Soho House, the hotel and members’ club chain, has been valued at $2bn after raising $100m to help double its global footprint to 50 venues over the next “three to four” years.
Nick Jones, founder and chief executive, said: “Expansion is definitely ramping up. We have the infrastructure to do it and we have the appetite — people love a house in their city.”
The expansion push comes despite the group failing to turn a profit and fears that it was taking on too much debt to broaden the business. In 2016, Standard & Poor’s and Moody’s warned the company would struggle to borrow. In 2017 it signed a £275m refinancing agreement with Permira Debt Managers, and by the end of last year the company’s debt had grown by just over a fifth year on year to £417m.
Peter McPhee, chief financial officer, said Soho House made a pre-tax loss of £65m last year, up from £60m in 2017. Soho House reported adjusted earnings before interest, tax, depreciation and amortisation of £56.4m, up from £50.5m a year earlier. Turnover rose 20 per cent to £432.5m, he added.
We have the infrastructure to do it and we have the appetite — people love a house in their city
Mr Jones said, however, he expected the company to be profitable “within about two years”, adding that the latest investment meant that “we’re good for cash”.
He added: “Opening new houses is not the cheapest thing to do, but if we stopped all of that we would be profitable very quickly.
“But we are in development mode . . . what excites our members the most is when we open in a new city.”
The company, which first launched in London in 1995, secured the investment from real estate investment trust Simon Property Group and Raycliff Capital, founded by entrepreneur Bippy Siegal, for a 5 per cent stake, valuing the company at $2bn. Soho House was valued at £250m in 2012, when billionaire retail investor Ron Burkle acquired it.
It said membership climbed 29 per cent to 89,000 last year, while another 36,000 people were waiting to join what Soho House describes as a private members’ club for those with a “creative soul”. Known for its celebrity appeal, Prince Harry and Meghan Markle attended the opening of Soho House in Amsterdam, the most popular membership grants access to Soho Houses all over the world and UK fees range from £850 to £1,700.
Wednesday, 7 February, 2018
New venues are set to open within the next two years in cities including Paris, Rome, Tel Aviv and Nashville as well as Greek island Mykonos.
Mr Jones added that recent investments in Soho Works, a “bolt-on” workspace offer for existing members, could not be compared with US co-working space operator WeWork, which is being bailed out by a $9.5bn SoftBank rescue package.
“I’m a great admirer of WeWork, but we are [opening far fewer] houses a year,” Mr Jones said. “It is a very different type of expansion.”