Soho House is finally profitable and plots to expand further into North America

Soho House — a global chain of private clubs with a huge appeal to celebrities and the watching crowd — is bigger than ever.

It also managed to score something in the last three months of 2022 yes evade the company in 28 years in business: profit.

Membership Collective Group, the name of Soho House’s parent company over the next few weeks (more on that later), reported on Wednesday a profit of $13.5 million in the fourth quarter. The company still reported a loss of nearly $221 million for the year, but the profitable quarter was an optically significant win for the company as leaders rolled out new initiatives for the year. last year to boost profits.

Soho House members and guests will feel it through higher membership rates — although leaders often note that rate is still a value compared to other member clubs — and new experiences as well as club services aimed at getting them to spend more at their local club.

“My strategy here is clear and focused on three key areas: leveraging data member insights, operating and scaling efficiently, without compromising what matters most. for our members and a focused approach to expanding internal profitability and enhancing the membership value proposition,” Andrew Carnie, CEO of Membership Collective Group, said on a call investors on Wednesday morning.

Carnie became CEO late last year after Soho House founder Nick Jones announces he’s stepping back. One of the most immediate changes under Carnie’s leadership could have brand analysts everywhere saying, “Oh, okay.”

The company plans to change its name from Membership Collective Group to Soho House & Co. later this month to reflect its biggest and most famous brand. The overall business, which includes other brands like The Ned as well as hotel chains The Line and Saguaro, belongs to the Membership Collective Group when it launches on the New York Stock Exchange in 2021.

“As we spent time as a listed company, we realized the benefits of being associated with a strong and unique brand. The Soho House name is a huge asset to us and we want to take advantage of it to the fullest,” said Carnie. “This change also aligns with our move to strengthen Soho House’s focus on business while continuing to support our other strong businesses.”

Profit concerns and other changes at the company come amid other optical changes at the company: After opening last year in Nashville and Miami, there are now multiple Soho Homes in North America. than the company’s country of birth, the UK or Europe.

Soho House debuted in 1995 at 40 Greek Street in London – you guessed it – the Soho neighborhood. The brand still added UK clubs last year in Brighton and London. But the Americas are the main focus for further expansion.

Thomas Allen, the company’s chief financial officer, told TPG ahead of Wednesday’s earnings call: “What we’ve said historically is that we’ve found that the Americas are home to a number of Active Homes our best move. “You have big cities in the Americas and there are a lot of cities that we haven’t been to.”

While Soho House leaders have said they plan to grow the brand by five to seven new homes a year for the next few years, they declined to provide many specific details beyond openings. coming soon in Mexico City and Manchester, England. Soho House Bangkok just opened last month.

TPG previously reported how can you tell if your city is a candidate for a future Soho House.

Hotel companies that came out of the pandemic have adopted the owner model maintain higher rate instead of discounting rooms to fill their hotel. This model seems to have worked, as it has allowed the hotel industry to recover financially from the pandemic much faster than during other downturns – even though many of our wallets are running low. when it comes time to book a hotel during these days.

Soho House, which has overnight rooms for rent at its clubs, works a little differently. The company is driving both rates and occupancy rates. There were nearly 162,000 Soho House members at the end of 2022 — an increase of nearly 32% year-over-year. The parent company’s total membership – which includes members at brands like The Ned and Scorpios Beach Club – is nearly 227,000.

The company also doesn’t allow people in. The waiting list of people hoping their membership applications are approved is now 86,000, the company’s all-time high.

Like at traditional hotels, room rates at Soho House are on the rise. According to the company’s website, a Soho House New York single-family membership for someone over 27 costs almost $667 quarterly or $2,667 if you pay for the whole year. Those numbers increase if you expand the membership to include access to all Houses.

Company leaders noted Wednesday that membership rates are growing, but current members see only “single-digit average” percentage increases — “well below the actual level” current inflation,” noted Carnie – while the rate of new members increased by double digits. Specific percentages are not provided.

Carnie added: “As we raised the price of new members, we continue to see super high registrations, which shows the strength of our business.

The biggest daily shift that Soho House members can go through involves food and drink. The move is very similar to what lifestyle hotels are doing.

lifestyle hotel (brands like The Hoxton and Edition focus on tailor-made experiences, food and drinks that reflect the surrounding community) are a big hit in the industry right now and driving growth incredible at major corporations like Accor, Marriott and Hyatt.

Soho House is mapping out a similar strategy, where the new menu at each House reflects that property’s clientele. While there are standard offerings across the brand, some Houses have a third of the menus tailored to each of those individual locations. 180 House in London now has a 1970s-inspired menu featuring dishes like duck a l’orange and gougeres (both of which became famous after Julia Child’s book “Mastering the Art of French Cooking”. ).

Instead of raising food prices, Soho House leaders find the right approach is actually driving members to spend more at their respective Houses.

“We have a pricing opportunity, but actually we’re more focused on increasing average spend per member than on increasing prices,” Carnie said. “Our average spend since implementing those changes has increased by about 20%, and this approach is being rolled out across regions and our Home.”