Dressed in all black, the Iranian-American hotelier Sam Nazarian sits in his whitewashed office—the former home of Ian Schrager’s Morgans Hotel Group—in New York’s Midtown West neighborhood. It’s a rare sighting to see Nazarian here, or in the sbe offices in Los Angeles or Miami, where he calls home, because “I try to spend as much time on the road as I can. I’m still the gatekeeper for [our more than 40] brands.”
The next time Nazarian returns to New York, he will be headed to sbe’s new office in SoHo. The reason: Accor Hotels recently acquired 50 percent of the company. “They know where they want to go and that they can only do it with strategic partners,” Nazarian explains. He credits CEO Sébastien Bazin with reinventing the culture “from a very traditional French company” to one that is more aligned with luxury and boutique-type brands. “He’s bought 15 or so brands in the last three years—some of them hotels, some of them, as he calls it, augmented hospitality that add value to an ecosystem.” Those purchases include John Paul, the biggest digital concierge company in the world; home-sharing platform One Fine Stay; and art-filled 21c Museum Hotels.
That’s not unlike what Nazarian has done with sbe—buying Morgans Hotel Group, launching F&B incubator Disruptive Group (both in 2016), and expanding into branded residential. “Sébastien definitely looks at the world the same way, and outside of Fairmont, they don’t have much exposure in North America. We have a lot of assets in U.S. gateway cities, and they are the largest in the markets where we want to grow.” In fact, he says, the response since the acquisition from Accor owners, who want to look at or change to one of sbe’s brands, has been almost overwhelming.
Those include homegrown hotel concepts SLS, Redbury, and Hyde; Morgans’ signature offerings Delano and Mondrian; F&B staples Cleo, Katsuya, Filia, Umami Burger, and the Bazaar; and nightlife outlets Bond, Skybar, Privilege, and Hyde. There’s also another tier dubbed the Originals, which encompasses one-off concepts (like Sanderson and Royalton hotels, mixology lounge Doheny Room, and restaurant Hudson Tavern). It’s Nazarian’s version of a soft brand “that we inject with the Accor turbocharge and sbe perspective,” he says. It’s for those who want to “tie their property into a community, but not necessarily into a corporation because they feel they may not get the attention [they want from] a 650,000-room hotel company. They can tie in with us, and we’ll give them an F&B solution and something that differentiates them. Plus, they get the global benefits of Accor.”
Starck Contrast
After finding success in telecommunications and multifamily housing, Nazarian launched sbe in 2002 in LA, first with nightclubs (Shelter being the first in Hollywood) and then restaurants, starting with Asian concept Katsuya, all sought-after destinations for Hollywood’s A-List. Nazarian was innovative from the get-go: Knowing how fickle nightclubs were (he was a promoter at China Club while at NYU), he would flip the concept every eight or so months to keep the idea fresh. At the same time, he was falling in love with hotels, becoming a key investor in more than 15 properties, including the Viceroy brand. “As an investor, it’s interesting to see all the different moving parts from development to acquisition to fees. At the time, boutique hotels were just starting, the word ‘boutique’ was just being used, and it was a different perspective for me. So when I started sbe, the idea was to do all these verticals under one roof, and to do it for ourselves.”
A “disciple” of Schrager and designer Philippe Starck—frequenting the Hudson, Delano, and Mondrian—he brought in Starck to design Katsuya, and then the SLS in Beverly Hills in 2008, a redo of a Le Méridien. “I wanted him to do the luxury perspective of what he had done [with Schrager] because he never had the budgets that we’d given him, at least in the U.S.,” explains Nazarian, who ultimately signed Starck to a 15-year exclusive agreement for North America (it ends in 2021).
“There was a level of appreciation for him,” he continues, adding that he never thought Starck would work with him. “I knew every one of his places intimately, everybody did. He sees things in a manner that’s the fourth dimension. I was attracted to his point of view, and the stories of his hotels. We have 85 restaurants, and I can’t cook you an egg. So I knew I had to work with the best people, and with him, it was instant credibility. He opened up his world to me; one person can change your life.”
Brand Identity
Nazarian created SLS to fill “the big gap between St. Regis and W for luxury lifestyle,” he says. It stands for service, luxury, and style, “the three things I could never find [in one hotel]” without sacrificing one of them.
His solution: create a fully-integrated food and drink experience “in a manner where it’s not just about the chef, but it’s about the space,” he says. “Back then it was Jean-Georges [Vongerichten], [Alain] Ducasse, and [Joël] Robuchon, and it was about the kitchen and the chef and how many stars.” Instead, he brought in chef José Andrés, who, at the time, was making a name for himself with his inventive Spanish tapas in Washington, DC. “It was about understanding what was important to the user,” he says. “Coming from the nightclub world, you always think to yourself, ‘It’s Friday at midnight, and I have three hours to make money, how is the next person or celebrity going to get in?’ It’s an urgency that most people don’t have. There was a flow that made customers feel like it was something they’d never seen before.”
In that first hotel, the piazza-like Bazaar restaurant was made up of a series of rooms that seamlessly transitioned from dark to light to red, complete with a curated retail experience, patisserie, and a show kitchen, all done in Starck’s whimsical Alice in Wonderland look with tapas to match (foie gras in liquid nitrogen cotton candy included). “Looking back, I was very naïve in thinking that it was a lot easier said than done, and a lot more ambitious,” Nazarian muses. When he opened his nightclubs, they took off immediately, but nightclubs won’t be found inside the SLS. Around it, yes, with guest access, but for him, it was more about a true culinary and beverage experience coupled with elegance and design. “SLS was such a new medium at that time,” he says. “There were one-offs, W had started, and then Mondrian came and kind of shook the world, or at least LA, which was a relatively quiet town; it had nothing on what it is today. [Beverly Hills] was an interesting place to start because no one had done what we’d done on such a level, [especially] with Spanish food—every square inch of the hotel was an experience.”
SLS properties with a Bazaar followed in South Beach, Las Vegas, and most recently Miami’s Brickell neighborhood, as did two of the first SLS properties without Starck’s hand (or a Bazaar for that matter): the Lux Brickell by Toronto and New York firm Yabu Pushelberg, located down the street from its sister property, and Baha Mar by LA-based Avenue Interior Design in the Bahamas. Upcoming properties in Cancun, Puerto Madero, Argentina, and Washington, DC will bear Italian designer Piero Lissoni’s touch. (All are overseen and managed by sbe’s in-house team, Dakota Development, officially formed in 2015 and led by longtime sbe leader Joe Faust.)
Power Player
Eighteen SLS properties—what Nazarian thinks is his fastest growing hotel brand—are in the works, including in Downtown LA (the tallest building in the area), Chicago, Dubai, and Atlanta, with most of them featuring a branded residential component. In fact, the company has already delivered $2 billion in residential sales between SLS and Hyde.
“I never expected it to be on the same level as Rosewood, Ritz-Carlton, or Four Seasons Residences, where people want to buy and live there.” He points to SLS Lux Brickell, standing at 57 stories tall with 450 residences and 84 guestrooms, as a property that embodies the essence of what he wants SLS to be. “People would ask, ‘What is SLS? Is it Vegas, South Beach, or Beverly Hills?’ But then we delivered Lux, and people just got it.”
Because despite its success, getting the brand to where it is today took time. “We’re all going to make mistakes, like buying a casino [in Las Vegas] right before the recession. I was 29 and the model was correct. But I was trying to appease some of my investors too much by not holding to the integrity of the original idea. I have a lot more confidence now, but at the time I was one guy and it was a big fee and a big private equity group. It was a mistake. After that, there was a lot more catching up to do.”
He says he’s proud that sbe was the first hotel to start construction in South Beach post-recession, and the first hotel to start a casino in Vegas post-recession, “which means four or five years of [no money], and no construction loans, so we had to sacrifice. We are still the only casino on the north end of the Strip. A lot of people with a lot more money failed; we’re proud of what we were able to execute with the limited dollars we had.”
Nazarian isn’t one to live in the past. “I don’t have the luxury of dwelling. You have to keep these brands relevant, keep evolving, and getting into new markets,” he says. “One of the reasons [my family was] so successful coming out of Tehran after the revolution in 1979 is because my dad never said, ‘I can’t believe this happened and this is what I lost.’ I was always looking out the front windshield, [not the] rearview mirror.”
That means evolving Mondrian and Delano as well. “When we bought Morgans, the company had been through so much strain. The demographic had gotten older; the relevancy of the brand had been dying off because other ones were coming in.” Nazarian and his team had to redefine the brands and figure out how they fit with SLS and the nightclub-turned-limited-service 4-Star residential brand Hyde without cannibalizing each other (as well as the Redbury, a 4-Star extended stay offering with a bohemian feel from photographer Matthew Rolston). “It took some time, [but we positioned] Delano as our resort product and Mondrian as the fun, younger sister of SLS, which is not as intensive as CapEx or as amenity driven, even though the Mondrian in Doha by [Dutch designer] Marcel Wanders has eight F&B outlets and there’s an SLS in South Beach. Moving forward, this is what we’re committed to, and it’s probably 60 percent SLS, 30 percent Delano and Mondrian, and 10 percent Hyde,” he says, pointing to the pipeline of seven Delanos and six Mondrians.
Test Kitchen
Reinvention is what drives Nazarian. He launched Disruptive Group as an innovation lab to rethink the restaurant and nightlife world. The team—made up of alums of Stephen Starr and Sands Corporation in Las Vegas—creates upwards of five new brands a year, as well as overseeing existing concepts. (Currently, sbe has 85 restaurants and 53 nightlife venues.) Take Umami Burger, which sbe partnered with in 2011. They recently brought in Impossible Foods to introduce meatless burgers to the menu, ultimately increasing sales by 27 percent in the first six weeks. The team will soon open KrispyRice by Katsuya, a fast casual version of the sbe showstopper (which now has locations in the Middle East). Looking ahead, Nazarian is interested in supper clubs, and hints one is in the works. “Activation during dinner is going to be the next [big] thing—a combination of a show and dinner.”
Indeed, Nazarian says he stays in the nightlife business because it is the ultimate avenue for research and insight. “I’m getting real time data on the next generation who wants to congregate. With people swiping left and right, they’re not going out [to clubs] as much and they’re not spending as much money.” Ten years ago, he says, champagne, vodka, and bottle service were all the rage, whereas today, “it’s tequila and mixology.”
Expect more surprises from Nazarian and his team in the 50 restaurants, 17 nightlife venues, and 38 hotels and residences sbe has on the boards, the majority in international locations. “I love that,” he says. In addition, they are also developing a loyalty program. “My ambition has always been a lot more expansive than our capability, because we didn’t have the scale. Now, Accor has the same ambition.” Paris is on the wish list, as is the Maldives. But overall, Nazarian seems humbled and excited about where he is today. “Who would have thought I’d be sitting in Schrager’s office? It’s crazy.” The next chapter, in new offices with a new partnership, begins now.
