By Tony Wong – Toronto Star

Charles Khabouth is no stranger to rolling the dice when it comes to churn­ing out new ven­tures aimed at fickle consumers.

As Canada’s largest night­club oper­a­tor he is an estab­lished brand, the most pow­er­ful man in Toronto’s enter­tain­ment dis­trict. A pope to the city’s night denizens hopped up on lychee mar­ti­nis and techno.

But his lat­est project is his biggest gam­ble yet. And this time he’s put his name on it.

Khabouth is build­ing a $150-million hotel and con­do­minium named Bisha. That’s short for Bechara, Khabouth’s child­hood name.

You can hardly miss it. A giant bill­board embla­zoned with his logo is already planted at 56 Blue Jays Way, the for­mer home of the Sec­ond City com­edy troupe in down­town Toronto.

The size of the ven­ture begs the ques­tion: Khabouth has con­quered the club world, but can he suc­ceed in North America’s tough­est condo market?

Toron­to­ni­ans are spoiled for choice when it comes to boxes in the sky. In the sec­ond quar­ter of the year the city had 272 con­do­minium projects on the mar­ket — the most of any met­ro­pol­i­tan area on the con­ti­nent. Another condo? Yawn. Another bou­tique hotel? Take a number.

“We want to be able to have the hip fac­tor of a bou­tique hotel, but with the atten­tion to detail of a Four Sea­sons,” says Khabouth.

There is saw­dust in the air, and ear­lier in the week his sales office was cov­ered in plas­tic sheets, but Khabouth’s vision is tak­ing shape.

“It all starts with the doors,” says Khabouth, point­ing to over­sized, ornate dark wood doors with elab­o­rate gold han­dles. “That’s the first thing peo­ple see. Impres­sions count.”

Khabouth’s style is Prince of Per­sia meets Philippe Starck. In his restau­rants, vel­vet and gold accents and dan­gling beaded cur­tains clash with angu­lar gran­ite and glass, recre­at­ing the Per­sian lounge for the 21^st century.

Not sur­pris­ingly, the new project will be opu­lent, with a dis­tinctly night­club vibe.

Bisha’s hotel will have two themed floors: a black and red themed Rock and Roll floor, and a Hol­ly­wood Floor with a Bev­er­ley Hills vibe. Like his clubs, there will be a huge amount of space — 30,000 square feet devoted to ameni­ties includ­ing food and bev­er­age and a fit­ness centre.

On top of the 41-storey devel­op­ment, Khabouth’s INK Enter­tain­ment, along with Life­time Devel­op­ments prin­ci­pals Mel Pearl and Sam Her­zog, plan to build 332 condos.

“We want to cre­ate a hotel brand from scratch,” says Pearl. “This hasn’t been done in Toronto since Issy Sharp built the Four Seasons.”

The part­ners hope that the Bisha con­cept can be expanded to other cities to take a place among other hip hotel brands, such as W and Thomp­son Hotels.

The con­cept might sound silly. Who would care about a Johnny-come-lately Cana­dian brand when the world is filled with bou­tique wannabees?

That was the ques­tion Pearl asked him­self when he set to build a hotel in Toronto. Life­time started out as a low-rise devel­oper before branch­ing into down­town con­dos. The com­pany cur­rently has eight projects on the mar­ket, with a C.V. that includes part­ner­ships in Lib­erty Mar­ket Lofts and the Four Sea­sons Hotel and Res­i­dences, the highest-profile condo project in the city.

But devel­op­ing a new brand is a lot riskier than sim­ply hir­ing a man­age­ment com­pany such as a Ritz Carl­ton or Trump. The part­ners know that get­ting a cus­tomer to com­mit to an over­priced Red Bull or two is one thing. Sell­ing con­dos that will go from more than $300,000 to over $1.5 mil­lion will prove more difficult.

Pearl hooked up with Khabouth through Bisha designer Alessan­dro Munge, who had worked for both men. Pearl, a youth­ful look­ing 55-year-old with a pen­chant for jeans, already knew Khabouth by reputation.

Khabouth, 49, grew up in Lebanon. Even though he has cou­ture tastes — he owned his own Hugo Boss bou­tique, drove a Fer­rari and his wife is a for­mer model — Khabouth wears a sig­na­ture dark urban safari jacket and could eas­ily be mis­taken for a bike courier.

He worked three jobs in high school; his first was at a McDonald’s. When he was 22, he started his first night­club with a $30,000 loan. He hit it big when he used the pro­ceeds from his first ven­ture to rent a decrepit space at Rich­mond and Dun­can in 1986, cre­at­ing what would become the city’s enter­tain­ment district.

The pri­vately owned INK gen­er­ates now more than $30 mil­lion in rev­enues annu­ally, accord­ing to Khabouth. It owns and oper­ates the mas­sive Guvern­ment and Kool Haus night­club com­plex on the city’s water­front, the largest such venue in Canada with more than 50,000 square feet on the main floor, and the This Is Lon­don night­club in the enter­tain­ment dis­trict. It also owns the Drag­on­fly Night­club in Casino Nia­gara and a string of restau­rants, includ­ing Ultra Sup­per Club on Queen Street and Spice Route, an Asian-influenced bistro bar on King Street West.

This year, Khabouth is finally being rec­og­nized by the main­stream busi­ness com­mu­nity. He is on the short list of nom­i­nees for an Ernst & Young Entre­pre­neur of the Year award.

Khabouth has been likened to Canada’s Ian Schrager, the for­mer Stu­dio 54 owner cred­ited for cre­at­ing the widely copied bou­tique hotel con­cept in Manhattan.

He was the Toronto orig­i­nal, here before the über-hip Drake and Glad­stone hotels. Before Peter Freed devel­oped the city’s west end and brought in a newly opened Thomp­son Hotel with its rooftop pool par­ties. But it took him a lot longer to get in the business.

Khabouth under­stands the irony. The man who orig­i­nated the lifestyle club looks like he’s com­ing late to the all-night party he started.

And besides, Canada already has a bou­tique chain. Khabouth was beaten to the punch by Que­bec City’s Chris­tiane Ger­main. In the ’90s she stayed at Schrager’s first hotel, Mor­gans in New York, and was inspired to do some­thing north of the bor­der. (A Hotel Le Ger­main in Toronto opened in 2002; a sec­ond is planned to open this fall beside the Air Canada Centre.)

“Being late is one thing, but it doesn’t mat­ter how late you are if you’re incom­pe­tent,” argues Pearl. “I think peo­ple who buy into Bisha will see that they are get­ting value, they will see it in the execution.”

The devel­op­ers under­stand that just because you build it, patrons won’t nec­es­sar­ily appear. You need buzz.

This is, per­haps, the entrepreneur’s com­pet­i­tive advan­tage in the hotel game.

Under INK, Khabouth books dozens of musi­cal acts every year and plays host to celebri­ties and rock stars in his many clubs. Last year, he esti­mates he rented more than 1,500 rooms at Toronto hotels to host his out-of-town acts. This year INK was the offi­cial host for the Much Music Video Awards, orga­niz­ing offi­cial after par­ties for stars such as Justin Bieber and Miley Cyrus.

In the brave new world of prod­uct place­ment, nowhere is the power of celebrity more pro­found than in the hos­pi­tal­ity indus­try. You are where you dine and sleep.

Today, paparazzi in front of Nobu in New York or Thompson’s Hol­ly­wood Roo­sevelt pro­vide per­fect global mar­ket­ing. Whether it’s hand­bags or hotel rooms, celebri­ties move product.

“I know this city,” says Khabouth. “I know the hotels. I know the night­clubs. I know the peo­ple. I’m not say­ing this because I’m try­ing to boast. It’s a fact.”

Pierre Bergevin , pres­i­dent of real estate con­sul­tancy Cush­man & Wake­field, says there is still room for good bou­tique hotels in the city.

“Just try and get a room dur­ing the film fes­ti­val,” says Bergevin. “They attract a higher-spending cus­tomer with good dis­pos­able income that isn’t nec­es­sar­ily on a cor­po­rate budget.”

Bergevin says the small size of the hotels also means that there is less chance of saturation.

But like hip night­clubs, hot hotels can be yesterday’s news. Main­tain­ing an edge will be chal­leng­ing. And then there is the ques­tion of too much product.

“What keeps me awake at night? That the (condo) mar­ket will crash,” Khabouth says bluntly.

Sales in the new condo mar­ket were down 8% in the sec­ond quar­ter of 2010 com­pared with the first. Some ana­lysts say there are already too many projects on the market.

Pearl remem­bers 1989 in Toronto all too well. His com­pany had 40 low-rise homes in North York that had been sold. Only four closed the year the bub­ble burst.

“We learned some hard lessons,” says Pearl. “You never say never — the econ­omy can always go south. Or your ego can get the bet­ter of you.”

Pearl says he has seen too many projects fail because of hubris. Of devel­op­ers who think it’s cool to get into the hotel and restau­rant busi­ness because they want to hang out with models.

“This isn’t about van­ity, about hav­ing a place to crash,” says Pearl. “We’ve seen that movie before. Our num­bers have to work.”

Pearl says Life­time is con­ser­v­a­tively man­aged and takes on strate­gic part­ner­ships to diver­sify. Khabouth claims he is not lever­aged on any of his exist­ing com­pa­nies. The part­ners say they are fund­ing the start-up costs, includ­ing the elab­o­rate show­room, entirely with cash.

Once con­struc­tion starts, the build­ing will be debt financed. But first, they have to sell con­sumers on the idea of buy­ing into the Bisha lifestyle.

Adver­tis­ing for Bisha shows a sen­su­ous black and white image of a woman’s face, blind­folded by a lace hand­ker­chief. It sug­gests the good life with a hint of S&M, not all that dif­fer­ent from the under­ground club scene Khabouth helped cultivate.

But after con­quer­ing the club world, it remains to be seen whether he can cre­ate a hotel brand that will bear his name.

“This is tak­ing every­thing I know — all my dif­fer­ent skills — and putting it in one project,” says Khabouth. “It’s some­thing that hope­fully will be around for my kids and grandkids.”

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