View Article on Mobile Site. Hotel Portfolio Transaction. SBE yesterday announced a definitive agreement to acquire Morgans Hotel Group in an all-cash transaction. Hudson Hotel in New York City. Daily News Delivery Join your colleagues and stay up to date on the latest Hotel industry news and trends.
More Morgans Hotel Group News. Are you with Morgans Hotel Group;? More Development News. More North American News. Popular Hotel News. Hotel Stocks Up 6. Daily News Delivery. Tool Box. Morgans Hotel Group. Click here to learn more! For half ownership in the hotel, he invested no money but agreed to act as the front man, opening the door to his banking connections.
Rubell and Schrager now had the money they needed to turn the fleabag Executive into the exclusive Morgans Hotel. French designer Andree Putmen was put in charge of the renovation. The lobby was eliminated, the marquee removed, and the bed legs cut off to make the small rooms look larger than they were.
Rubell did the hiring--in effect, casting he even thought about hiring a Hollywood director --preferring people with glamorous looks and no prior experience in the hotel business.
Morgans opened to no announcement on October 1, With no marquee the new hotel could have easily been mistaken for an apartment building. Once again Rubell and Schrager were in the limelight and the darlings of the tony set, having reinvented themselves as cutting-edge hoteliers. They took their hotel-as-theater concept a step further in when they opened their second property, the room Royalton, located across the street from the famous Algonquin on 44th Street.
No comfy overstuffed chairs there; everything is very sharp-edged. Visitors to the Royalton's public mens' room encounter no ordinary urinals; there is, however, a waterfall activated by electric eye. To reach their rooms, guests first navigate dark corridors because as the Royalton's designer Philippe Starck puts it, 'before the opera starts, the place is dark. With two successful properties in the stable of their hotel management company, which they called the Morgans Hotel Group--as well as other real estate investments and the creation of the Palladium, the club of the year in Manhattan in Rubell and Schrager next turned their attention to Times Square, a once glamorous neighborhood gone to seed but about to enjoy a rebirth.
The idea for the Paramount was to offer a less expensive hotel experience for a market that had similar tastes as the people who stayed at the Morgans and the Royalton but whose pockets were not as deep.
Rubell would not see the third property open, however. In July , at the age of 45, Rubell died from septic shock and hepatitis, presumed now to be the results of AIDS, although not acknowledged at the time. His gravestone was inscribed, "The Quintessential New Yorker. The more reserved Schrager was now left on his own to run Morgans Hotel Group. He was able to open the Paramount in October , and like the Morgans and Royalton it was an immediate hit.
But beneath the glittery surface all was not well with the company, which had taken on too much debt in its rise to prominence and was unable to generate sufficient cash flow as a recession adversely impacted the hotel industry. The Morgans hotel filed for bankruptcy in , followed by the Royalton in Schrager managed to hold onto his properties, however, and soon returned to expansion mode.
For several years he had his eye on the Miami market, and in Morgans bought the room Delano hotel in Miami Beach, having it redesigned as a contemporary family resort. It opened to considerable acclaim in In that same year, Schrager brought in some executive help, hiring Steven A. Hicks, a former Marriott hand, to serve as director of operations, and William Sheehan, former Omni chairman, to serve as chief financial officer.
Schrager was now free to look for new opportunities. He set his sights on Los Angeles, acquiring the room Mondrian hotel, located on Sunset Boulevard, and reopening it in Also in Morgans acquired the venerable room Clift in San Francisco. To fund his growing portfolio of boutique hotels, Schrager took on new partners in , joining forces with Northstar Capital Investment Corporation, a New York real estate investment trust.
The hotels were consolidated under a new company, Ian Schrager Hotels. In April Schrager acquired the faded St. Moritz on Central Park South in Manhattan, followed a month later by the addition of the Barnizon, a former women's hotel that was well situated in the shopping district of the Upper East Side, and the Empire, located in the Lincoln Center area.
Schrager also took over the Miramar in Montecito, California, in March , converting it into a resort, and took his first steps overseas. In he opened the room St. Martin's Lane in London, followed by the room Sanderson, located in the city's trendy Soho district. Other Schrager deals in the late s included the acquisition of the Henry Hudson, located on West 57th Street in Manhattan.
Once renovated it offered more than rooms after it opened as more of an economy hotel in Another addition was the McAlpin on West 34th Street, another large property, reopened in Schrager's ambitions continued to grow in the new century.
The company opened the Shore Club in Miami in , holding a modest stake in the oceanside resort for which it served as a manager. Schrager was also especially interested in making Morgan's into a lifestyle brand. There was even talk of launching a retail chain of stores called "Shop" to market a wide variety of goods, many designed by Philippe Starck. The idea was supposed to be launched in the Morgans' hotels in , but other events intervened to derail the plans: the economy soured and, more importantly, the terrorist attacks of September 11, , had a dramatic impact on New York City's hotels and tourist industry.
Business began to pick up in , and now Schrager was turning his attention to Las Vegas, putting down a deposit on the Maxim casino-hotel. Aside from a drop in travel that hurt occupancy rates across the board in the hotel industry, he also had to contend with imitators, like the W hotels that opened in and drew on elements developed by the Morgans' hotels, such as according to the New York Times Magazine "arty black-and-white photographs, large mirrors leaning against walls, [and] a staff of fashionistas.
Martin's Lane, Sanderson, and the Shore Club. He retained an ownership stake and consulting contract, but now devoted his attention to the development of apartments and condominiums. Replacing him was W. Edward Scheetz, North Star's co-chief executive officer, who looked to grow Morgans.
The stock did not fare well once it debuted on the Nasdaq, however, quickly dropping below its IPO price. Apparently, investors were not sufficiently impressed with the projects in Morgans' pipeline, which included the development of a new Miami property located across the street from the Delano, the acquisition of the James Hotel in Scottsdale, Arizona, the development of a pair of hotels in Las Vegas.
In the opinion of Wall Street analysts Morgans had overpaid and already had too much debt to contend with. In some ways, the Hard Rock property was in keeping with Morgans' desire to be perceived as a hip venue.
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