The hotels would be two of nine to be built by the unusual partnership of staid industry stalwart Marriott International Inc. and the flamboyant Schrager, one of the founders of the infamous Studio 54 disco in New York in the 1970s.
After serving a jail term for failing to pay income taxes on his celebrity-magnet nightclubs, Schrager entered the hospitality business in the 1980s and pioneered the boutique hotel concept characterized by unique architecture, clubby atmosphere and edgy bars. The Mondrian hotel in West Hollywood was one of his earlier projects.
Marriott and Schrager declined to say exactly where in downtown and Hollywood the hotels would be, but they are expected to open in about three years and have about 200 rooms apiece.
They would be part of the new Edition chain -- as in, the Los Angeles Edition. Other Editions are planned in Paris, Madrid, Costa Rica, Miami, Washington, Chicago and Scottsdale, Ariz.
"We're going to use a lot of different designers and each one will be totally different," Schrager said.
The hotels will be built and owned by third-party developers and operated by Marriott. Schrager will create each hotel's concept and theme. "I'll try to give it its ethos and lively bars and restaurants."
Schrager is "sort of the founder of the hip hotel movement that other people are emulating right now," said hotel consultant Alan Reay of Atlas Hospitality Group.
The Internet has helped boutique hoteliers such as Schrager and competitor Kimpton Hotel & Restaurant Group thrive because its convenience reduces the advantages big hotel chains have with their vast room reservation systems, he said.
Los Angeles has room for more full-service hotels, said consultant Bruce Baltin of PKF Consulting.
Room occupancy in Hollywood has improved from 65% in 2002 to 75% while downtown occupancy has jumped from 50% to about 75% in the same period, he said. "The downtown market has gotten exceedingly healthy over the past two years."
Schrager said he was undaunted by threats of a recession: "The best way to deal with the vagaries of the economy is to have a unique product. The cycle doesn't matter to me."
He and Marriott are "actively pursuing" 20 more locations for Edition hotels.
Schrager also sought to redevelop the Miramar Hotel in Santa Barbara but sold it in 2005. It is now owned by Los Angeles developer Rick Caruso, who plans to turn it into an upscale resort.