivative of what I did in past. This is something more original, more evolved and the next step. It will be distinct from what W has done. W has done 20-some hotels and we have great volume with 30 in the pipeline. With Marriott’s muscle and execution, things will ramp up fast.”

Not unlike Schrager’s Gramercy Park Hotel in New York City, Edition will have a visual edginess to it—only with greater focus on service. Edition’s Potential

Under the new agreements, Edition hotels are now planned for Paris, Madrid, Costa Rica, Miami, Washington, Chicago and Scottsdale, Arizona. Two hotels are planned for Los Angeles. A total of 30 deals were in the pipeline at the end of January, and the Marriott team believes 100 hotels are not out of the question in the medium term. Schrager believes, however, the sky is the limit for this brand.

“I think the market is much bigger than Marriott does,” Schrager says. “They are more scientifi c, while I think instinctively. I think about businesses like Target, Sony and Apple and see who buys that type of product with sophisticated design. I think it is a huge market that can go to all ages… Anywhere a new hotel can work, we can come in and do a more sophisticated one for that market. I think we can do more than 100 and the fun of it for me is doing that kind of volume, which is why I wanted to do this deal instead of spending another 25 years and maybe doing 12 or 14 hotels and then having the idea picked up by everyone. I want to come up with new ideas now, get out there and permeate the market so fast that it prevents everyone from using the concept.”

Schrager is leading the effort on concept, design, marketing, branding and food and beverage for Edition, while Marriott is overseeing the development process and operation of the properties.

“The strength of what we are doing relies in product distinction. I am taking a new direction, starting over and creating a new design vocabulary,” Schrager says. “Gramercy Park (his 2007 hotel opening in New York City) is a perfect example— the furniture is traditional but the way the hotel is put together still comes out in an edgy way. Edition will be more mature with a greater emphasis on service. Doing what I did before no longer interests me. I want to step up to the plate with the prospect of hitting a home run and then going back to square one and rethinking the concept each time.”

Among the things Schrager will do differently this time around is food and beverage, which will be market driven, original concepts that might be operated by Marriott as opposed to completely outsourced. “I want restaurants with street entrances, hot bars, nightclubs and to do a tremendous banquet business,” he says. “I won’t come up with a restaurant concept and then roll it out. A restaurant in Paris has to be very different than one in Costa Rica.”

On the marketing side, Schrager expects to advertise for the very fi rst time in his career. “Due to the scale we may be obliged to advertise,” he says. “We will also have signage outside, which I never had because I was never interested in creating a brand; I was only interested in creating a product. I am smarter now. I should have created a brand and now have that opportunity with Marriott.”

And speaking of Marriott, how exactly are these strange bedfellows getting along? While Schrager says he has had little interaction with J.W. Marriott Jr., he says things are going great.

“Because this is a space Marriott has never been in, they really want me to do what I do,” Schrager says. “They want their life safety standards and back-of-thehouse requirements implemented, but they don’t want to use their other book of standards. We have respect for each other and always knew it would work. On the surface we look nothing like each other, but we have much more commonality than people realize.”

It also helps that Schrager has an in-house partner in Mitchell Hochberg, who is specifi cally focused on the Marriott partnership on a day-to-day basis, allowing Schrager to focus on the creative side of the business. “I am really committed to this and view this as the culmination of my career,” Schrager says. “I am giving it 110%, will be involved in every little detail and put everything I can into this to make it incredibly special.”