Schrager “took a pass” on Hotel Chelsea buy

December 07, 2010 09:21AM

Ian Schrager “took a pass” on the Hotel Chelsea after touring the for-sale landmark last month, he told Bloomberg News. “It’s a sexy asset with an incredibly sexy history and we felt obliged to take a look at it,” he said.

The 127-year-old property at 222 West 23rd Street, famous for having housed literati like playwright Arthur Miller and rock and roll stars like singer Patti Smith, went up for sale in October for the first time in over 65 years and is said to be asking around $90 million.

Schrager said he believes the hotel, which is currently averaging rates of $349 per night for its junior suites, has the potential to get as much as $600 per night. But despite getting “half a dozen” phone calls from investors who wanted to partner with him in the historic acquisition, Schrager wasn’t interested. “Maybe there are others who are seeing things we didn’t see,” he said.

Doug Harmon of Eastdil Secured is marketing the property, which has 125 hotel rooms, 101 apartments and 17,000 square feet of retail space. According to Harmon’s listing, “considerable margin improvement and revenue maximization opportunities exist” because the Hotel Chelsea “has never implemented or utilized an effective sales and marketing campaign or central reservations system.” [Bloomberg]