But the crown jewel was Paris’ legendary Hôtel de Crillon, which overlooks the Place de la Concorde. Built in 1758 by Louis XV, it was a private home until 1909. (Marie Antoinette supposedly took piano lessons there.) When the estate was turned into a hotel, it became gilded corporate housing for world leaders: The American delegation camped there while negotiating the Treaty of Versailles (ringing up a bill of the then unfathomable sum of $900,000), as did the commander of the German occupation army two decades later. Today it’s still the upper crust’s social hall, annually hosting the international debutante balls at which young women of privilege—from first niece Lauren Bush to Nadine Ghosn, daughter of Renault and Nissan C.E.O. Carlos Ghosn—come out. The wealth-monitoring group Luxury Institute found that, among consumers with a net worth of more than $10 million, the Crillon was considered to be one of the most exclusive hotels in the world.

Sternlicht intends to convert the building into an all-suites hotel and has hired French architect Thierry Despont for the redesign. He says he could flip the property and make a huge return for his investors, mainly large pension funds and wealthy families. But he thinks he can do even better by spreading the Crillon name, creating a line of hotels that will immediately become the most expensive in any market. He’s already picked out historic buildings for Crillons in New York and Moscow and is looking for a site in Shanghai. As for marketing the new chain, he says it won’t need much: “Those who know, know.”

For those who know a little less, Sternlicht is launching a line of properties under the Baccarat name. The first few sites will be resorts, including one on Water Cay, in the Turks and Caicos Islands, that will look as if it had been transported from the South Pacific, with over-the-water bungalows, a dramatic lobby set near a man-made river, and an assortment of multimillion-dollar, ocean-view condos. But Sternlicht expects more out of the brand. Glancing down at the blue-faced Montblanc watch on his wrist, he says he will follow the penmaker’s strategy of offering a broad line of luxury goods—ties, watches, custom-made glassware—at Baccarat stores and hotels. “We have to make Baccarat a status symbol,” he says. “People in Dubai and Saudi Arabia and Russia and France know Baccarat. It’s a little brand with a huge name—a huge name.”

Sternlicht has limited time to roll all this out. Unlike his Starwood Hotels investors, Starwood Capital’s expect a full payout in the next six to eight years. For now, the window for oversize returns on luxury properties still appears to be wide open. In the past year, the prices for high-end hotel rooms rose faster than those in any other sector of the lodging industry, with a typical room going for $300, about three times the average room rate. Ultra-luxury hotels are increasingly being sought by wealthy American baby boomers and their global counterparts; they’re not happy sticking to pleasant-but-familiar standbys like the Four Seasons or the Ritz-Carlton.

“We were in the era of cookie-cutter hotels before Sternlicht,” says Lalia Rach, divisional dean of New York University’s hospitality school. “And when you think about upscale hotels, they’re very similar. I think there is some great excitement about his newest venture: Will he bring that magic to bear again?”

With competitors watching intently, it would probably be best for Sternlicht to show his hand only at the last minute. He knows that but can’t resist the temptation to prove he has a plan. “I didn’t want to talk about the W until we had 10 open,” he says. “But it got to the point where people were criticizing us, and me, and saying it would be ‘Barry’s folly.’ I seem always to have my credibility in doubt. Here it will be the same thing.”

The latest collection of brands is like a trophy wife to Sternlicht: younger, sexier, able to show up the original spouse should both end up on the same block. And not surprisingly, the Starwood founder finds himself thinking a lot about his time at his first hotel company: He still uses possessive pronouns when talking about the W, and he grows morose reminiscing about his last days at the firm. In late 2003, Sternlicht decided he was done running day-to-day operations. He told Starwood’s board that he’d like to be executive chairman and explained how easy his successor would have it, thanks to the path he had laid. “Elmer Fudd could run the company” was how he put it. Sternlicht’s employment contract, rewritten by the board in 2003, emphasized that he would “consult with the new C.E.O. in all important matters concerning the interests and management of the company.”

Starwood’s hire, former Coca-Cola president Steven Heyer, wasn’t so willing to share the spotlight; he set out to make Starwood his own. Some of Sternlicht’s people sensed the chill immediately. Clint Phillips, a personal trainer and chiropractor whom Sternlicht helped by letting him set up a back clinic at the St. Regis in Aspen, says he tried fruitlessly to reach Heyer to discuss expanding into other Starwood-owned locations. When Heyer stayed at the Aspen hotel, Phillips even slipped a note under his door. It was never answered. Heyer drastically scaled back one of Sternlicht’s mandatory rituals: a weekly review of every new design—from rug to lobby desk—being planned for each brand. He also killed off a Sternlicht scheme to build a chain of hotels intended to be a more upscale version of the W.