Can club king Charles Khabouth conquer the hotel business?

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Charles Khabouth has a recurring vision—his personal castle in the sky—of a big, elegant supper club that morphs into a dance club over the course of an evening. A place where a sophisticated clientele can eat dinner, then stay and party.

Or better yet, they'd stay the night too: "At the end of the rainbow, I always thought I would like to get into the hotel business," says Khabouth. "It en-compasses everything I do. You can put a club in a hotel, a restaurant, a bar. It's a total lifestyle package."

You'd think Khabouth could make it happen with a snap of his fingers now that he's 30 years into a star- and success-studded career that has proven without a doubt that he is a genius of tastemaking. The 54-year-old CEO of Toronto-based Ink Entertainment made his name as the city's king of clubs. Lately, after a long haul, he's also emerged as one of its champion restaurateurs. He's tried to make the resto-club hybrid work many times, getting ever closer. Now he's venturing into the hotel part of his dream, too.

As Khabouth and I step off an elevator on the 31st floor at the Trump International Hotel & Tower just after 11 p.m. one evening, a compact version of his vision is firing on all cylinders—even if it doesn't involve a stake in the hotel itself.

The first thing to hit our senses at America—a high-ceilinged 110-seat restaurant that Ink took over and revamped with partners Oliver & Bonacini Restaurants last year—is the dance music, thumping at about 120 beats per minute. As lights swirl, the DJ pumps up the volume. A stylish young clientele at tables along both sides of a runway get up and start moving to the beat. Dozens more pour through the entrance. Servers wearing blond-bob wigs and shoulderless black mini-dresses—designed by Khabouth himself—glide through the crowd, bearing bottles of vodka and champagne adorned with sparklers. Even a jaded old journalist feels a shiver of giddy excitement.

Just before midnight, Khabouth cranks the energy even higher. Normally this is when he brings on pro dancers, but tonight it's "the mad violinist," as Khabouth calls him, dashing around and coaxing Hendrix-style effects out of his wireless rig. The crowd roars as he finishes, and Khabouth is buttonholed by well-wishers every few steps as he heads to the balcony to get a breath of air.

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Last January, when Khabouth lowered the needle on the final track played at Toronto's storied Guvernment nightclub complex—a vinyl copy of Donna Summer's I Feel Love—it capped an astonishing 19-year run.

It was 7:30 on a Monday morning.

All-night partying is not standard CEO behaviour. But for Khabouth, nothing succeeds like excess. "I like taking chances, pushing the envelope," he says. Perhaps it's lucky, then, that the business he pioneered, clubs, has outgrown him. That means there are more chances to be taken, more envelopes to push.

Guvernment did not close because nightclubs have short lifespans. On the contrary, it was still going strong. But Ink never owned the property. When the landlord sold the site for condos, it left a big hole in the middle of Khabouth's club holdings. It also exposed a fundamental challenge to his near-monopoly on electronic dance music (EDM) in Toronto. If you scroll down Forbes's annual ranking of the world's highest-paid DJs, you notice two things. First, they make a staggering amount of money—Calvin Harris, at No. 1, earned $66 million (U.S.) last year. Second, Harris, along with everyone else in the top dozen names, played the Guv's main room or the adjoining Kool Haus at least once.

But that was on the way up. As DJ pay has exploded over the past five years, mainly due to the advent of long-term residencies for DJs at monster clubs in Las Vegas and the rise of massive outdoor EDM festivals worldwide, the big-name DJs Khabouth used to hire are now too expensive for him to book unless they either decide to do him a favour or he brings them to town as a loss leader.

Ink owns, runs or co-operates more than a dozen clubs and restaurants in Toronto; Ink is also Canada's largest promoter of EDM festivals. All told, the company brings in just over $50 million a year in revenue. It all began with Club Z, which a 22-year-old Khabouth opened in 1984 on the strength of a bank loan against his car. It was headed for failure until Khabouth put a live tiger in the club's storefront window on Halloween night.

Leveraging that streak of entrepreneurial audacity, Khabouth became a pioneer of Toronto's famous—or infamous, to the authorities and neighbours—Club District, along the western stretches of Richmond and Adelaide Streets. Ground Zero was Khabouth's Stilife, which brought Toronto surreal design (courtesy of Yabu Pushelberg), Manhattan-style haughty doormen, and a clientele including Madonna, Prince and George Michael. But by 1995, dozens of competing clubs had flocked to the district, and Khabouth sold Stilife.

Khabouth looked east, to the waterfront district, taking over two adjoining clubs in a rundown 60,000-square-foot warehouse complex, and renaming them the Guvernment and the Kool Haus, each with a capacity of more than 2,000. Soon after opening in June, 1996, he hired DJ Mark Oliver, a star of the burgeoning rave scene.

Oliver stayed 18 years. Now 47, he's still Khabouth's go-to DJ. "What other DJ has had health benefits?" says Khabouth. "People used to ask me why I didn't tour," says Oliver. "I have four kids."

For a few years, the Guv/Kool Haus complex, which included five smaller rooms and a rooftop patio, was a money pit. Khabouth went millions of dollars into debt to upgrade the decor and lighting. He hired Studio Munge, founded by Yabu Pushelberg alumnus Sandro Munge, to decorate the rooftop bar—the first of many projects they'd do together. And Khabouth spent $240,000 apiece to remove five pillars down the middle of Kool Haus that were blocking stage views. Contractors reinforced the building from the outside. That paid quick dividends. Kool Haus became a popular venue for mid-level touring rock bands and for legends seeking a nightclub showcase. The Stones, Bowie, Prince, Dylan, Foo Fighters, Puff Daddy, Justin Bieber, Lady Gaga—they all came. "The only one we didn't get was Madonna," says Khabouth.

And the DJ nights with Oliver became cash cows. Khabouth proved to be an astute judge of the market for dance music. Fridays in the Guv's main room were devoted to hip hop, Saturdays to house and EDM. Khabouth also opened three additional clubs in Toronto, each with a capacity of 1,000 or so, as well as Dragonfly in Niagara Falls. The Guv complex itself peaked around 2009, the year after readers of Britain's influential DJ Mag voted it No. 8 in its global ranking of clubs. But attendance dwindled in later years as it became harder to book big international DJs. Khabouth knew he had to make another move—and make it even bigger this time.

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Khabouth, who think three or four years ahead, had a plan in place well before the Guv closed. In 2012, he bought a controlling stake in the Sound Academy, another waterfront space that had been a warehouse. It has a main room that can hold 3,000 people, and a large patio alongside. He hired Studio Munge and spent more than $5 million to remake the patio into the Cabana Pool Bar. Munge installed 12 poolside white-tent cabanas, and several dozen tables and couches, which Khabouth said would appeal to "the 25-plus crowd that has travelled to the south of France, been to Miami, been to Vegas."

Cabana, opened in June, 2013, has been a big success, attracting more than 4,000 people a day on summer weekends if the weather is nice—even if it's just local DJs spinning the tunes. The big moneymakers are the tables, couches and cabanas. It costs $1,000 to $2,500 to rent them for a day. Included are three bottles of liquor to start, a platter of snacks and wristbands affording access to between 10 to 20 people. It's an extension of the bottle-service booths in Khabouth's indoor clubs—often the only places to sit down—which start at about $700 a night.

What Khabouth really wants to do is take advantage of the Sound Academy's spectacular view of Toronto's waterfront from the east, and transform it into the biggest version yet of his restaurant-and-club hybrid idea. The main room at the Sound Academy was—and still is—a big black box with a stage. In 2014, Studio Munge drew up lavish plans to replace walls with windows, and install a full kitchen and removable booths so that the club could also be used for corporate dinners and functions.

Khabouth originally hoped to relaunch the venue as a new flagship, opening just a few weeks after the Guvernment closed this past January. But while the upside of taking over an empty shell is a blank canvas to work on, there's a downside to these old industrial hulks too. Delays have been caused by structural-engineering tasks, including reinforcing the building from the outside in order to eliminate 90% of the pillars inside.

Khabouth also has to soundproof the building. Monster clubs in Vegas and Ibiza, Spain's island mecca for EDM, are vast indoor-outdoor venues that can operate pretty much around the clock in the summer. But Khabouth has to shut down Cabana at 11 p.m. because residents of Toronto Island found the booming sound from the club intolerable. The target opening for the new flagship, yet to be named, is now May of next year.

In the meantime, the global competition for top-level DJs keeps heating up. The Vegas residencies have boosted pay and filled up many DJs' schedules. Calvin Harris opened the floodgates in 2013, when he signed an agreement to play 68 shows at the two clubs in the MGM Grand over 20 months. Almost all the other EDM acts have followed suit, signing deals for residencies, and Harris is now making a reported $400,000 per show.

But the biggest driver of DJ pay is outdoor EDM festivals. To compete, Khabouth had to go into that business, too. In 2012, he launched Veld, held on an August weekend in Downsview Park in suburban Toronto. Headliners included Sweden's Avicii, local boy Deadmau5 and Britain's Gareth Emery. Khabouth has more than doubled attendance at Veld to about 80,000 over two days since then. Ink now also co-produces the ÎleSoniq EDM festival in Montreal with a local promoter.

But there are now several dozen EDM festivals around the world, and the biggest ones are three times the size of Veld. Many are also exporting their brands, including Belgium's Tomorrowland, the Netherlands' Sensation and Ultra, which began in Miami. In global terms, Khabouth is one of many relatively small regional promoters.

One giant has already invaded Khabouth's backyard. Back in 2012, Live Nation actually beat him to market in Toronto by staging its first annual two-day Digital Dreams EDM festival on the Canada Day weekend. The California-based Goliath booked many of Khabouth's regular international DJs, including Kaskade and Afrojack. That rattled Khabouth's cage, and Ink approached Live Nation, seeking détente. Last fall, the two sides signed a five-year deal to partner on both festivals.

There is also the prospect of corporate consolidation in EDM. The biggest push so far came from Robert Sillerman, a onetime broadcasting mogul whose SFX Entertainment has been buying up EDM promoters and festivals. Khabouth says he turned down an offer from SFX last year. Since then, SFX has run into trouble; it debuted on Nasdaq at $13 (U.S.) in October, 2013; lately it's been below $1.

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It's no accident that Khabouth's grail is to achieve the ultimate in hospitality. He's from Beirut, the Paris of the Middle East, where appetites for the nightlife and entertaining are deeply engrained. Khabouth's late father was a restaurant manager who fulfilled his own dream in 1970 by opening a supper club. It went bankrupt after six months. On his first night back at his old restaurant, he died of a heart attack at age 42. Khabouth was just nine years old.

Khabouth fled Lebanon with his mother and stepfather at age 15, in August, 1976, a year after civil war broke out. Like the countless Middle Eastern refugees who lately have seared the world's conscience, they escaped on a boat—a small fishing vessel crammed with 300 people.

Khabouth first tried to realize his resto/club vision in 1989, opening the glitzy 60-seat Oceans next door to Stilife. The era of the celebrity chef was beginning, and Khabouth hired a rising star, Greg Couillard. In a practice that continues to this day, Khabouth also hired a bevy of sharp, hot-looking servers—male and female. Like Stilife, Oceans roared out of the gate. Pierre Trudeau dined there one night. Lifestyles of the Rich and Famous filmed a segment. It was heady stuff for a 27-year-old proprietor.

Restaurant critics were less impressed, however, heralding a theme that would run through reviews of the dozens of restaurants Khabouth opened over the next two decades: too much flashy decor, not enough focus on the food. He actually agrees, up to a point. "I'd rather have a bad meal and awesome service than a great meal and bad service," he says. "I can live with a pasta that's not perfect. I can live with a salad that's okay, if you make me feel good. Make me feel good!"

Couillard quit Oceans in a huff in July, 1990, and took the kitchen staff with him. Khabouth closed the restaurant the next year. The lesson learned: Don't bet the farm on a celebrity chef and his ego.

By then, Khabouth had turned his attention uptown, to Yorkville, the 1960s hippie enclave turned yuppie mecca. He launched a string of restaurants and bars in the late 1980s and 1990s, including the Boa Café, Skorpio, Bellair Café, Acrobat and some whose names even he has trouble remembering. At Acrobat, opened in 1992, Khabouth tried the after-dinner DJ concept. Many patrons were alarmed, and so was his partner in the venture, respected restaurateur Franco Prevedello. He bought out Khabouth in 1994, but then shut down the following year.

After Yorkville, Khabouth devoted most of his attention to the Guv complex, but in 2002 he bought the old BamBoo live music club on Queen Street West and took another run at the high-end restaurant-club combination. He spent more than $3 million to transform it into Ultra. Same old Khabouth, said the critics.

Still, Ultra was a major turning point in Khabouth's career: Raising money for the venture, he got to know a fellow '80s wunderkind named Danny Soberano.

Soberano had already owned and run several restaurants and clubs, and had demonstrated serious business chops: In 1986, he and a group of investors had bought Allseas Fisheries, and turned it into one of Canada's largest suppliers of seafood to supermarkets, hotels and restaurants. Soberano could see that Khabouth's business was scattered—he had different partners and investors for almost every venue. Seeing a good fit, Khabouth made Soberano his one partner in Ink, and Soberano also assumed the job as president of the company.

One of the first things Soberano did was to buy out several other investors in the Guvernment and establish an ownership split that applied both there and to Ink as a company: 57% for Khabouth and 43% for Soberano. Each of the clubs and restaurants is still an independent operation, but they pay marketing and management fees to Ink. Both Khabouth and Soberano say that Ink finances its investments solely from cash flow—no bank loans or other investors. "Which is a problem," says Khabouth, when you are expanding, as Ink is now.

The duo make a nice contrast. "We tell people we're in show business—he's the show, and I'm the business," says Soberano. Khabouth works in Ink's bright white-painted headquarters atop a seven-storey building on the so-called Mink Mile of Toronto's Bloor Street West. He's usually wearing fitted black designer clothing from head to toe. He sits behind a glass-top desk that is supported by what appears to be huge gold-painted horns curling out of two rams' heads. Across the room is a large 3-D image of a diamond-encrusted skull by Damien Hirst. After office hours, Khabouth is usually out five nights a week, checking out his venues. He travels 10 or 12 days every month. Unsurprisingly, he's skinny, typically bearing a droopy expression halfway between fatigue and bemusement.

Soberano, who says he's "a very young 60," is still CEO of Allseas, and he spends most of his days at its warehouse and well-worn offices in an industrial section of west Toronto. There is indeed a fish plaque on the wall in the lobby. Soberano has two phones on his desk—one for Allseas and one for Ink.

For the most part, Soberano says, Ink likes to run its clubs itself, but the company has signed with corporate partners for restaurants and hotels. With restaurants, the key partner is restaurateur Hanif Harji's Icon Legacy Hospitality. Khabouth and Harji met in 2011, when Khabouth was preparing to open Weslodge, a modern-day saloon, on King Street West and Harji was working on Patria, right next door. The two decided to join forces on both, and Ink and Icon now own and run eight Toronto restaurants together, including Byblos and Nao, a high-end Japanese steakhouse in Yorkville where patrons use handcrafted knives that cost $140 a pop.

Khabouth and Harji have got the food and the decor and service mostly right. Both Patria and Byblos made critics' lists for best new restaurants. And this past summer, after years of research and preparation, they finally opened a Byblos in Miami's South Beach, in the art-deco Shorecrest Building at the Royal Palm Hotel. Khabouth is happy to be established in Miami, and he rents a condo there. He also says he's recently concluded three deals with a wealthy family in Dubai that wants to introduce three of his restaurant brands there—Byblos, Patria and Weslodge.

Still, Khabouth also realizes that opening restaurants in other cities—a few hundred seats at a time—is a tough way to expand in a business that's narrow-margin to begin with. At the Shorecrest Building, he says, "you needed a permit to change the colour of the paint."

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And so on the top of the mountain—the "total lifestyle package" represented by the hotel business. Khabouth has a role model. "The person who launched boutique hotels was Ian Schrager," he says. Schrager gained fame as co-owner of Studio 54 in New York in the 1970s, launched the Morgans Hotel Group in 1984, and now develops and runs hotels with many partners. "He knew how to bring that sex appeal from the clubs into a more permanent structure," says Khabouth.

Khabouth originally announced the 41-storey Bisha, now slated to open next spring, as a joint venture with condo developer Lifetime Developments in 2010. "Bisha" is a familiar form of Khabouth's real first name, Bechara. Plans call for about 100 hotel rooms and more than 300 condos.

Even early on, Khabouth said that he wanted to create a hotel brand that he could expand to other cities. Realistically, that wasn't something Ink could do itself. He approached the Loews Hotels in 2012 when he was in Miami scouting possible restaurant locations for Byblos. He met then-vice-president Costa Dimas and chairman Jon Tisch. "We immediately saw that Charles is a tastemaker and an arbiter of style in areas that were not traditionally Loews's," says Dimas.

But they wanted Khabouth to gain more experience outside Toronto, and in hotels. In 2013, they offered to let him open another outlet of his Toronto French restaurant, La Société, in the Loews Hotel Vogue in Montreal. Studio Munge designed it, and it was a success. Last year, on Khabouth's condo patio in Toronto, Dimas pitched Khabouth and Danny Soberano on the idea of using Bisha as the model for a chain of dozens of independently owned boutique hotels, each with a different name and concept, but with a similar feel. It will be called the OE Collection (for "original experiences"). "Imagine if Four Seasons had a baby with the Hôtel Costes in Paris," says Dimas, who is chief business officer for the venture.

The Hôtel Costes, for those of you who (like me) didn't know, is a trendy boutique hotel just north of the Tuileries Garden. "It's my favourite hotel in the world," says Khabouth. North American boutique hotels tend to be small and stylish. They keep room rates low by having fewer services than traditional large chain hotels—no pool or ballrooms, and maybe just a small café or bar. The Costes, on the other hand, has a pool and spa, perfume shop, a terrace restaurant and a bar with DJs.

The OE Collection appears to be an attempt to carve out a niche between North American chain hotels and boutique hotels, an increasingly competitive business that has been invaded by the chains. Khabouth says Bisha's rooms will be spacious—about 500 square feet. The key competitive advantage in a crowded market, he says, "will be all about the food, beverage and hospitality in the building." There will be a bar and 24-hour café on the ground floor, a courtyard restaurant and a rooftop restaurant, bar and pool. "I want to see people constantly in the lobby," says Khabouth. The next cities to get OE hotels will likely be Miami and Los Angeles.

But if Bisha succeeds, how will Khabouth keep tabs on his other businesses? That's not his issue, it seems. "My biggest fear is that I'm going to die before I do all the things I want to do."

At Veld, I ask Khabouth if he might sell out. Maybe, he says—if Ink got a lot bigger, and someone cut him a big cheque. But he still loves what he does. "Why would I retire?" he says, surrounded by a bunch of beaming rave kids.