Ian Schrager speaks onstage at D.LUXE
Credit: Phillip Faraone/Getty Images for Dow Jones

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Ian Schrager, the legendary hotelier behind hotel brands like EDITION and PUBLIC, says luxury hotels are on the precipice of a transformation.

Schrager, who cofounded Studio 54, the legendary New York City nightclub known for its wild parties and high-profile guests like David Bowie and Andy Warhol in the 1970s and early '80s, says that hotels are "manifestations of popular culture and the people."

And according to Schrager, the US is headed in a direction where "you have the 1%, and then you have everybody else, with a declining middle class," he told Business Insider. "And I see hotels following the same thing."

Luxury hotels will change in two major ways over the next 10 years, Schrager says.

"For the luxury hotels, I see them getting much smaller, maybe 80 to 90 rooms," but the rooms will be "much larger," he said.

These more intimate hotels will also be "very expensive" with the finest details, "catering to that 1%," Schrager said.

"I see nothing in the middle," Schrager said. "And I see a lot of less expensive, value-oriented hotels, but very sophisticated and very cool, with lots of entertainment and food and beverage possibilities."

Schrager's PUBLIC Hotel in New York's Lower East Side opened in 2017 offering a modern luxury experience at rates as low as $150 per night, as Business Insider's Noah Friedman and Lamar Salter previously reported.

His newest hotel, the Times Square EDITION in New York City, has 452 guest rooms and nightly rates that range from $430 to about $2,800.