Nazarian 'respects the ROI' during CHRIS interview

“You have to be respectful of the ROI.” That was the big message relayed by sbe founder Sam Nazarian during his on-stage interview last week at the Caribbean Hotel & Resort Investment Summit (CHRIS) in Miami as he updated the crowd about his emerging HQ Hotels & Residences concept launched in January with partners Marc Anthony and Wyndham Hotels & Resorts.

With a stated goal in January to reach 50 managed “smart luxury” hotels by 2030, Nazarian said at CHRIS that HQ already has 33 deals in the pipeline and 10 more set to be announced at the NYU investment conference in early June. He also let the cat out of the bag that the brand will soon announce the launch a $50 million key money fund to provide subsidies for developers as needed to be competitive.

We think this is a perfect portfolio for some of the inevitable foreclosures that are coming. They’ve come to us to understand what HQ looks like.

Sam Nazarian

Share this quote

Nazarian added that he is already talking to lenders who are going to have to take back a lot of troubled assets. “We think this is a perfect portfolio for some of the inevitable foreclosures that are coming,” he said. “They’ve come to us to understand what HQ looks like.”

As for the Caribbean and Mexico, providing the 4-star option will be very strategic, according to Nazarian, adding that the relationships already built by Anthony and Wyndham will be another big advantage. He pointed to Mexico as a great market for HQ opportunities and made a bigger point about seasons are less and less now in the Caribbean and a 4-star product is going to be more exciting for a lot owners in the Caribbean because the ROI and ease of conversion are there.”

The toolkit

But Nazarian’s biggest point of emphasis during the interview was what he considers HQ’s biggest differentiator among luxury lifestyle brands: “the greatest toolkit all under one hotel management agreement.

He continually referenced the 27 restaurant brands being made available to owners, a new wellness concept that can potentially replace dormant banquet space, a workforce and student housing option to fill a percentage of keys, and the power of Wyndham’s booking engine. He also explained sbe’s effort to capture the millennial and Gen Z audience, many who identify with Airbnb as opposed to other hotel brands. And then there is partner Marc Anthony, who is helping sbe appeal to the immense Hispanic audience yet to be captured by any hotel brand.

Sam Nazarian speaking at CHRIS

“In 2019 and 2020, we really started focusing on what we thought was the next generation of consumers that we didn’t completely understand, how to communicate with them, how to be relevant in their worlds,” Nazarian said. “But they’re growing like a tidal wave, like a tsunami that was coming, and that is millennials, Gen Z, and also the Hispanic, which is an unbelievable category that really not too many people have figured out how to communicate authentically with. It took us three years to understand that model and come up with a great product that can make HQ hotels focused on that particular subset.”

In what will be a primarily conversion opportunity (about 80%) with a strong emphasis on food and beverage, Nazarian said they will be flexible about brand standards, again out of respect to owner ROI. Cost per key conversions will likely range between $30,000 and $50,000 – and in some cases a bit more or less depending on the amount of F&B.

“The category of smart luxury, or 4-star lifestyle, for us becomes a little bit more flexible as far as brand standards go because we think the action (F&B) is going to be the important part,” Nazarian said. “We’re not going to spend too much time on five-fixture sinks and the more traditional brand standards, even though we're going to have a very strong brand standard department. But it will be a little bit less of an emphasis, especially if you’re a conversion brand because you have to you have to be respectful of the ROI.”