One of the coolest joints for an overnight stay in Boston is the $150 million, 298-room Liberty Hotel, a converted jail that has attracted a slew of celebrities from Paris Hilton and Bruce Willis to British billionaire Richard Branson, who founded the Virgin Group, an air travel and financial services company.

The boutique hotel has completed its first full year in operation with nearly 70% occupancy, reports Jim Treadway, managing director for the hotel. Room rates range from the mid-$200s to $400s, depending on the date and other factors. The Liberty hasn't yet attained the revenue-per-available room of say, Boston's Four Seasons Hotel, but it's climbing, Treadway says.

“Returns were good the first year,” he notes, adding that the economy has hurt hotels. “We would be lucky to achieve the same occupancy we did in '08.” Occupancy at luxury Boston hotel chains declined 35% in January over the same period in 2008, according to Smith Travel Research. The average daily rate fell 8.1% to $245.79, while revenue per available room dropped 40% in January, year over year.

It took five years to convert the old Charles Street Jail, built in 1851. A new tower added 280 rooms to the 18 in the section that once housed the jail. The adaptive reuse project was completed in 2007, when the hotel opened.

Treadway helped to get the independent hotel project financed. Carpenter and Co., based in Cambridge, developed the Liberty in partnership with Kennedy Associates Real Estate Counsel, which invests on behalf of MEHP Pension Fund. “I introduced Carpenter to Kennedy,” Treadway says. “Carpenter was looking for equity, and Kennedy liked the project.”

The former president of Westin North America, Treadway grew up about four blocks from the jail, when it was surrounded by a 15-foot wall. He could see just the top of the jail, and the little cupola on its roof. “I was always afraid of it. I was a kid and it had some pretty unsavory characters in it. I was able to convince myself that they were going to break out and find me and do harm to me somehow.” A wrecking ball knocked down the wall in 2003.

Today, as founder and chairman of MTM Luxury Lodging, a hotel management company based in Kirkland, Wash., Treadway personally oversees the Liberty. He calls the boutique hotel a trophy.

If location trumps history, the Liberty's could scarcely be better, since the land under the hotel is owned by Massachusetts General Hospital, and the hotel sits on the hospital's campus, just across the Charles River from the Massachusetts Institute of Technology and Harvard University. The hotel owners have a lengthy ground lease with the hospital, and many of its guests are medical personnel or visitors to the campus.

Guests can dine at the Clink restaurant or the Alibi, where the former jail's drunk tank was located. In 2008, the hotel added the Scampo restaurant. Remnants of jail cells are visible in the striking lobby, and its past is evident in the Liberty's thick granite exterior. The granite comes from Quincy, Mass.

When the recession eases, Treadway expects occupancy to soar at the award-winning Liberty. “It's a good place for a getaway.”