Here's what's on the mind of one of the hottest hoteliers in the world today.
Reflecting on post-pandemic trends that will last, Ennismore founder and co-CEO Sharan Pasricha anticipates that real estate owners will continue to want to split their income streams across coworking, food-and-beverage, and lifestyle hotels for years to come.
“Hotel owners like the diversification of revenue,” said Pasricha on-stage at Skift Global Forum in New York City on September 20 with Skift CEO Rafat Ali. Accor and Ennismore last year created a lifestyle entity based in London and jointly led by Pasricha and Gaurav Bhushan, CEO of Accor’s lifestyle division. Ennismore’s brands include The Hoxton, Gleneagles, SLS, Delano, Mondrian, 25hours, and Working From.
See below the video and transcript of Pasricha discussing how Ennismore manages its 14 brands, the geographic market he’s most excited about, whether the group might do festivals, the company’s growth strategy and drive for direct bookings, how traveler and coworking patterns are shifting, and more.
Rafat Ali: I really wanted you to close because I hyped you as the hottest hotelier in the world today.
Sharan Pasricha: You did. You also gave me the graveyard shift to do that.
Ali: The graveyard shift. I’m sorry. We’ll do a better job next time.
Pasricha: It’s always a pleasure to be here, Rafat. Always a pleasure to be here.
Ali: So, Sharan, for those of you who don’t know, runs Ennismore. Ennismore is a company that maybe a lot of people who are not in the hotel industry do not know but Ennismore runs the Hoxton brand, a bunch of others. And they have a tie up. Accor is a large shareholder now. And so all of the Accor lifestyle brands have rolled under Sharan and beyond that he is also, just had an option from Saudi to open up a lot of new hotels in Saudi. Cut the deal with Qatar, which was I guess not announced yet, is about to close-
Pasricha: It’s announced. We haven’t closed yet, but it is announced.
Ali: You haven’t closed, but they’re buying in 11 or 10, 11% stake from Accor to own part of your company as well. And you are opening lots of hotels. You were telling me you’re opening 18 hotels before the end of the year, right?
Pasricha: Correct. I mean you packed in quite a lot into that-
Ali: Quite a lot. The point that I was trying to make was you opened 10 or a dozen hotels in 10 years and now you’re opening hundreds of hotels.
Pasricha: Yeah. So I guess my journey’s been kind of starting as an entrepreneur, my first hotel virtually moving into that hotel, learning every part of it, and then slowly expanding it. And took 10 years for us to get to, I think, 13, 14 hotels. And then we started figuring out the asset-light side of the business probably four or five years ago and started signing some asset-light deals. Up to that point we’d owned and operated all of our own assets.
And I guess this latter part of my journey with Accor has been about them putting together all of their lifestyle brands and they’ve been on this journey for lifestyle for a number of years and I think we both realized that there was a real opportunity to do lifestyle at scale. I think what I found quite interesting is if you’re a
Ali: A “lifestyle supergroup” I think we wrote in one of our articles.
Pasricha: Yeah, I quite like that, super lifestyle group. I think what’s interesting is you either are a small creatively-minded authentic operator, but then you sort of tap out at 8, 10, 12 hotels and it’s bloody hard because I’ve been on that journey or you are part of a larger mother group, but then you get lost in the system.
And I guess what we’re trying to do at Ennismore is sort of buck the trend where we’ve got five what we call home bases though myself and Gaurav, my co-CEO based in London and we’re really autonomous in how we operate where we’ve got independent culture, our brands are very much linked to the people that are very much there. We’ve got a lot of our founders from the original brands who are very much involved.
So where there’s Jeremy [Trigano] from Mama Shelter, Christoph Hoffmann from 25hours. So what we’ve really knit together is a truly unique global lifestyle platform. We have a hundred operating hotels across 14 of our brands and last I checked 160, 170 in the pipeline. So to do lifestyle at scale hasn’t quite been done before, not in a way that’s truly-
Ali: But do you find that an oxymoron?
Pasricha: Yeah, I think it is, Rafat. I think it is. I think there’s actually a tension between authenticity and scale and if we didn’t have the founders involved in the brands and if wasn’t kind of the founder-led driving the product side of the business, I’d say it’ll be challenging because lifestyle brands are hard to do. They’re really hard to do.
Ali: It’s a very intensive high touch. If you think about it-
Pasricha: Super intensive. There isn’t really a playbook like you have with traditional hotels where you say off you go, I’m just going to build this. Just replicate this. 40, 50% of our business is restaurants and bars. Those restaurants and bars only work if locals that live and work in the area frequent those restaurants and bars and that’s bloody hard to do to-
Ali: And you’ve done a very good job with Hoxton, which in London, if any of you’ve been to London, there’s a good chance if you’re in a certain set, you would’ve gone to Hoxton because of the food, even if not to stay, which is what I’ve done.
Pasricha: Yeah, I think so the way we set the business up is I’ve got four studios that report straight into me. So obviously it’s a fairly large business now that’s global. But the four studios, the first is our F&B studio called Carte Blanched. We have a lot of owners that come to us and say, “Okay, well if F&B is 40, 50% of our business, how are you really going to create concepts for us that compete against high street restaurants?”
Ali: And these are F&B that you own and operate versus outsourcing?
Pasricha: Absolutely. So we own and operate. So we have about 40 brands that we’ve incubated in-house, and I don’t mean incubated in-house as in we’ve been the secret sauce behind every brand. This is about finding incredible local chef partners, finding incredible local operators that we’ve aligned with. So it’s really a combination of credibility across all the markets we’re in.
And that’s an amazing team of mixologists, creatives, and operators that have come together to, ultimately, create this really talented group of people. We then have our design studio. So for 10 years we’ve designed our own hotels and of course, that’s hard to do at scale, but I think if you’ve got a strong design ethos as a business, it allows you to really deliver exceptional products. We’ve got graphic designers on staff, interior designers on staff, and design directors that support a lot of our new brands.
And I think that’s really, really important because again, in the asset-light business, when you’re opening, as we are 50, 60 hotels a year, the truth really is in our ability to sit across owners and across external interior designers and be able to deliver products that are authentic products that last, that kind of stand the test of time, so that’s quite challenging ultimately to do.
The third studio for me is technology. So five years ago we started our journey really not choosing the traditional kind of hotel route, which is using a third-party booking engine or a white label booking engine. So we decided to foolishly hire our first software engineer, our first product individual and one thing turned into the next and we really built our own booking engine that allowed us to API directly into PMS.
Five years later, 50% of our business comes direct at thehoxton.com. We have looked to book conversion rates of 10%, really industry-leading numbers, which now all of a sudden we’re going to replicate across all of our 14 brands. So that’s a team of 30 software engineers, product engineers, data scientists that really drive our own brand.com, because I think if you’re building an ecosystem of lifestyle brands, your brand.com is your most powerful channel. And that’s been an interesting kind of journey.
Ali: And so-
Pasricha: I’m sorry, just to finish the fourth because I know I said four. The last one is sponsorships. We found we have a lot of brands that approach our hotel individually to say, “Hey, we would love to do a partnership.” If it’s Chase Bank or it’s Theragun or it’s an alcohol brand. So we kind of consolidated all those efforts under global sponsorship and partnerships team that’s based out of New York that basically works with some of the most amazing and incredible brands to activate across all of our hotels.
Ali: Interesting. So is that becoming a bigger part of the business?
Pasricha: It’s great. It’s amazing-
Ali: They pay you to have your captive audience so to speak.
Pasricha: Yeah, I mean they love the brands, they connect with them, they love our customers and our guests and they want us to be able to curate experiences across our physical locations and across digital locations. It’s a profit center for us. It’s not a cost center. Actually, all four of these areas are profit centers.
Ali: Are profit centers. So in terms of, and you are an entrepreneur yourself, obviously you started Ennismore, you are now in charge of these owner entrepreneurs that were there, 21c, Mama Shelter, et cetera, et cetera. What do you lose? What do you miss in terms of you used to be able to go to every opening now you can’t.
Pasricha: Yeah, that’s a good question. Physically
Ali: Physically, you can’t.
Pasricha: Yeah, I guess that the transition for me personally as an entrepreneur has been kind of knowing everything about everything. I guess you could draw panels in your own business where you’re sort in the trenches on every email, have to know want to see and that’s just not possible now. So I’ve just surrounded myself with people that are frankly way smarter than I am.
Ali: And how do you and Gaurav split your responsibilities?
Pasricha: Yeah, so Gaurav and I went to the same boarding school together in India. He’s been in Accor for 20 years. He’s done all of M&A for Sebastian for Accor for the last 10 years. He focuses his time and his efforts on driving performance across the assets, reporting up to Accor, T+5, legal, commercial and really running the day-to-day operation of the business.
And I focus on everything the guest touches and sees, so product. Things that I’m probably passionate about. So everything our guests touch from our brand.coms to our physical environments, to our brand partnerships, our F&B partnerships, our design and anything between. Of course being co-CEOs, you kind of make a lot of the big decisions jointly and together. But at this pace we’re growing at 30 plus percent CAGR year on year. You kind of need to divide and rule.
Ali: And so we talked about, and I know Hoxton has a coworking just because we have worked in the Hoxton coworking space, so how are you thinking when Accor is probably the biggest hotel brand that is very bullish on coworking? I think the other hotel brands haven’t jumped into it as much, but you obviously jumped independently from Accor in that as well. So what are you seeing in your hotels? What’s the opportunity in co-work? What’s the state of your coworking business today and what’s the opportunity you see?
Pasricha: Sure, sure. So I think for the Hoxton when I first started it, our public areas are lobbies. Those of you who’ve been through any of our hotels really been a reflection of the neighborhood and people would love to come and hang out, use the super fast wifi, hang out, have a cup of coffee and kind of laptop. And this has been going for 10 years, so we’ve sort of been in the coworking business for 10 years. We just didn’t charge anyone for it.
And I’ve always thought about what’s the next layer up if you’re just a kind of laptop or kind of cruising in our public spaces, what’s the next level up? So we had the opportunity in London mainly because I was nervous to go above 200 keys in one of our locations in the southern to build 850 desks across seven floors. And really the model there was how do you take the, we’ll call them laptop warriors on our grand floor and kind of take them up into this dedicated space?
And we did a bunch of research and worked out that people actually quite enjoyed the coworking space, but the thing they valued most was two things, flexibility and transparency. They wanted flexibility and they wanted to know that if they’re signing up to something that’s… Oh, cool, a video. Look at that.
Ali: Oh, we’re showing a coworker space.
Pasricha: If they’re signing up to something that’s 200 pounds a month, it really is 200 pounds a month and you’re not going to tide them over with extra charges along the way. So we started this business and it’s just been a boomerang success for us because not only did all 850 desks get sold in Southwark, we’ve got a waiting list of 400 people wanting to join. But we launched in Chicago and that’s sold out and been incredibly successful.
What was interesting, I remember sitting with a team, I’m like, “Listen, guys, we’re at a hundred percent occupancy.” The team were like, “Okay, now we need to lock in everyone and get them to sign longer term contracts,” and that’s the opposite of what we set this business up for. It’s like, “No, that’s great. We’ll just lock them in, lock the revenue in.” So I said, “Okay, well let’s understand these 850 people that are occupying our desks and let’s understand on average what is their average length of stay.” Because if they wanted to generally move in and move out, you’d find a lot more churn.
We found the average length of stay was nine months. So basically what it told us is they valued the flexibility but they didn’t necessarily exercise it when they need it. So for us having that flexibility, and being super transparent in terms of how we’re pricing it has kind of worked for us. So now we’re taking the Working From_ brand, which has historically been linked to the Hoxton and we’re going to take it across all of our 14 brands. So you may find a Working From SLS, Working From Mondrian, and what this brand will then do is morph-
Ali: And these are all brands that you own now?
Pasricha: That’s correct. So they’re all a part of Ennismore and I think the Working From_ brand will morph into the design ethos of that mother brand.
Ali: And are the margins there coworking compared to the other parts of [inaudible 00:13:23]?
Pasricha: Yeah, I mean rule of thumb, it’s a third up cost, a third rent and a third profit if you do your jobs well. Again, if your product is strong, you should see a 20, 30, 40% margin uplift on traditional, what we call category A office in the UK. So I think the commercials are ultimately there. What’s interesting is what’s going through my mind is, “Should I have built whatever a hundred rooms in that space instead of the coworking,” in hindsight? That’s something I often think about that.
But what’s amazing is owners love the diversification of revenue stream. So if you think of a hotel like ours in Southwark you’ve got 40% revenue, which is rooms, 30%, which is F&B and then another 30% if my answer is correct on coworking. So you actually, you’ve got a really well-diversified revenue base, you’ve got businesses, you’ve got restaurants and bars linked to locals and you’ve got a traditional-ish hotel product. And what we’re finding is owners and investors just love that diversification of revenue stream.
Ali: Can we put up the poll? I guess we forgot to put the room in there, but just put the poll up there if you can. What do you feel is the most compelling facet of lifestyle hotels? I guess we forgot to ask the room itself.
Pasricha: Cool. Design and F&B. Yeah.
Ali: Because I guess room would be the most important part, but-
Pasricha: I mean yes and no, right? I mean think-
Ali: Design. So I guess design, which is what your thesis has always been very design forward as a brand.
Pasricha: I think so. I think so. Design means so many things to so many people. I think one of the things missing for me there is around culture because I think at some level anyone can hire a fancy designer and maybe even a tattooed bartender. That doesn’t really make a lifestyle hotel frankly.
I think lifestyle is a lot deeper than that. I think your brand needs to first and foremost stand for something. You have to have a purpose. Somebody asked me the other day, would we buy more hotel brands. L mean maybe, but my job-
Ali: You can buy Soho House. I heard they’re about to make a profit finally after 26 years.
Pasricha: Yeah. And good on them. Good on them. Nick’s a good buddy of mine.
Ali: Sorry. Nick’s is never going to talk to me again.
Pasricha: I’m not going to fall into that trap, Rafat. Nick’s a good buddy. So I think around culture is incredibly important. I think you need a lot more than just design.
Ali: And so that we talked with Vasu about the blended trip and the types of people that are staying now and the mixture of business and leisure and it’s hard now to tell. Are you seeing that, I mean it would seem that you would be riding on that curve where people want a lifestyle even if they’re traveling on a business trip. Are you seeing any of that evidence in terms of blended trips in your business or can you tell?
Pasricha: Yeah, I think-
Ali: Well I guess the co-working sort of speaks to that as well.
Pasricha: Co-working speaks to it. I think what we’re seeing is a few things. So now we have the access to wider data and including Accor data. What we’re seeing is lifestyle hotels are recovering or have recovered a lot faster post the pandemic. So a good 10, 15 points quicker, which is great. Tells you that naturally consumers are gravitating towards a product that they can connect with, the restaurant and bar that they can ideate with. So I think that’s a really kind of important shift. What was the other part of your question?
Ali: What was my part of the second question? Too late in the day. Blended trip. I was asking-
Pasricha: Blended trip. That’s it.
Pasricha: Blended trip. I think we are finding that and I think Sovasu mentioned that earlier, the 24-hour trip is gone, right? I don’t think people are doing the red eye in the morning, the 12-hour trip, the red eye in the morning and then kind of back at night or back the following early morning. I think that trip is gone. I think they’re blending a Skift conference on a Wednesday, Thursday, staying over in New York for the weekend and then kind of heading back. Our business is typically sending the urban locations roughly 50/50 between corporate and the leisure market. Roughly.
Ali: Most of your business is urban, right?
Pasricha: No, I think we’ve got huge resorts from Mexico City, outer Mexico, Middle East, so we’ve got huge, huge, huge resort part of our business as well.
Ali: And is the length of stay, like Sovasu was saying, the length of business travel is, if the day trip is gone, the length of stay and Chesky is going to come, the Airbnb CEO, he talks a lot about how length of stays has become much, much higher than what used it used to pre-pandemic.
Ali: Are you seeing any changes there?
Pasricha: Definitely seeing that. I mean if I can connect to like Gleneagles for instance, our length of stay is dramatically increased and for a resort business or in a state business like that length of stay is incredible for a hotel group. It’s way more profitable to have them come from further away, stay for longer. And certainly in a resort environment, they’re doing more. So your TRevPar is substantially higher.
Ali: And this, I don’t know the question. Are the booking window for lifestyle hotels shorter historically compared to chain hotels?
Pasricha: Ooh, that’s a really good question.
Ali: I don’t know, but is the booking industry changed post-pandemic?
Pasricha: Our average is, I think it’s definitely shortened for sure. It used to be 20 to 30 days. It’s a lot shorter now. We found that the pace of bookings is 10, 15 days out, whereas previously it’ll be 30 days out. So it’s definitely narrowed. I couldn’t answer that against traditional hotels. I don’t know that.
Ali: Yeah. In terms of, one of the things that I wanted to ask you. So obviously you’re opening, you have this 400 million fund from PIF from the Saudi.
Pasricha: So let me clarify.
Pasricha: So on a recent road show in Saudi Arabia, we signed an agreement with TDF which is a-
Ali: Oh TDF, not PIF.
Pasricha: Correct, TDF, which I guess is a subsidiary of the state. It’s the tourism and development fund. And the mandate there is to build lifestyle hotels across the kingdom of Saudi Arabia. So it’s to use the Ennismore brands across the kingdom and that’s the joint venture that we signed. So they’re going to be raising the capital, building it, deploying it, and we’re just going to be managing probably 12 to 15 hotels from that capital pool.
Ali: And this is the hotels across your portfolio?
Pasricha: Yeah, I think we’ll kind of look at what’s right as we go through that process. We’re still early days, and we still haven’t kind of started looking at active opportunities, but over the next couple of months and years we’ll look at that.
Ali: And so talk about, so why, and obviously Dubai continues to be a big center for-
Pasricha: Dubai’s great. It’s a key market for us. We’ve got 25hours we just opened, which is a great product just at DIFC. The SLS we opened last year and we’ve got a handful of projects in the pipelines, so I think Dubai will be our top five destinations of any top five cities actually, world cities.
Ali: Are you going for the World Cup?
Pasricha: I will go for a few games in Doha.
Ali: For a few games?
Ali: Because Accor is managing all the non-hotel accommodations-
Pasricha: That is correct, yes.
Ali: … for the World Cup.
Pasricha: That is correct.
Ali: So I’m guessing you have an in somewhere.
Pasricha: They are some benefits to that, correct, yes.
Ali: To be a part of Accor. Okay. So speaking of that, in terms of the, what’s the most exciting region in the world for you? You’re opening so many hotels in so many different parts of the world. What is the most exciting region today for you?
Pasricha: So what’s interesting is I’ve obviously been traveling gangbusters since we opened. We’ve got some really exciting projects. We’re opening a Mondrian in Hong Kong a Mondrian in Singapore, which I’m really excited about. The Hoxton in Berlin shortly-
Ali: Did you take over the Mondrian in LA I guess? Is it still there?
Pasricha: That’s correct. Yeah. We’re managing that. Correct yeah, we’re managing that. I think the bit that the region that excites me only because I think we haven’t even scratched the surface and potential is the Americas. I think we have an incredible opportunity.
Ali: The US you mean, or generally?
Pasricha: I think the Americas generally. I think South America, but even North America. I think given that so many of our brands, certainly the erstwhile SBE brands and Morgans were born here, I think we’ve got a really interesting opportunity to reboot these brands that have been so relevant. And actually everyone’s got a story in these hotels to be able to chart its destiny for the next few decades. So we’ve got a lot of traction across the Americas. We’re doing and opening a lot of hotels. I just don’t think we’ve even scratched the surface. I think it could be our biggest market in years to come.
Ali: And so how many brands do you have now, number-wise?
Pasricha: We have 14 brands.
Ali: 14. Is it 14 too many or is it…
Pasricha: Is 14 too many? I think-
Ali: Meaning is 14 a large number?
Pasricha: Look, I think what’s important is I think a brand’s not a brand, I think a brand is a product if it doesn’t have a purpose. So my job really is to make sure that every one of our brands is distinctive, both in terms of design, but also in terms of culture and value. And that’s both to our guests. So you got to walk in and say this brand stands for this or it means this, but also for our team and our employees to be able to connect with these brands. Because it’s no secret, I think the hotel industry loves to accumulate brands. I’m not-
Ali: Well, your company is one of them.
Pasricha: My company is not one of them. We have 14 incredible brands. And I think we have the ability to make sure that every one of them stands unique amongst itself, but also stands distinctive across the competition.
Ali: Across the competition.
Pasricha: I think so.
Ali: And have you thought of it. Obviously a lot of action in the short-term rental world. Have you thought of taking your ethos and applying it to anything other than hotels?
Pasricha: So I think on the residential side, we sell a couple of billion dollars worth of real estate with our flags on it and we’re incredibly successful and good at that. Arguably, the Americas and parts of Asia are better than other parts of the world at it. I think the idea of applying what we do can go anywhere. The idea of creating spaces that have meaning, creating service in a culture that has a bit of depth, telling stories. I think you can have any sort of canvas. I mean I’d love to do a festival. I’d love to do, take the spirit of what we’re doing in terms of physical buildings-
Ali: Hotels haven’t done a festival yet. That’s an interesting idea, yeah.
Pasricha: Yeah. I mean, look how incredible Coachella is, or look at Burning Man. There are some amazing spaces that are very reflective of what we’re trying to do as a company. Ultimately we’re looking to tell amazing stories in an environment that’s comfortable and safe through amazing people. And I think there’s an opportunity to do one of those. So, that’s probably one.
Ali: In terms of a brand that you would love to buy, name it here. Ace Hotel?
Pasricha: I admire Ace. I love what Alex did when he started Ace and it’s kind of fiercely independent, incredibly authentic narrative and I’m a huge fan of what the folks at Ace do.
Ali: I know, I guess Accor, and you paused a little bit on M&A as you’re building up the existing pipeline. Would that be fair to say?
Pasricha: Yeah, look, our business is growing at 30% a year. I sort of have enough to do this. There’s not enough hours in the day. My wife will tell me that I just need to hang out more with her and the kids. There are literally not enough hours in the day. Ultimately, I think M&A is good up to a certain point, but it’s also a huge distraction if you’re building a brand or a business where culture is important. And I mean culture from employee perspective and team, that’s really hard to do when you’re crashing businesses together. It’s really, really hard to do.
And of course the original combination of Ennismore, you think about all the businesses, right? I mean there was 25hours from Germany, there was Jo&Joe that came in from Accor. There’s Mama Shelter from Paris, SB from the US, Hoxton from London. I mean if that’s not-
Ali: It’s a lot of cultures.
Pasricha: That’s a lot. That’s really hard, so I’m really proud of us coming out the other side, having built a team that all subscribe to the same values and we’re really on a winning ticket. I’m really excited about the future. M&A, I think will look at it opportunistically, but it definitely, it’s not a focus for our growth, just purely based on the fact that we’re growing so much and so fast already.
Ali: Last quick one, if I can squeeze in.
Ali: Do lifestyle hotels have an easier time with labor, with hiring?
Pasricha: I think brands that have purpose have an easier path for recruiting. So I don’t think lifestyle hotels-
Ali: But you’re still going through all the issues in hiring?
Pasricha: Yeah, we totally are. We totally are. And our kitchens, we’re always short in the kitchens, we’re always short in the front of the house. But genuinely speaking, I think we do a lot better than most because you’ve got your mission-based company and I think if you genuinely live by your values and it means a lot because at the end of the day you’re nothing without your staff.
I mean, everyone’s had an amazing, been to an incredible hotel that’s fallen right flat because you’ve had that bad interaction or you’ve had that bad engagement. For me, it’s the most important thing. We live by our people. We have 20,000 and counting people recruiting thousands every other month. That’s the secret sauce that makes us unique.
Ali: And how many hotels do you have in New York now?
Pasricha: We’ve got four in New York. Three in New York.
Ali: Which one should we go to if anybody wants to go tonight?
Pasricha: I’d go to the Hoxton in Williamsburg. I would try and get a reservation at Laser Wolf on the Rooftop, which is an incredible restaurant, but unfortunately, I think it’s sold out for the next couple of months. But if you can get the opportunity to go to Laser Wolf-
Ali: Or if you email Sharan
Pasricha: … please do. Oh yeah.
Ali: Okay. All right. Thank you, Sharan. I appreciate it.
Pasricha: Thank you, guys. Appreciate it.
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Photo credit: Skift CEO Rafat Ali (right) interviewed Ennismore co-CEO Sharan Pasricha at Skift Global Forum in Manhattan on September 20, 2022.