Los Angeles Times, July 29, 2006

By James Verini

On a recent Saturday night, the parking lot outside of the West Hollywood nightclub Privilege was reminiscent of a movie theater before the release of a new “Star Wars” movie. The men and women lined up in their miniskirts and expertly torn jeans were better-looking, of course, and did not carry toy light sabers, but the frisson of anticipation was the same, as was the size of the crowd, which motorcycle police and bouncers tried unsuccessfully to hem in. Everyone buzzed about Privilege as though it were the latest thing.

But it wasn’t the latest thing. It wasn’t even this year’s thing. Privilege has existed in one incarnation or another on that spot (the corner of Laurel, at the entrance to the Sunset Strip) since early 2003. You may remember when it opened as Shelter. Sam Nazarian owned it then too.

For the previous two weeks, however, Privilege had been closed, and now it was reopening, with a new design and new lifestyle to sell and the promise to every hopeful club-goer of a new lease on their nightlife. The Chamillionaire would still be set to jet-engine volumes, the vodkas-soda would still be $12, but as for everything else — well, who knew? The new beach-themed decor might just save one’s life.

Once inside, the revelers were ushered into “St. Tropez-on-Sunset,” as Nazarian describes it. White sand-colored benches and navy blue trim, images of models on beaches projected on the walls, some big, tropical plants. It was not all that different from Privilege’s previous, also mostly white, Nordic-themed incarnation. But it felt new.

And so the crowds spilled into the street, clamoring to get in.

In a nightlife market as saturated as L.A.’s, obsolescence is the one death-and-taxes certainty of the business. Thirty percent of hospitality businesses — restaurants, bars, clubs — go out of business in the first year, 60% by the third. No matter how modish your place, no matter how long the lines, eventually — likely sooner rather than later — it will go out of style.

Nazarian knows this. His flashy lifestyle — at 31, he lives in Jennifer Lopez’s former mansion in Beverly Hills, drives among other cars a Ferrari and goes out a lot — leads some observers to overlook a sagacious mind for business. He admits readily that like any club, his clubs — besides Privilege, he owns Hyde, Lobby, Prey and co-owns the Abbey, along with the restaurants Yu and the new Katsuya in Brentwood — are always, by their very nature, in a state of slow death. So he tries to think of them as productions, events, ephemeral things. Movies, almost. (With the film arm of his company SBE, Nazarian also has a sideline executive producing those; the latest one was “Down in the Valley,” with Edward Norton.)

“It’s a set-design concept,” he said. In business school speak, this is known as “refreshing the brand.”

Nazarian’s Hollywood shuffle works thusly: He keeps his clubs open for about eight months to a year at a time, then closes them, renovates them, at a cost of several hundred thousand to a million dollars, and reopens, often, though not always, under a new name. (He likes short ones. Privilege used to be Shelter. Hyde was North. Prey will soon be Area.)

Nazarian claims that his redesigns pay for themselves within a month and that they bring business back to the top line for about six months. But how long can this last?

Refreshing the brand is common to the world of consumer products — and sometimes restaurants, and college and neighborhood bars — but it’s rarely if ever been tried in the world of high-end nightclubs.

L.A. may prove an ideal spot for this strategy or not, depending on one’s business. Unlike in Las Vegas, Miami and New York, where clubs serve liquor all night, in Los Angeles they must stop at 2 a.m., leaving a very small window for making money. Most operators are therefore loath to put any more money into a club than they must to pay their investors and make a profit. And when they are willing to put a lot of money into a club, operators want to build a brand, something that will keep paying dividends. Changing looks and names would be inimical.

But Nazarian has no investors. A millionaire since his early 20s, so he claims, he owns most of his properties outright. What’s more, with hotels, restaurants and more clubs planned for every corner of the city, Nazarian doesn’t want to just get in and out.

The detractors have begun lining up, of course. Last fall the New Yorker magazine published an unsurprising profile of Nazarian that implied he was more Sammy Glick than Eli Broad. “It’s a memento of a development deal,” the author, Dana Goodyear, wrote of a golden shovel mounted on his office wall, “but, after a few hours with Nazarian, it begins to suggest another use.”

According to Elizabeth Peterson, a hospitality industry lobbyist who has owned, operated or worked on behalf of dozens of L.A. spots (she helped Nazarian obtain the entitlements on Privilege and Hyde), an average dance-club “has a shelf life of 18 months. You might be able to squeak four or five years out of it.”

Nazarian said the inspiration for his ever-changing clubs comes from Ian Schrager (in his pre-hotelier days) and the late Steve Rubell, the creators of Studio 54, the archetypal nightclub of the modern era, which managed to stay relevant long past its due, and Peter Gatien of the epochal New York clubs Limelight and the Tunnel.

“We studied the last 30 years of nightclubs,” he said. “They made sure the venue was the experience.”

But, as Anthony Haden-Guest, who wrote “The Last Party: Studio 54, Disco, and the Culture of the Night,” said, “Studio 54 was so incredibly famous that they got all kinds of normal people as a result.”

While Nazarian and his nightlife deputy, Reza Roohi, and his new promoting partner, Brent Bolthouse, have done a good job keeping SBE’s clubs in the spotlight, not yet having to resort to hiring drag queens en masse or getting Liza Minnelli to act raunchy, none of their establishments have “incredibly famous” potential written on them. Not yet, anyway.

But Peterson said that Nazarian has “got a formula down. His numbers seem to be OK right now. And he’s got the money to stand the test of time.”

Roohi oversees the renovations, hiring set designers and furniture builders to carry out SBE’s latest whim. One of them is Wendy Creed, who designed the new St. Tropez-style Privilege and Lobby, which has a black-and-white, antique Hollywood glam look.

“We think of it as an event,” she said. “Only in this case it’s going to be there for six months.” Creed’s other clients include the NFL, for whom she puts together Super Bowl parties, and movie studios, for whom she plans premieres.

As for the buildings that house the clubs, the lower-rent the better. “Calling it ramshackle is putting it nicely,” Nazarian said of the ramshackle pile that houses Privilege, which sticks out from the nearby Chateau Marmont and the neighborhood’s pretty houses like Delta House did from the Faber College campus.

Before its most recent St. Tropez iteration, Privilege was supposed to evoke the frozen north. Before that, Roohi lighted on a construction-set theme, complete with unfinished wood slats and exposed studs, a winking reference perhaps to Privilege’s notoriously down-at-heels setting. The waitresses wore hard hats.

“A lot of these people don’t have the ability to go to those places,” Nazarian said of his customers. “We bring the allure of the Hamptons to L.A. and for six months they think they’re there.”

Currently undergoing a renovation, Prey, on La Cienega, will have an angular mid-century modern look when it reopens as Area later this year. In its last life it was Moroccan Old Hollywood and before that Gothic in appearance. Lobby is set to undergo another face-lift later this year. What it might be called next is anybody’s guess.

By Peterson’s math, Privilege has only a matter of months left in it. Good thing then that Nazarian’s next upgrade to the property will be drastic. The building will be razed and in its place will be put up a sleek, ultra-modern supper club designed by Philippe Starck, who plays Baron Haussmann to Nazarian’s Napoleon III. The restaurant will bear the rather unfortunate medieval-sounding name Slab.

And this time, Nazarian promises, everything will be different.