On a guided tour of his bustling new Manhattan hotel, the Paramount, Ian Schrager is holding forth on a favorite topic: the nightlife in New York City. "It has become a little sleepy," says the former co-impresario of that '70s den of decadance, Studio 54. "People still want to go out, but the difference between now and when Steve and I were in the business is that it's not as mindless an experience. In the '80s, things turned a little more civil." Schrager is standing underneath the ornate, gold-trimmed ceiling of the unfinished supper club he says will help snap the city out of its nocturnal malaise. His eyes scanning the raw space, Schrager turns to a visitor and says, "I hope this room gives off as much of the good luck—but not the bad—that Studio 54 did."

"Steve," of course, is Steve Rubell, Schrager's longtime business partner and friend, who died last year from hepatitis and septic shock. It was the impish, self-promoting Rubell who gladly threw himself into the swirling mix of celebrities and glitz during the '70s, while Schrager, Rubell's best friend since their college days at Syracuse University, stepped away from the glare of the strobe lights and worried about details. Now, as the 610-room Paramount garners media raves and young, hip travelers enter the hotel's laser-lit entrance in droves, it is Schrager, normally a reserved and guarded person, who finds himself playing the role he used to avoid: the Highly Visible Promoter.

That task has been made easier by the success of the Paramount. Schrager and Rubell already had created two stylish New York hotels, Morgans and the architecturally adventurous Royalton. For his next trick, Schrager wanted to see if he could combine daring design and, by Manhattan standards, reasonable rates. The Paramount's prices range from $90 to $150 for a single room (suites cost as much as $300); the cheapest room at his other hostelries goes for $170. (None of his hotels has a sign out front, but if you have to ask, well....)

With talk of recession, Schrager, 44, couldn't have timed his "cheap chic" strategy better, although he claims, "That has nothing to do with it. It's sort of like the Holiday Inn idea of 40 years ago. Except then they only promised you a clean room. Here, we're trying to create some magic and sex appeal too." Apparently Paramount's guests think he's right on the money. Since it opened last August, the place has boasted 100 percent occupancy.

Styled by the très haute French designer Philippe Starck, the Paramount crackles with visual energy. In the sleek lobby, eager young employees in black jackets and white T-shirts scurry about, while guests recline in brightly colored chairs and wallow in urban-hip ambience. There's a $4,000 hollow aluminum chaise lounge, one of only four made each year, as well as a 22-foot-high platinum-leafed wall that rises behind a wide staircase leading up to the mezzanine. Other design touches include lettered indicators on each floor that light up according to weather conditions outside. The single rooms are a cramped 10 feet by 16 feet, but each one features a reproduction of Vermeer's The Lacemaker hanging above the bed.

The Paramount has received glowing marks for style. "[The rooms] have the same aura of crispness and sensuality that marked Starck's rooms at the much more expensive Royalton," observed New York Times architecture critic Paul Goldberger. Rival hoteliers admit to a degree of awe in Schrager's latest triumph. "After Rubell died, people thought Ian would collapse," says Dario Mariotti, manager of the May-fair Regent. "But in America, you can reclaim your virginity. If you're good, you can become good again."

Schrager now oversees an estimated $200 million empire, a phoenixlike rise from the ashes for the Brooklyn, N.Y., native. In 1980 he and Rubell spent 13 months in federal prison for tax evasion, the result of creative accounting at Studio 54, which Rubell arrogantly described as "cash in, cash out and skim." Schrager admits he and Rubell "made mistakes they paid for," but the disbarred lawyer, a 1971 graduate of St. John's University law school, doesn't exactly obsess over his conviction. "We went in and then we came out ready to get started," he says, referring to their stay in minimum security Maxwell Federal Prison Camp in Montgomery, Ala., only as "our time away." Asks Ian: "Does the American system really work? Well, look at what we did."

It was not an easy task. After their release from prison, Schrager and Rubell owed more than $1 million in legal fees, as well as some $750,000 in various taxes, penalties and interest. Some banks wouldn't even allow them to open checking accounts, let alone lend them money to go into the hotel business. But the partners started paying off their debts by selling the Studio 54 building. Two years later they sold the lease to the disco, which no longer exists, for a reported $4 million. Rubell and Schrager then accepted advice (but no money) from friends such as "Donny" Trump, scoured the city for other investors and refurbished Morgans, which opened in 1984.

Slowly, Schrager and Rubell climbed back to the top. After serving as "conceptual consultants" for the Palladium dance club the following year, they next set their sights on the Royalton, an old-style hotel across the street from the famed Algonquin. Guests started checking in to the new Royalton in 1987, but just as Rubell and Schrager's names began to pop up in gossip columns again, their comeback together was cut short.

In July 1989, Rubell was hospitalized due to extreme dehydration. Two days later, at age 45, he was dead. (In response to allegations that Rubell died of AIDS, Schrager says, "We were best friends. He would have told me [if he had AIDS].") In the wake of Rubell's death, Schrager found himself dealing with an all-too-familiar experience. "I've had a lot of tragedy in my life," he says, his voice dropping to a whisper. "I lost my father to cancer when I was 20, my mother died of a heart attack when I was 25, and my sister, Gene, died of heart failure four years ago. I saw Steve every day since 1964. I don't know who was the husband and who was the wife, but I loved him. It was the best love affair without sex."

Schrager is still feeling the emotional aftershocks of Rubell's death. Last March, he and his girlfriend of two years, public relations executive Deborah Hughes, 33, had gathered 60 guests at Schrager's Southampton estate for their wedding. The ceremony never took place. Rumor had it the couple were spatting over a prenuptial agreement, which Schrager denies. "I think I was still traumatized by Steve's death," he says, "and I broke a cardinal rule. After having been through so many tragedies, I never make any major decisions for a year."

Hughes, a former model who was introduced to Schrager by Rubell, won't divulge much about the nixed nuptials. "Neither of us had been married before," says Hughes, "and we wanted to resolve some things first. We're still talking about getting married."

Although Schrager and Hughes say they're still together, Ian stays in a suite at the Paramount so he can "experience the same things the guests do" and keep close tabs on business. Hughes, meanwhile, lives in their town house in Manhattan's Chelsea district, and they head to the Hamptons together on weekends. Schrager works constantly, overseeing every detail on each project, including the renovation of yet another hotel, the Barbizon, scheduled to open in 1992.

A year and a half after Rubell's death, Schrager says he's just now getting used to being the center of attention. "I was afraid when Steve died," he says. "Like, 'Am I going to be able to do this on my own?' I was anxious and insecure [about opening the Paramount]." Schrager also realized he had no choice but to go on. "I picked up the baton where Steve left off. Nobody's going to replace him; he's one of those guys that comes along once in a lifetime." Looking around one of the Paramount's tiny rooms, Schrager says, "Steve would be proud. I still feel he's with me, and I feel his strength."

  • Contributors:
  • Andrew Abrahams.