Can Small Clubs Make Real Bank?

On my trip to Vegas the power of the strategic group machine was evident. Tao Vegas and Lavo, on back to back nights, packed a formidable wallop. The same one felt every night in associated New York venues. Avenue is still there and so is doing it, doing it and doing it well Marquee. The ability to service clients, especially those that spend big bucks in both New York and sin city, sets strategic groups above the rest. Tao New York as well as Stanton Social Club and other properties provide multiple cross promotion possibilities. It is difficult to see how any stand-alone nightlife entity can compete in New York without this outside revenue and marketing boost.

The Andre Balazs properties operate differently, but it can be argued provide similar opportunities. As I mentioned the other day, while attending a party in my honor at the Chateau Marmont, I noticed Leonardo Dicaprio playing backgammon at a nearby table. I heard that he had recently been spotted at Andre’s ever booming 18th floor at the Standard. The ability to service a celebrity as they jet set between cities like New York and LA or Miami is an advantage the real players feel they must have. In the summer, the clubs will create Hamptons outposts to ensure that when the season is over VIPs return to the fold. You basically have 16 days to pay for a year’s rent, insurance, wear and tear and financing, not to mention day to day operating costs. That’s 16 real days out of 365 and that reality doesn’t consider cold spells or rain. You can’t really make money, but you can stay real close to those who butter your bread year round.

Going forward can a stand-alone club generate enough money or publicity or marketing momentum to compete with clubs located in hotels where rent, security and publicity? Electricity and other expenses are absorbed by the large chains. It’s becoming more and more important for food and beverage to drive hotels. Wouldn’t the Standard be just standard if not for the publicity and beautiful folk its restaurants and clubs attract?

Eric Goode and Sean Macpherson seem to understand and succeed in letting the f and b drive their properties. Would the Maritime be worth a mention if not for Hiro and Matsuri? Would the Bowery Hotel be more than a flop house without Gemma and the Lobby Bar? Would the Jane be anything but a youth hostel without the major hype of the Jane Ballroom? Would Ian Schrager’s Grammercy Park raise an eyebrow if not for Rose Bar? The small hipster lounges will somehow pay rent, salaries and other expenses by being “off the beaten path” or non-corporate alternatives, but will these operators actually make loot without the hotel connection or a viable franchise in sister markets? How will they pay their bills, let alone thrive?

Places like Lit or Beatrice will always bring home some bacon and will generate volumes of press, but the big clubs with Vegas, Miami and LA partners will have much larger revenue streams. My home will always be in the smaller, hipper places where advanced forms of music and alternative ideas can flourish outside the mentality of the hotel chain, but I spend about 11 dollars a year going out. The pools, outdoor terraces and decks of the hotels turn summer, which traditionally melted club’s bottom lines, into a season of prosperity. Rumor has it that the roof of the Ganesvoort grossed close to 200k on weekend afternoons during the hot months. With the publicity generating Provocateur now open on the lower level, the hotel is a home run.

The future of clubs will be in hotels. Hotels receive an almost automatic liquor license. This has been challenged of late, as seen in the problem Todd English ran into at his community board hearing for the new hotel on Bond street. In most cases, obtaining licensing will be easier at hotel properties. Their political lobby is stronger than the nightclub industry and the tradition is to grant them permits. Police and government inspections will surely be more lax. Considerations to hotel guests will ensure soundproofing and controlled sound systems. As a by-product, this will lessen the impact of the joints on the lives of neighbors. Hip little bars in hip little inns may become all the rage. Boutique bars will excite boutique hotels. My trip to Vegas showed me XS. It is the deathstar of all nightclubs. It is a place where a million dollar night may well be feasible. Some may find it a bit cheesy, but that’s a lot of cheddar being generated. XS is setting the bar for the new decade.

[Editor’s Note: An earlier version of this article reported inaccurate information about Thompson Hotels. BlackBook apologizes for any misrepresentation or inconveniences caused as a result.]