CEO interview: Here's why Sam Nazarian, sbe founder and CEO is upbeat about his company’s future
In an exclusive interview with Hotelier Middle East, sbe founder and CEO Sam Nazarian talks about the debut of SLS in the Middle East, the importance of food & beverage in lifestyle hotels and what is on the horizon
It seems that every operator has a lifestyle brand in their portfolio now. The Middle East has always been hungry to adopt global trends quickly – so it is no surprise that sbe has signed a management agreement with World of Wonders Real Estate Development to open the first SLS property in Dubai, UAE.
It is not the operator’s first Middle East signing, with the Delano Dubai on Palm Jumeirah expected to open later this year, along with the Mondrian Dubai, which recently had its construction financing approved – although both these deals were inherited by sbe after the Morgans Hotel Group acquisition in 2016.
Housed in a 75-storey building in Business Bay, the SLS Dubai Hotel & Residences will follow the Delano Dubai by opening in Q3 2020. Offering 254 hotel rooms, 371 residential units and 321 hotel apartments, the property will also feature sbe signature culinary concepts Fi’lia and Carna, sbe’s mixology lounge in the lobby, and signature rooftop nightlife venue, Privilege.
In Dubai for the signing at the end of February 2019, sbe’s founder and CEO, Sam Nazarian, is upbeat about his company’s future. The term ‘lifestyle’, he says, has been part of the mainstream of dialogue with every brand in the United States. However, the hospitality business deals with the term differently, according to him.
“The essence of how it applies to our industry is really unique and something that we’re very excited to be leading. I say that only because I look at lifestyle as a level of experiences, so I use the analogy that anyone can hire a great designer or a great architect but how you bring those worlds together, how you unlock the value of that experience for your consumer is what defines the word lifestyle,” Nazarian says. “Food and beverage is key in this respect.”
The top four floors of the hotel will be “purely epic”, says Nazarian. This is because the top four floors will house the property’s entire food and beverage offerings – which is unusual in itself. Many hotels now prefer to place restaurants on the ground floor or with their own entrance, but Nazarian is confident that people will travel 70 floors to experience SLS’ food and beverage offering.
He also calls the rooftop pool experience something that has “never been done before” in Dubai. The rooftop will be home to Privilege, a brand Nazarian created in 2005 for Sunset Boulevard in Los Angeles, which is now also in the Bahamas. In Dubai, it will feature a cantilevered pool, similar to C’est La Vie, which is in the Marina Bay Sands.
Another project element is the branded residential. Nazarian calls it the “most important residential project that’s going to open in Dubai”. A bold claim, which he immediately admits, and adds: “This is difficult to say because there’s so many great projects here and so much innovation that’s happening in architecture and design. But for us, it showcases what really separates us as a company which I think is really resonating more now in this region and globally, which is the loosely phrased word ‘lifestyle’.”
SLS Dubai will deliver more than 300 branded residential units – a hefty number. “It is a lot of residential delivered to a market that has a little bit of an oversupply today. But I think the way we present our residential platform, which is the largest lifestyle platform in residential to-date globally in the business, will bring a very unique perspective into Dubai and the region as a whole,”he says.
The growth of sbe’s residential platform cannot be denied, with 1,300 branded residential units sold to-date, valued at US$2bn with another $2bn more in the pipeline. Nazarian says the team will soon start to selectively launch the residential. “We understand that there’s a lot of product here but we do things a little bit differently. We’ve sold more than $2bn of branded residential all around the world. We think here we are going to be offering a value that enables us to really hand select buyers that we think will appreciate what we offer, not just with the property but also the sbe platform globally.”
Access to sbe also means access to Accor. In 2018, sbe signed a partnership with AccorHotels, where the French operator now holds a 50% stake in the lifestyle company. Nazarian says: “Accor is the largest operator in this region. They have multiple hotels and brands, but in the space that they feel is going to be growing the fastest and the most relevant (which is lifestyle). I think Sébastien [Bazin, CEO of Accor] will agree that he is looking to unlock the value of the Accor loyalty, not just in hotel rooms but with experiences, and as he calls it, the eco-system. We’re the perfect example of a micro eco-system within our platform.”
The access to Accor’s resources and sbe’s lifestyle know-how are attractive to investors. He comments: “It’s a win-win and great hybrid for owners and developers to know that they can still deal with an entrepreneurial company like sbe, but also have the infrastructure behind and the support of the biggest hotel company in the world.”
Global expansion is on the cards for sbe. Nazarian teases that in addition to signing the SLS for Dubai and checking out the progress on the Delano and Mondrian, he is “hopefully looking at a couple more projects. We see Dubai being a major market for sbe, one of probably only four in the world for us.” The other three, he reveals, are Los Angeles, Miami and London. The operator is looking at the potential GCC markets such as Abu Dhabi and Saudi Arabia, and wider still, Baku in Azerbaijan and markets like Shanghai and Hong Kong are of interest. “For us, prioritising the opportunities that Accor has given us in addition to our own footprint is tremendous,” he says, adding how the company is also growing the resort side of its business, with another 3-4 fully integrated resorts to be signed in North America and Europe.
Wherever sbe goes, Nazarian is confident about its first-mover advantage. Dubai has certainly seen no shortage of lifestyle brands wanting to enter the market, but while Nazarian agrees that there have been many brands that say they offer lifestyle, he says that SLS is the “true pioneer” – again circling back to the importance of F&B and entertainment within lifestyle concepts.
“Part of our business model is that we deliver the complete solution as an operator. A lot of hotels specifically here [Dubai] will outsource or license or franchise other brands, especially in F&B and entertainment. There are not too many hotel companies, if there are any other than us, that constantly creates their own F&B portfolio,” says Nazarian. He shares examples of having designed F&B specifically for the local audience – which he aims to carry through in Dubai as well.
“Think about how many true lifestyle hotels there are – not great hotels with great restaurants, but a fully integrated lifestyle solution that was designed as a brand from inception. You can probably count on your hand how many there actually are in this market. There are a lot of brands that want to be lifestyle, but I think we have a real opportunity in the space. The lifestyle space as a whole is growing five times faster than any other part of the hospitality world. We’re at the right place at the right time in that category, specifically because we deliver all those experiences under one roof,” he says.
“We commit to the city, not just with one hotel. We’re looking to build multiple brands and multiple outlets,” he adds.