Nazarian returns to hotels with star power and horse power

Lifestyle hotel industry veteran Sam Nazarian is returning to the hotel world after divesting of his 100-hotel platform to Accor in 2020 – only this time he is bringing along some star power in new sbe equity partner, singer, songwriter, actor and entrepreneur Marc Anthony, as well as some horsepower in Wyndham Hotels & Resorts, who will bring much needed marketing and development muscle to the launch of a smart lifestyle brand dubbed Project HQ Hotels & Residences.

The concept will be about 80% conversions and 20% new-build with conversion costs ranging from $30,000 to $50,000 per key, depending on the shape of the asset.

Nazarian said in a virtual interview last Thursday that about eight deals are already in the works for the approachable brand with an ADR ranging from $250 to $500 and a goal to reach 50 hotels (7,500 rooms) by 2030. He said there are initially four conversion deals being negotiated in the U.S., as well as two deals in Europe and two in the Middle East. While designed as a management platform, Nazarian said that sbe will likely own at least a few properties and is willing to discuss partnerships if a deal makes sense.

While sbe has an eye on global development, about half the deals should happen in the U.S. Many of the deals will be in city center locations but Nazarian said sbe’s past experience in the resort space gives them a natural interest in that segment, as well. He said office conversion will be consider, as well.

“The brand is as flexible as possible, but the content is very deliberate,” Nazarian added. “To get connectivity to that Millennial, Gen Z and Latin American market, we’ve pulled in some of the best partners we can to be relevant in those spaces for that direct-to-consumer connectivity from the F&B, residential, and ultimately the accommodation side.”

Naturally, the affiliation with Wyndham, its Registry Collection Hotels soft brand, as well as its global franchise sales system will be another source of development for HQ. “The biggest differentiator was solidifying our deal with Wyndham,” Nazarian said.

Wyndham CEO Geoff Ballotti added, “I can’t wait to introduce this internationally because we’re so often in Asia Pacific, Europe, Africa, India and the Middle East with developers asking for a brand with this type of food and beverage programming. We just don’t have it. So, we are going to be rolling it out this week.”

Brand details

HQ is being positioned as approachable, social, culinary and wellness led for the next generation of travelers and a concept that gives existing owners a fresh conversion story in the 4-star range.

The brand will have pre-approved FF&E packages, supply chain, technology integrations, OS&E packages, and programming to monetize otherwise underutilized spaces. Through sbe’s collection of F&B and nightlife partnerships and collaborations, owners can choose established sbe concepts like Umami Burger and Soom Soom, as well as creations from celebrity partners like Sofia Vergara, Dario Cecchini, Iron Chef Masharu Morimoto, Dani García, and Wes Avila.

Project HQ will also deliver branded residential offering for underserved markets like integrated student housing, workforce housing and the like. After launching branded residential business with brands like SLS and Mondrian that Nazarian said regularly sold for ~20% above market rates, Project HQ is set to build on that expertise to deliver a lifestyle residential program that will drive licensing revenue for owners and address the Millennial and Gen Z audiences.

“We’re also looking at HQ to be relevant on college campuses because we think that the intersection of student housing, workforce housing, hospitality and food and beverage becomes very interesting under a brand,” Nazarian added.

Back story

“We spent the last three, four years continuing to build our food and beverage business – more importantly around the category of Millennials, Gen Z and this New Age consumer that we are really curious about and want to be relevant within that ever-growing and fast-growing segment,” Nazarian explained. “Through that process, we recognized we have this connectivity to a very unique and coveted audience that goes to Airbnb and more bespoke hospitality destinations. Why don’t we really look at a category within lifestyle that really complements what we did for the last 20 years in luxury to focus on a new category called smart lifestyle? It is really designed for a 4-star conversion product that enables all the content and connectivity that sbe brings in food and beverage, entertainment, digital, and wellness, and do it in a manner that hotel owners who have a very big sensitivity to return on investment and are up against contracts coming up with legacy hotels and are trying to figure out what to do with portfolios. We are building a very unique product that resonates both for owners and ultimately for consumer that really has not been targeted correctly.”

During that process, sbe realized it could also differentiate by finding a partner who can help with scale to become a global network. “We feel that we partnered with Geoff [Ballotti] and Wyndham at a perfect time,” Nazarian added. “It allows our owners to spend less money to execute on an unbelievable lifestyle product and partner with one of the biggest and best companies in the world.”

Wyndham’s Ballotti added that this deal gives his group and its 100-million-member loyalty program an aspirational redemption opportunity it does not yet have in its portfolio. “Sam has created such a fresh take,” Ballotti said. “We have talked about becoming younger in our overall guest demographic. They’re looking for this type of experience and appealing to Millennials and Gen Z travelers is something that we think is going to work really well.”

Anthony partnership

With a new equity partner in Nazarian’s long-time friend Anthony, another focus will be on growing the sbe brands, including Project HQ, among Latin American audiences.

Anthony’s Magnus entertainment company launched in 2015 and is comprised of operating units that include an artist and athlete management company, digital content studios, a talent booking agency, a record label and a new business ventures division, all focused on leveraging the power and potential of Latin content creators in the U.S. and throughout the world.

Anthony is also a minority owner of the NFL’s Miami Dolphins and owner of E1 Team Miami, as well as co-owner of leading plant-based energy drink brand OCA. He recently debuted an exclusive, limited edition watch and jewelry collection in partnership with Bulova, and he has his own clothing and accessories line for Kohl’s.

“Together, we look to unveil a series of remarkable initiatives that showcase the synergy and excellence synonymous with the sbe family,” Anthony said.