Gansevoort Hotel Adds Members Club: Founder’s Lessons To NOT ‘Hemorrhage Money’

A handful of real estate investors are exploring how to combine hotels with members clubs — which typically charge an annual fee for access to co-working spaces, food and beverage offerings, and a fitness or wellness center. Yet blending a hotel with a club can be tricky, said Michael Achenbaum, the president and founder of the Gansevoort Hotel Group.

“I know a lot of people are moving into this genre [of membership clubs, but, to really figure out how to work it, it’s not the simplest thing,” Achenbaum said during an on-stage interview at the Boutique Hotel Investment Conference on June 8.

Achenbaum began in hospitality with The Gansevoort, a boutique property that opened in 2004 in Manhattan’s Meatpacking District — and in the past year received a $30 million renovation.

In 2017, Achenbaum wanted to take the membership club model and apply it in a modern way to a hotel. In London’s Shoreditch neighborhood, he co-developed The Curtain. His firm then essentially sold the property (or freehold) to Ruben Brothers, leasing it back to run as a management company. During the pandemic, his firm had to walk from the property. The Curtain is now Ennismore’s Mondrian Hotel in Shoreditch.

This fall Achenbaum is taking the lessons he learned in London to add a membership club to The Gansevoort in New York. His lessons include what type of people to target, how to avoid conflicts, tech mistakes to avoid, why keeping control of the business is critical, and advice on using influencers wisely.

He’s not alone in toying with the concept. Updated versions of members clubs have become trendy with the successful initial public offering of Soho House in 2021. Last year, hotel developer Ennismore debuted Gleneagles Townhouse in Edinburgh, mixing a 33-guestroom luxury hotel with a membership club that caters to locals. In 2021, Hong Kong-based Rosewood Hotel Group opened Carlyle & Co., a private club. London’s The Ned, a hotel-and-members club, landed in New York City late last year.

Lessons Learned

Achenbaum learned in London that creating a thriving membership club required a different approach than launching a buzzy nightlife-centered hotel in 2004.

“One of the basic lessons I would tell you is don’t necessarily try to find the coolest people — we had 3,000 applications for the club — but instead be very focused on getting the right people who will truly utilize the various spaces,” Achenbaum said. “You have to balance who is really going to use the spaces versus who … will have the right sort of cachet. Otherwise, you’re hemorrhaging money.”

You also need to listen to your members and give them what they want.

“I had gone in pushing heavy on music as a theme because Shoreditch has a heavy music focus [as a neighborhood],” Achenbaum said. “But while it was important to me, it wasn’t important to my members — who were instead focused on things like food tasting, technology events, LGBTQ events, Black history events.”

Members Versus Hotel Guests

Another challenge of blending a hotel with a members club is deciding who gets access to which facilities and at which times.

“Not giving access to certain spaces to hotel guests is problematic,” Achenbaum said. “But at the same time, you have to give something to the members to make them feel special.”

Ahead of the New York members club launch, Achenbaum said his team is going over charts to figure out who gets what rights.

“It’s always easier to give more later than it is to take anything away,” Achenbaum said. “There’s sort of an entitlement issue you run into.”

Keeping Control

Some hotel investors choose to outsource parts of the operation of their hotels and member’s clubs to specialized experts in running a restaurant or providing, say, fitness services. That’s what Achenbaum did early in his career, but he now seeks total control.

“It’s hard enough when the head of your hotel and the head of your F&B [food and beverage] are fighting because they want credit for the profits,” Achenbaum said.

He said it’s even harder to navigate tensions when the tenant running your restaurant and controlling the breakfast service for your corporate clients is a separate entity. He no longer outsources services that define his properties.

Beware the Big Brands

Achenbaum extends his advice about retaining control to recommend that high-end boutique hoteliers avoid working with major global brands, at least as a general rule.

“I would say you really want to go with a smaller, more entrepreneurial management company than one of the big brands if you want to see greater profitability flow to the bottom line,” Achenbaum said. “Bigger brands are a bit more laissez-faire about how profits flow. They care about their gross points [their management fee or commission] but are not necessarily as focussed on the bottom line.”

As a caveat, all membership clubs in New York State must operate as not-for-profits, but Achenbaum was talking about the broader principle.

Get the Right Tech

Hoteliers exploring the idea of adding a member’s club or trying to create upsells and cross-sells through “activations,” such as access to food tastings or performances by DJs, need to think beyond the industry’s traditional metrics of success, such as revenue per available room.

Related to that, they have to be able to track their property’s performance effectively.

“One of the biggest things I learned in London is that we didn’t have the right software,” Achenbaum said.

“The right software will let you know which of your clients is really into whisky, for example, so that you can invite them back to a whisky tasting,” Achenbaum said.

For the New York project, his team is using SevenRooms, a platform that matches information about guests with the delivery of experiences at a restaurant or venue, and PeopleVine, a customer relationship management tool.

Use Influencers Judiciously

Hoteliers have for decades courted celebrities, models, and other hip people to hang out at their properties in exchange for perks, such as complimentary room stays. But social media’s influencers are increasingly helping to drive spending decisions among a segment of travelers. (For context, see: “A Growing Influencer Class Attracts a Larger Piece of Destination Marketing.”)

“For my member’s club, I want influential people, not influencers,” Achenbaum said. “We are talking to people who are successful bankers, successful media players, successful fashion players, and so on, so we have people who might meet each other and have meaningful conversations.”

“For my F&B [food and beverage] spaces, particularly our rooftop venue, are we inviting influencers?” Achenbaum said. “Yes, 100%. But it’s not just any random influencer or some beautiful person from Alabama who comes to New York to snag a free room. We’re selective.”

“There’s a cost to putting someone at the table across from the bar and I honestly want the person in the seat to really care about food and be conversant and knowledgeable about food in a way that’s respected,” Achenbaum said.

“I know some [influencers] and I can’t believe they live a free life and don’t seem to pay for anything,” Achenbaum said. “The moment they’re asked to pay for something you’d think the world’s coming to an end.”