Ian Schrager Company Logo 

Washington Post | June 15, 2007

Marriott, Boutique Hotel Pioneer Partner
to Develop a New Brand

By Alejandro Lazo

Marriott International, the Bethesda hotelier, announced yesterday that it was entering the boutique-hotel business by partnering with the inventor of the concept, Ian Schrager, and developing a global brand.

It is an unusual pairing. Marriott is often thought of as being more conservative with its designs, which largely appeal to the business-travel market. Boutique hotels are smaller, hip, upscale and built with an emphasis on location and taste.

"Things change, the collective unconscious changes," Schrager said in a phone interview. "Fashion changes, automobiles change, styles change, our tastes in movies, music and theater change, and things are constantly evolving."

The companies say they hope to take the boutique hotel idea to a new level, focusing on "a feeling rather than a look," Schrager said. Marriott said it hopes to sign five development deals under the still unnamed brand by the end of 2007, with 100 hotels open, or in the pipeline, within a decade. The company will open the hotels through new construction, conversions and renovations.

"The scale of this brand requires the reach, resources and expertise of a global player like Marriott, while the innovation necessary calls for the experience and originality of the category's most accomplished entrepreneur," chief executive J.W. "Bill" Marriott Jr. said in a statement.

Schrager will focus on concept, design and food and beverage, while Marriott will make deals with developers and then manage the hotels. Schrager is credited with many innovative hotel trends, including making the hotel lobby a gathering place for customers and residents, and "cheap chic," providing ambience and luxury at accessible prices.

An almost perfect contrast with Marriott, a Mormon who does not drink, Schrager came up in the free-wheeling, New York disco days of the 1970s and 1980s, founding Studio 54 and Palladium with his late partner, Steve Rubell.

The deal puts Marriott into a category with well-established brands from competitors such as Kimpton Hotels & Restaurant Group and Starwood Hotels & Resorts Worldwide, whose line of W hotels have been wildly popular.

Marriott plans to look into opening hotels in New York, Miami, Los Angeles, Chicago and other major U.S. markets. New York was an obvious first target, and Marriott was visiting three to four sites there yesterday, he said in an interview.

The company is also looking at cities such as London, Berlin, Madrid, Shanghai and Beijing.

Analysts called the deal a logical, strategic move for the lodging behemoth, while not one that may have an immediate impact on its bottom line. The new brand appears to be part of a larger strategy of branching into new markets. Last month, Marriott announced it would create a line of family-themed resorts with Nickelodeon.

Boutique hotels tend to be slightly more profitable because more alcohol and premium foods are sold, said Smedes Rose, a lodging analyst for Calyon Securities.

"I would say the margin is probably better [with a boutique hotel], and you're getting higher price points," Rose said.