Skift Take

The beauty of Ennismore's flagship brand, The Hoxton hotels, is how it distills what the original boutique hotel pioneers did, but makes it relevant to today's audiences on a more equitable, democratic scale. CEO Sharan Pasricha's approach to hospitality — an outsider's perspective, if you will — is equally refreshing.

If you’re not all that familiar with The Hoxton hotels brand — and you happen to be based in the U.S. — don’t worry. You should know it very well by year’s end.

That’s because the UK-based lifestyle hotel brand is planning to open three properties in the U.S. alone this year. The first is scheduled to open in Brooklyn this summer, followed by Portland, Oregon, and Downtown Los Angeles at the end of the year. A fourth is set to open in Chicago in 2019.

Hoxton hotels is the flagship brand of London-based hotel development company Ennismore, which was founded by Sharan Pasricha in 2011. It was in 2012 when Pasricha, a recent London Business School graduate with no previous hospitality experience and who had unsuccessfully attempted to buy Soho House, decided to take a chance. He bought a six-year-old boutique hotel located in the then very up-and-coming East London neighborhood of Shoreditch and following that first hotel, three other hotels have since opened in London, Amsterdam, and Paris.

In addition to focusing on growing The Hoxton hotels brand, Pasricha’s company is also focused on its other properties and brands, which include the iconic and historic Gleneagles, and NoCo, a new stylish, budget-friendly brand, which is expected to open its first hotel in 2019. Hoxton has built a reputation for being both design-driven but also rather affordable. While the original Gleneagles resort in Scotland is still going strong, Ennismore also has plans to open two more Gleneagles-branded properties in Edinburgh and London.

Pasricha hinted, when we spoke to him, that Ennismore may soon launch its own co-working brand, too.

“We’ve got a bunch of office spaces to move into with our developments,” Pasricha said. “In Chicago and potentially San Francisco and in London we’ve got office space with our hotels, so we’re actively considering exploring, possibly, our own co-working brand.”

Pasricha said, however, that he is still contemplating whether the “flexibility and ease” of co-working will be enough to ensure that it remains a “sustainable” business model. “You’ve got brands talking about a sense of community and fostering this sense of place amongst all the businesses working there,” he said. “You know, some work, some don’t work, but the reality is that people are buying into it because of the flexibility and ease.”

And if Pasricha and his team were to launch a co-working brand, what might that look like, and would it evolve into more of a co-living type of model?

“I don’t think we would be able to compete with some of the larger folks on the traditional co-working so, I think, given our experience in brands and our link to the hotel, I think we’ve got to find ways to integrate our brand and our hotel more closely, so we’re going to focus on how we can do that,” he said.

Another potential area of interest for Pasricha and Ennismore? Looking at blockchain technology and how it can transform his company’s online booking systems.

“I think you can’t ignore blockchains, so we’re actively trying to get our heads around what the interesting platforms or products are that can be created on the blockchain as a platform,” he explained. “We think of our website not as an online booking engine but as an e-commerce platform.”

If co-working and blockchain seem like non-traditional areas of interest for a hotelier, that’s probably because Pasricha isn’t a traditional hotelier — something he relishes in not being. Prior to starting Ennismore, he ran a media company and a leather-manufacturing business. Drawing on unconventional views of hospitality are what sets his hotels apart, he said, and what’s helped him grow Ennismore to where it is today.

Skift recently spoke to Pasricha to talk about that growth, as well as ask him about his views on the responsibility that hoteliers have for their impact on local communities, how to improve guest experience, and where he sees hospitality headed in the next few years. Here’s what he had to say.

The lobby of The Hoxton in Paris. Source: Ennismore Capital

On Growth & Consolidation

“This is our biggest year as a business, which is one of the most exciting times in our company history,” Pasricha said. “This year it all comes into fruition. It’s a really busy year for us.”

With so much growth taking place this year and the next few years for Ennismore, we wondered if Pasricha had plans to eventually take the company public, or search for other strategic alternatives. For now, it seems, he’s content to keep running the business as he has for the past six years, but he’s not ruling anything out as the portfolio grows.

“I think we’re on a path to create a very vibrant, exciting hotel platform,” he said, noting that Ennismore has the capital to build about 15 hotels and has since built 11. “Given our size today, certainly for The Hoxton hotels and Gleneagles, we only have five operating hotels even though we have nine development projects, including Gleneagles in our pipeline. That feels tiny compared to some of our peers and contemporaries.”

Pasricha added, “My gut feel is within the next 24 months we’ll probably evaluate some form of strategic options in terms of our future goals.”

“In the next couple of years, once we develop out a fairly large pipeline, we will have to explore those strategic options in terms of what we do,” Pasricha said. “Do we bring on a minority investor? Roll the dice again, for the next billion dollars in capital that we invest? What are the strategic options available to us? To us, it’s quite humbling to us, to be approached by a wide variety of strategic investors who are obviously very intrigued and interested in what we are doing. We’re always having conversations, and are always interested to know how people would be of value to our business, as we grow and scale to the new market and trajectories. I think all options are open.”

In pursuing growth, Pasricha said he’s not opposed to considering acquisitions. “I think we’d certainly be open to acquiring additional brands if we felt they were complementary to our existing portfolio, and offered a key point of differentiation to our guests.”

He hasn’t ruled out adding a new brand, whether that grows organically or via acquisition.

“We’ve also thought about a brand perhaps between The Hoxton and Gleneagles brands, which could be an exciting proposition. I’ve got this romantic idea of our guests starting out their journey with Ennismore with NoCo, then going for Hoxton, then perhaps going to the country with one of our products,” he said. “Then going to maybe another luxury brand and then ultimately ending up in Gleneagles.”

Even as the hospitality industry continues to consolidate even further, Pasricha said he continues to see opportunity for Ennismore’s brands. “Consolidation is good, in one way, in the industry because it allows us to remain fiercely independent and we like to be fiercely independent … we can create exciting products and exciting propositions for the customers. When some of the smaller brands get snapped up by some of the larger big-box hotel groups — while it allows them a lot of muscle and distribution perhaps — it sometimes, perhaps, kills the creativity.”

A guest room at the soon-to-open Hoxton hotel in Williamsburg, Brooklyn. Source: Ennismore

On Being a Good Neighbor

If the history of the boutique hotels movement has shown us anything, it’s that these hotels have had transformative power in shaping their neighborhoods and, in some cases, that also means contributing to the gentrification of their respective communities.

The first Hoxton in London’s Shoreditch neighborhood has, some might argue, played a role in both the evolution and, well, gentrification of East London. And with Hoxton’s upcoming properties in the U.S., especially those opening in Portland and in downtown Los Angeles, Pasricha acknowledged that part of his model does involve considerations of gentrification.

“Part of our model, our value proposition, is to identify very exciting neighborhoods before they gentrify or as they gentrify,” he said. “A big part of that is to find these amazing buildings,” he said, explaining why Ennismore isn’t adopting an asset-light approach like so many of its peers have. “So, the real estate depreciation isn’t our impact that we have as an operator or as a brand, once we’re opened, it’s an integral part of our model. So, how do we find the next Williamsburg or the next downtown LA?”

When we asked him what role his hotels can and should play in these local communities, and what he thinks of gentrification, Pasricha had a lot to say.

“We spend a lot of time thinking about it,” he said. “There’s obviously a skill in identifying which neighborhoods are about to gentrify or are going through a gentrification process. We spend a lot of time in these neighborhoods and in these cities, to really understand what all the dynamics are at play here. Where are the new jobs being created? Where is the new housing? Where are the independent coffee shops going? Where are the independent art galleries going? Where is that incredible chef who was in the city that left to create a new fantastic pop-up?

“We spend a lot of time looking for spots and hanging out in some of these places to really know which parts of the neighborhood are able to sparkle. To be an active part in that gentrifying neighborhood, it really speaks at the core of our brand and our value. It really is about bringing the outside in.”

Pasricha noted how, in Paris, where Hoxton opened a hotel last year, there’s a particular emphasis on making sure the public spaces cultivate a real hotel lobby culture that welcomes locals.

“I think the reason we’ve been as successful as we have, certainly in Europe, is we pop in certain neighborhoods and our public space is like one big living room … It’s about how to multiply our public spaces and have a way wider demographic where you come from all walks of life and backgrounds and you own enough spaces, but all united by the levels. Amazing food, great value, in terms of its proposition, and exceptional design and a real connection to community — that’s what we want to offer.”

After a personal stay at the Hoxton in Paris last December, I can’t disagree with him: The lobby and bar spaces were continuously packed, and more often than not, with locals and not visitors like myself.

Pasricha said Ennismore pays close attention to making sure it involves its neighbors and locals in the growth of the brand and the properties themselves, especially through innovative programming.

“We spend a lot of time in our local communities and in the neighborhoods. Basically, we own the real estate, so we will be there for the next decade, therefore, it’s the right step to make sure we know who our neighbors are, but it’s also so integral to our business model that we engage with the locals in a way that no other hotel does.”

On Not Being Asset Light

Ennismore is both owner and operator of its properties, a business model that has increasingly fallen out of favor with major branded companies like Marriott, Hilton, and InterContinental Hotels Group, for instance, but there’s a reason for that, Pasricha said.

“I believe that with brands like ours that are incredibly creative, very authentic, culturally connected, and community focused, you need to control every aspect of it,” he said. “Our fear is we do not want to create a different collection of hotels that have an inconsistent brand message. Our belief is to really control the entire guest experience, we’ve got to control every aspect of it. And by nature, we restrict how many of these we could do.”

The Hoxton hotel in Amsterdam. Source: Ennismore

On Technology’s Role in Hospitality

Aside from paying close attention to blockchain technology, Pasricha said he is focused on technology’s role in the hospitality experience because it can allow for better personalization of the guest experience.

“I think technology is going to really allow independent brands or brands that are focused on creating experiences to allow those experiences to be personalized,” he said. “Generally, hotels know very little about our customers … allowing this cross-section of bringing technology and personalization together will allow guests to have way more of an experiential stay wherever they are staying.”

For hoteliers, focusing on the overall guest experience is increasingly crucial, or even more important than the guest room itself. In Skift Research’s most recent Experiential Traveler Survey, 72 percent of the 2,300 respondents said they value experience over room quality, and 65 percent said they are seeking new experiences.

“I think there will be a fundamental shift from a commoditized hotel experience to one that is a lot more experience led, where you stayed today tells a lot more about who you are than it did 10 years ago,” Pasricha said. “I think some of the big hotel brands have realized that shift, where people’s habits and behaviors are changing, and while I think there’ll always be a place for a utilitarian hotel product, I think hotels are fast becoming an important way of life and an accessory to life.”

He said he’s also looking at how “technology in the form of artificial intelligence and automation” can help his hotels in terms of “yield management and rate curves,” expressing a hope for back-end technology systems powering the hospitality industry to find more relevance and efficiency.

“The other thing I think the hotel industry perhaps hasn’t quite embraced is technology,” he said. “There are certain property management systems that have large market sizes within the industry, there’s certain technologies that have become standard only because of the scale that they have across the industry and the cost of change is significant, so people have accepted the status quo, they’ve accepted technologies that are now semi-redundant, that are not relevant in today’s day and age, but the cost of replacing them is significant.”

But he sees disruptors like Airbnb and new technologies as a way for the industry to evolve.

“It’s a bit of a cyclical problem, but I think with the likes of Airbnb in one hand and us on the other, where we’re trying to disrupt a traditional industry using technology, using outside thinking, using storytelling, and using innovation,” he said. “I think that’s when you have the beginnings of something that’s quite exciting and I think there’s a lot of people within our industry that are pursuing that charge.”

On Distribution

What does Pasricha think of Google Hotels and Google’s increased activity in hotel search/distribution, albeit prior to news that the company would begin to make it harder for consumers to find the lowest rates from independent and smaller chains?

He said, “Google is definitely one to watch in the travel space given just the sheer power they yield in search and we’re constantly thinking about how we can drive more traffic through to our website and on our own guest experience and customer journey and, of course, you’ve always got to wait and watch and see whether it’s the rise of metasearch or the big OTAs [online travel agencies] who are pumping considerably more amount of billions into advertising and marketing, so we’re always watching and trying to understand where some of these key market drivers are heading.”

He noted that Ennismore’s largest distribution channel is its own sites, adding, “We need to work with a variety of third-party channels to make sure our guest come to us from far and wide, but once they do come to us … we spend a lot of time making sure that for the second and third time that they come back through the channels that we’d like them to come back through.”

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Tags: blockchain, boutique hotels, ceo interviews, co-working, ennismore, hoxton hotels, lifestyle hotels

Photo credit: Ennismore CEO Sharan Pasricha got his start in hospitality in 2012 when he purchased The Hoxton hotel in London's Shoreditch neighborhood. The boutique brand continues to grow, with three new properties being added in the U.S. this year. Ennismore

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