SEPTEMBER 6, 2024
PRIVATE MEMBERS CLUBS...NOT SO PRIVATE?Photo Credit: Soho House; new development approved for construction in Mayfair, London
Throughout history, private members clubs served as the community’s social center. Is that still the primary purpose, or are today’s members expecting a different experience?
The sector is experiencing a surge in development with no signs of stopping anytime soon, drawing further attention from larger institutional investors and developers. Private members clubs—once intimate, niche havens for specific groups—are transforming into a global asset class in its own right and frankly, in some cases are becoming glorified restaurant groups with no programming or point of view. Yet, as these concepts multiply, the very nature of what we perceived as a private members club is being diluted in favor of the pipeline growth. I think it is crucial to evaluate the shifting dynamics and the potential long-term implications from both the market and clientele perspectives.
The sense of belonging and social signaling is as old as our societies, but as a practice and businesses, these clubs began forming in the 17th century in London, particularly around the St James and Pall Mall district, then known as Clubland. The admissions were strictly controlled mostly by gender, race and social standing. By the late 19th century, several clubs for women were established, marking a significant shift in the society and club culture.
The idea of what a PMC is nowadays remains largely the same. Programming driven clubs, offering tailored experiences around wellness, culture, and socializing, have capitalized on post-pandemic craze for privacy and community. This growing demand has naturally encouraged larger chains and investors to start capturing the market opportunity. The economic landscape also supports this growth, with global luxury spending and high-net-worth individuals seeking bespoke environments. Clubs like Soho House, which began as a refuge for London’s creative elite in 1995, now have over 40 locations worldwide and cater to nearly 180,000 members.With this boom comes a critical question: how can these clubs maintain their exclusivity while scaling rapidly?
The defining appeal of a private members club has always been its ‘behind the velvet robe’—small circles, carefully curated communities, and personalized services. When a club begins to open multiple locations globally, catering to tens of thousands of members, it inevitably becomes more accessible. While such expansion provides robust revenue streams, it risks diluting the brand’s core. Exclusive memberships are no longer as rare, and that "private" aspect becomes much less meaningful. Essentially, the line between a high-end social club and a luxury hotel chain starts to slowly blur. For investors, this presents a double-edged sword too. On one hand, the robust investment return of these clubs, particularly in markets like the US and Asia, is undeniable. However, the risk comes with saturating the market to the point where the perceived exclusivity—a key driver for member attrition—is compromised.
EROSION OF EXCLUSIVITY
Whites London is one of the oldest members clubs still in operation today
Aman New York; private members club charges $200k initiation fee and $15k yearly membership fee
BALANCING THE SCALE
Larger private club operators, such as Invited in the US, are acquiring existing businesses and streamlining operations across hundreds of properties. While this “cookie-cutter” approach may offer a standardized level of service; and we do have fantastic examples of that in hotel chains like Four Seasons or Rosewood, but then it starts lacking the tailored, personable experiences that define that luxury membership. How great is it to walk into a club that reflects the location in its design, where you are greeted by your name by the same server and your preference for water, favorite table is already known? These clubs, designed more for profit than for cultivating a community, can start to resemble commercial enterprises rather than sanctuaries between the like-minded.
Membership dues is proving not to be a barrier either— fees can soar into six figures, as is the case in Aman New York— and are no longer sufficient to maintain an aura of exclusivity. For clubs like Soho House, which charges far lower membership fees than its counterparts (around GBP 3,000, depending on geography), their reliance on F&B revenues and ancillary services further underscores the shift from private enclave to luxury business model. While financially a viable growth strategy, it has already alienated members who sought out the club for its like-minded community rather than its commercial appeal.
Clubs that manage to retain exclusivity while expanding selectively can succeed, but this requires careful brand management, smart geographic choices, especially in emerging markets, and a continued focus on providing deeply personalized programming reinforcing the concept and maintaining the definition of the clientele. The focus should remain on creating unique cohesive environments that offer more than just amenities.
Smaller, independent clubs, often privately owned, still offer the bespoke services that larger chains may struggle to provide as they grow. For private investors and developers, this suggests that smaller-scale projects—focused on cultivating member relationships rather than maximizing numbers—may offer better member attrition rates and a more sustainable path in the long term. For the hospitality real estate industry, the future of private clubs lies in thoughtful expansion, one that values the community it serves over the sheer volume of properties. By retaining the essence of what makes these clubs exclusive, developers can ensure that they continue to thrive in an increasingly crowded market.
Invited is one of the largest operators in the US, primarily focused of golf and country clubs
POTENTIAL SOLUTION: EXPANDING THE HORIZONS
As the market matures, two strategies can offer potential solutions for brands that already have sufficient brand equity and a multi location portfolio. These approaches could aid in preventing dilution. One path to scale while preserving exclusivity is through targeted expansion into emerging markets. The over-saturation of established cities like London and New York has resulted in fierce competition among private clubs. External marketing (via social media and press) and other incentives can dilute their uniqueness and prestige, especially if the business is as big as Soho House with 9 locations in London alone. Nonetheless, consider the success of Soho House, which has managed to scale its brand globally while retaining a certain level of exclusivity. Such expansion was underpinned by strong brand equity, which allows them to replicate the successful model in emerging markets while still tailoring each club to the local culture and needs of its members. Now they are perceived to be one of the more casual members clubs’ side and struggle operationally to provide excellent service and strong F&B offering, however I truly admire that it is indeed the only members club business to scale to such a worldwide success.
Successes in expanding the horizons is evident in their Mexico City location. The club is bringing in high revenues, it is their first LATAM property, the local interest is high, which allows to control the brand narrative, as well as member volumes incredibly well. The waitlist for this location is rumored to be 15,000 people. By focusing on cities with growing luxury markets—such as Istanbul, Lisbon or Sao Paulo—Soho House will be able to maintain its cachet. Emerging markets not only provide fresh growth opportunities but also offer a buffer against market saturation in more established locations. With the rise of new luxury hubs around the world, these territories offer a blank canvas for creating smaller volume exclusive spaces that stand out in a less crowded field. Moreover, they present the opportunity to cultivate a more diverse and global membership base, which can elevate the prestige of the club as a whole. By carefully selecting markets where luxury spending is on the rise, developers can foster a sense of exclusivity while still growing their global portfolio.
However, this strategy requires careful planning and a deep understanding of local tastes, trends, and cultures, which can be an expensive mistake if miscalculated. Expansion must be more than just opening a new location; it needs to involve integrating the club’s identity with the spirit of the destination. Successful clubs, like 5 Hertford or Maison Estelle, invest heavily in design, local partnerships, and programming to ensure that each location feels authentic. This attention to detail preserves the exclusivity and community ethos that discerning members expect, even as the brand grows. Which brings me to a second solution….
ANOTHER SOLUTION: ROBUST DATA
Let’s use Soho House as an example here as well. In recent years the F&B offering is behind compared to the comp set, the service is lacking as well (which is an area private members clubs should especially excel). Members might be still happy with the club and perceive it as high-end establishment, however seeing diminishing quality and increasing yearly rates, members are asking themselves if there are better alternatives. So I believe, the second approach to scaling focuses on improving operational efficiencies. In a world where technology can personalize everything from shopping to entertainment, private clubs must leverage consumer data to enhance the member experience. By implementing back-end management systems, clubs can gain valuable insights into their operations, allowing them to track every member and their patterns within the club (or clubs worldwide).
These systems should track key metrics like spending patterns, attrition rates, providing clubs with a clear picture of what works and what doesn’t. For example, by understanding which events and programming resonate most with their members, clubs then can tailor future offerings to better align with the local clientele. Real time. Additionally, by tracking pricing sensitivities and analyzing member spending, clubs can optimize their pricing models, menu designs to ensure that they remain attractive to members and offering value, while maximizing revenue potential.
One of the most compelling advantages of operational efficiencies is the ability to refocus on what truly matters: delivering exceptional experience. With an efficient back-end system in place, management can shift their focus away from the day-to-day administrative hassles and concentrate on curating memorable member interactions. In this way, operational improvements don’t just reduce costs—they elevate the club’s core offering, ensuring that members feel at home.
For example, a well-run system could identify that a particular subset of members that uses the club in early afternoons regularly attends wellness events, allowing the club to invest in expanding those services and simply send emails to those members saying ‘Hi, we know you love x programming, we made an effort to invite x speaker in early afternoon, we would love to invite you to join us on x date’. This is true hospitality. Similarly, tracking member movements within the club could highlight underutilized spaces, presenting an opportunity to repurpose them swiftly for new high yielding services.
Global collaborations also offer a frontier for exclusivity. By partnering with other luxury brands, private members clubs can offer unique, culturally rich experiences that transcend the local market. Whether through art or wellness retreats, these collaborations can elevate the member experience, giving clubs an edge in retaining exclusivity while expanding their reach.
For instance, a club might host a series of exclusive international events for members in partnership with renowned chefs or performers. These events create a sense of belonging and community that extends beyond the walls of the club, reinforcing the idea that membership offers access to a global network of like-minded individuals. Again, this should be done having that ‘not for everybody’ low volume in mind. Highly targeted collaborations can also attract high-net-worth individuals from diverse backgrounds, further enriching the club’s community without sacrificing its intimate feel. All of this boils down to one thing – knowing your member base well, even more so if you are expanding to preserve the core offering without compromise.
DOES IT HAVE TO BE MUTUALLY EXCLUSIVE?
In the competitive world of private members clubs, growth and exclusivity are often seen as mutually exclusive goals. However, through a combination of strategic expansion into emerging markets and the adoption of operational technology, I think developers can find a way to balance both to an extent. Emerging markets provide new opportunities to extend brand equity and cultivate exclusivity in untapped regions, while operational efficiencies allow clubs to personalize experiences and streamline without losing core values and exceptional quality.
Ultimately, the key to success in this space lies in maintaining a laser focus on community and belonging. As real estate developers, the challenge is to navigate this delicate balance—ensuring that growth enhances the global member experience, rather than diminishes, the unique appeal of these spaces.
Courtyard at 5 Hertford street in Mayfair
Soho House in Mexico City was an awaited opening for the international crowd
