One of Ian Schrager’s highest-impact innovations within the boutique hotel category was the creation
of über-hip restaurants and bars, which became city destinations (rather than the traditional model of
pushing hotel guests into its restaurants and bars). Hoteliers shrewdly realized that their expertise lay
in the hospitality industry, and not the entertainment industry (where these restaurants and bars reside).
By using alliances with well-known chefs and bar and restaurant owners rather than trying to create
these on their own, boutique hotels were able to create products that their target segment actually
desired and valued very highly (see Exhibit 12: Building of Alliances Between Hotels and
Bars/Restaurants). W’s and Ian Schrager hotels’ profit sharing and revenue deals with their alliance
partners will be discussed in the next sections.