Membership Collective Group's IPO throws major fuel on the idea that members-only clubs have a future post-pandemic. While there may be opportunities in newer brands like The Ned and Scorpios, it is the mature Soho House that is the bread-and-butter to global expansion.
The company once known as Soho House & Co. plans to look beyond its namesake brand to fuel membership club growth around the world.
Membership Collective Group, the new parent company’s title, began a management roadshow Tuesday ahead of its planned initial public offering on the New York Stock Exchange. The company, which would trade under the “MCG” stock market symbol, plans to raise about $450 million by offering 30 million shares of its Class A common stock to the public, according to a virtual management presentation. MCG’s valuation could exceed $3 billion.
While a bulk of the company’s business centers around Soho House — and will continue to do so — company leaders also emphasized the potential for additional revenue streams in other membership platforms like Scorpios, a beach club in Greece, and the Ned, a London-based club.
“We see these brands as [having] huge potential to grow, and that is why we have created an umbrella and called it the MCG: the Membership Collective Group, which is a physical and digital platform for these membership brands to flourish,” Soho House founder and CEO Nick Jones said in the presentation, reviewed by Skift.
Both Scorpios and the Ned, at one location apiece, have a significantly smaller footprint than Soho House’s 30-club portfolio. But the presentation revealed plans to add one new beach club annually and one to two Ned venues each year going forward.
Scorpios is a concept that can be scaled globally while the more working professional-minded Ned “can be expanded into many, many metropolitan areas globally,” Jones added.
The company also appears to have acquisition on the mind. MCG, then operating as Soho House & Co., acquired the Scorpios property in Mykonos in 2019, and it is unlikely to be the last takeover target
“Anything we acquire or any affiliation we have has huge potential under the MCG,” Jones said. “There is so much white space for us to go into, so many exciting cities, [and] so many new ideas we have to make life better for our members.”
Keep in mind: Soho House is still very much the bread-and-butter of this company. The membership club has 30 locations globally and accounts for 111,000 of MCG’s 119,000-member roster.
Twenty-six percent of MCG’s revenue comes from Soho House membership fees while 49 percent comes from in-house revenue like food and beverage, accommodations, and events.
Twenty-five percent of MCG revenue comes from “other” sources like Scorpios, management fees from the Ned, and the co-working platform Soho Works. North America is the company’s most profitable region.
MCG managed during the pandemic to actually grow its membership wait list, which swelled from about 33,000 people at the end of 2019 to 59,000 at the end of May.
Company leaders also touted the ability to cut down on expansion costs in the years ahead, given how landlords and real estate developers like the impact a Soho House might have on surrounding property values.
MCG might have invested $10 million or more in the past in order to open a new Soho House, but those costs are now somewhere between $3 million and $6 million.
The lowered cost structure is good news, given the company had an $848 million deficit at the beginning of April, according to its prospectus filed with the U.S. Securities and Exchange Commission.
Humera Afzal, MCG’s chief financial officer, noted in the presentation the company planned to use the planned $450 million raised from the IPO to pay down debt and other corporate costs.
The Roadmap to the Future
MCG’s growth is likely to go fast. Soho House grew by 50 percent just between 2018 and 2020, and the company expects to add as many as seven new physical locations annually. The company expects to triple the overall Soho House portfolio in the next 10 years.
Along with more locations for the Ned and Scorpios, MCG also plans to ramp up growth of the Soho Works coworking platform. The company’s digital infrastructure helps inform that growth roadmap.
Soho House’s “Cities Without Houses” membership is one for those who live in cities without a physical Soho House but can access one of the clubs whenever they travel to a city where one is located. The company has 5,100 of these members concentrated in 44 markets around the world.
The presentation outlined many of these markets as likely next growth opportunities for physical Houses, including cities like Atlanta, Vancouver, Buenos Aires, Tokyo, Nairobi, and Shanghai. But it also noted the company sees plenty of financial opportunities in expanding to more of a digital platform.
“As well as guiding our decision-making on future House locations, the appetite for Cities Without Houses membership has also given us proof of concept for a digital membership, not tied to a physical space,” Jones wrote in a letter included in the prospectus.
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Photo Credit: Membership Collective Group, parent company of Soho House, sees growth opportunities in new brands like Scorpios (pictured), a Mykonos beach club. Membership Collective Group