The Airbnb-ification of hotels
Ian Schrager’s new Public hotel brand is redefining high-end hospitality for a budget audience.
Ian Schrager’s latest boutique redefines luxury hospitality for price-conscious guests.
“Luxury is a state of mind: It’s how [something] makes you feel,” says Ian Schrager, the nightlife impresario turned hotelier, who is frequently credited (often by himself ) for inventing the boutique hotel. His latest property, Public, on Manhattan’s Lower East Side, has all the trappings of a high-end hotel, from the minimalist, light-filled architecture of the Pritzker Prize– winning firm Herzog & de Meuron to the restaurants from celebrity chef Jean-georges Vongerichten. But the price of a guest room? Starting at about $200 a night.
Hotel brands have been trying—and failing—to hit the sweet spot of “affordable luxury” for the past decade, especially in cities like New York, where the average room went for more than $250 a night last year, according to travel consultancy STR. Most brands end up either scrimping on public spaces or settling for decor that looks like it was assembled using Allen keys.
The 367-room Public, which Schrager developed after launching his high-end Edition brand with Marriott in 2008, mines some of the best ideas from the tech, retail, and design industries to create a more streamlined model for hospitality. “[He’s] ignoring the traditional definition of a luxury experience,” says Bjorn Hanson, a New York University professor at the Jonathan M. Tisch Center for Hospitality and Tourism. Instead of offering guests bellhops and room service, the hotel is “edited and focused on the things that people like and care about,” says Schrager. Those priorities include efficiency, convenience, local flavor, and value—beautifully packaged in a $300 million building.
Though Public is poised to compete with boutique hotels, Schrager also sees the brand, which he plans to expand to gateway cities such as London and Las Vegas, as a response to the “mortal threat” that Airbnb poses to the hospitality business. Here’s his formula for building a new breed of hotel.
To keep expenses down, Herzog & de Meuron employed inexpensive materials—exposed concrete, plywood, and steel—but used a few clever tricks to make them feel lavish, including imprinting the concrete with a wood-grain pattern and staining the plywood. The architects squeezed more guest rooms into the building by reducing them to 190 square feet, but added operable, floor-to-ceiling windows to make them feel more spacious. The development also includes 11 condominiums on its top floors, which bring in revenue that allows Schrager to charge less for guest rooms. At Public, the development cost per room (the hotel industry’s standard metric) was about $350,000. According to the consulting firm HVS, upscale New York City hotels can cost as much as $550,000 a room to build.
Schrager sticks with the essentials: a comfortable bed, high-end linens, a 50-inch TV, automated blackout shades, and a well-lit bathroom with a rain showerhead. The guest rooms may be spartan, but the finishes— such as marble-topped tables and Italian oak platform beds—are high quality. Most of the furniture is custom, uniform, and built-in, which reduced fabrication costs and makes cleaning easier. The smaller footprint also means that a housekeeper can clean 26 rooms per shift versus 14 in a traditional hotel.
A big part of Schrager’s strategy involves reducing the staff costs associated with traditional upscale hotels. At Public, there are no bellhops, concierges, or front-desk assistants. (There’s not even a front desk.) Instead, Schrager trained roaming employees—known as Public Advisors—to handle any questions guests may have, from navigating the hotel to recommending local restaurants. The rest is taken care of via technology. Guests check in through a mobile app or on ipads in the hotel’s lobby. In lieu of room service, they order and pay for food from the Public Kitchen and the luncheonette-style Louis using a custom chatbot, and then pick up their meal from a shelf in the lobby. The bot also doubles as a virtual concierge. “You can get everything you want by texting,” Schrager says. If guests do want to talk to a person, their calls go to an answering center in Las Vegas, another cost-saving measure.
Lucrative public spaces
With its free Wi-fi, long wood tables lined with outlets, and stylish bar, the second-floor lobby bears a striking resemblance to a coworking space. That’s by design: While most full-service hotels take in between 10% and 20% of their revenue from food and beverage sales, Public is banking on increasing that to 30% to 50% by drawing in locals. A subterranean art space can host theater, parties, and special events; the ground floor has a casual food market, a grab-and-go café, and the Public Kitchen restaurant (all falling under the auspices of Vongerichten); and upstairs, there’s a tequila-themed lounge and a rooftop bar with sweeping views—to cap off a distinctly New York experience.
Back to basics Schrager avoided unnecessary furnishings in Public’s guest rooms, above, to make the compact spaces feel more airy. The hotel’s lobby, left, incorporates ideas from coworking spaces, attracting both business travelers and locals.