SBE Wants to Become the Ultimate Lifestyle Hospitality Group

Los Angeles-based SBE got its start with the opening of a nightclub, Hyde, and in the 14 years since, the company has come to encompass not only nightclubs but restaurants, hotels, and residences whose brands include Umami Burger, SLS Hotels, and Katsuya.

Last year, SBE dramatically grew its hotel portfolio with the $82-million acquisition of the long-struggling Morgans Hotel Group.

That acquisition, which took more than two years to complete, finally closed in December 2016 and in the months since, SBE has been integrating its 13 Morgans properties into its portfolio.

At the time of the deal close, Bjorn Hanson, a clinical professor at the NYU Tisch Center for Hospitality and Tourism, called it a "great acquisition" and that the awareness of Morgans Hotels Group's iconic brand portfolio would be especially attractive for SBE.

"Many people know the Mondrian name, and each of these Morgans hotels, in its own way, is its own brand. I don't know what [SBE CEO] Sam Nazarian is planning to do — there could be cities where there could be a Hudson, a Delano and a Mondrian all in one city. But I think they all have a loyal enough following from both guests and what these brands represented, at times, in the earlier life of the company."

Hudson, Delano and Mondrian are all Morgans brands.

In the 10 months since then, SBE has been integrating the Morgans properties, as well as announcing a possible merger with nightclub and restaurant operator Hakkasan Group. Should Hakkasan and SBE merge, they would form a nightclub/restaurant/hospitality company worth $1 billion.

Since word of a possible merger between the two companies broke in late March, however, there hasn't been much news since.

An SBE spokesperson issued the following statement, regarding the merger, this month: "SBE remains in negotiations to complete a financial transaction in which SBE's and Hakkasan's formidable hospitality assets are combined into one company. We are looking forward to completing the transaction to accelerate our already robust expansion."

While the SBE-Hakkasan transaction is ongoing, SBE is proceeding with its plans to become a leader in lifestyle hospitality.

Later this month, a Mondrian Park Avenue is opening in New York City. The hotel, which was originally slated to be an SLS hotel, now bears the name of one of the Morgans Hotel Group's flagship brands.

SBE CEO Nazarian, who was an investor in the project for more than five years, was recently bought out of the deal by one of his developer partners in the project, and the hotel will be managed by Journal Hotels, which also manages the former Public Chicago (now known as Ambassador Chicago) and The Hollywood Roosevelt. Nazarian is reportedly seeking to open an SLS hotel in New York City at another location.

Skift recently spoke to Chadi Farhat, SBE's newly appointed chief operating officer for the Middle East and Europe and the former chief commercial officer of Morgans Hotel Group, for an update on the Morgans integration, and SBE's future plans.

"We are fully integrated," Farhat said. "We've already integrated some of our food-and-beverage and nightlife brands into our existing brands." He cited the introduction of Doheny Room locations in Los Angeles and Miami at Morgans hotels, and the new Umami Burger location at the Hudson Hotel in New York City.

Farhat's new appointment also points to the increasing importance of SBE's aspirations to be truly global. The Morgan acquisition certainly helped, and the company is opening a Mondrian in Doha later this year. He said the company was "targeting key markets like Milan, Paris, Berlin, Vienna, and Lisbon" for additional hotels.

He also stressed that SBE wants to be known for being much more than just a hotel group. "Our group is beyond just a hotel group," Farhat said. "We are a global lifestyle hospitality provider. We provide a full experience to our guests. We offer true destinations and experiences — hospitality, cuisine, and design."

To that end, too, Farhat hinted that the company would be launching a new loyalty program in 2018 but would not divulge further details.

"We are going to launch a loyalty program in 2018, a new program for SBE. It's going to be a very unique program that is developed around guest experience and destinations," he said. "It'll be multi-vertical: hotels, culinary, design — something very unique."

SBE currently has a loyalty program, called The Code. Farhat didn't confirm whether the new program would share the same name, or how the program would change next year. It's likely, however, that whatever loyalty program SBE launches next year will be a model that encompasses all of its brands and businesses that span across residential, hospitality, dining, and nightlife.

Farhat added that the company is paying close attention to technology to ensure the guest experience is better than what guests can already have in their homes.

"I want guests to say they want our tech at home," he said. "Now when you go into a hotel, you often find that the technology in your house is higher than the one on property. We want to do the reverse of that — so you see great technology at our hotel and want it at home."