Colin Nagy, head of strategy at Fred & Farid, a global advertising agency, writes this opinion column for Skift on hospitality, innovation, and business travel. "On Experience" dissects customer-centric experiences and innovation across hospitality, aviation, and beyond. You can read all of his columns here.

The Soho House built its brand and re-energized the private club model more than two decades ago on the notion of exclusivity.

But today Soho House feels a lot less exclusive, as competitors line up and Soho House’s challenges grow. That hasn’t stopped the company from pursuing a development tear, with new locations spanning from Dumbo in New York, to Istanbul, to Mumbai and beyond, while it eyes a possible IPO.

The irony, of course, is not lost on market observers that a chain of clubs created as private sanctuaries would now be public, as in an open book for shareholders.

Nick Jones started the brand in 1995 as a hyper-focused members club in Soho in London, catering to a well-connected, drink-loving media class. It stood in stark contrast to Britain’s notion of a members club: instead of leather club chairs, grey hairs and legacies, this felt fresh, design-centric and new.

As the brand expanded, so too did the stories of waiting lists miles long, and selectively peppered anecdotes about how some famous person barely made it in by the skin of their teeth. The brand executed well on the luxury and desire playbook, also finding favor with an A-list clientele who found the spaces a bit of a controlled refuge from paparazzi or fans.

But as the brand continues to goose itself up for a float, it is worth looking at the experience today and a few pressure points. Can expansion still maintain that exclusivity? What role does customer experience play? And “in a world full of We Works, Airbnbs, and hotels that exist,” as noted English strategist Tom Morton pointed out to me, “what will be the lead use case?”

Alignment With an Entrepreneurial Class

Though the notion of paid members clubs isn’t new, Soho House positioned itself well from the start as being a breath of fresh air. Also, it began to grow in popularity at the same time a new, entrepreneurial class began to surge. This audience was much more mobile, moving from global capital to global capital, and less penned into a typical career ascent as generations past. However, with no shortage of real estate products, spaces, and “movements” catching up to address this market, it will be harder to stand out. Aggressive global expansion and the strength of the brand can do a lot to address this, but there’s just going to be more competition coming online from every possible angle. It comes from other specialized clubs like the women-only The Wing or creative class co-working space, Neuehouse, to the larger WeWork and its suite of new competitors, to even the hospitality resurgence happening in hotels as they fight to win back spend with better experiences and more convivial environments.

Growth Versus Exclusivity: A Tough Needle to Thread

Soho House has played the same Hermès “Birkin bag” style of exclusivity very well. They know how to cater to an upwardly mobile, hustler class by making admittance seem out of reach. It is no different than the manufactured scarcity of Supreme or any luxury good. But as you have numbers to hit, can this stay up? This is one of many important questions. The quality of a member base is genuinely one of the essential parts of a members club. People want to be surrounded by other successful people from similar social strata. So as the hordes of hustlers with startup dreams flood the Houses, one wonders if this will detrimentally affect the brand. How much do people care?

The Brand and Customer Experience

Let’s address the elephant in the room. Soho House isn’t exactly known for its quality service. The New York service brings to mind the attitude of the early Morgans Hotel Group properties where the staff was concerned with their callback for the audition than actually providing empathetic service. What’s more, the feeling in many spaces is that of a premium Starbucks with lots of people sitting all day, making a mess, working on startup plans, and using common areas as their full-time office. In its quest for cool, the brand doesn’t seem to be trying to differentiate on service or loyalty, and there’s no, “your usual table sir?” in sight. This could actually be a huge competitive advantage if they got it right.

The Data Tells the Tale

A lot of the answers to these questions sit in the data. According to company filings, 60 percent of revenues come from food and beverage, on a total turnover of 120 million pounds in 2017. Membership fees accounted for 16 percent, accommodations 13 and retail and other 11. So, in essence, the brand is into selling people as much expensive food and drink as possible, making an additional margin on membership costs. People are paying extra for bad service, which is a great business trick if it lasts.

Whether they can sustain this in a highly competitive market with entrants competing at every turn remains to be seen. On the positive side, they have shown a way to operationalize and modernize the modern members club model, but are lacking competitive advantage regarding the soft diplomacy of hospitality and great service. And it is clear the trend-chasing hordes are not always ones to count on for deep loyalty, especially if asked to pay more dues or mingle with a broader audience of the general public. Or if there’s a brighter, shinier object around the corner.

Photo Credit: Soho House in Berlin. As Soho House considers plans to go public, there's a lot of competition. Skift