Can you turn your property into a private members club?

From the old establishment names to new, cool places to co-work and congregate with likeminded souls, private members’ clubs in London are having a moment. According to Knight Frank’s deep dive into this exclusive world of wingback chairs and whisky bars, more clubs have sprung up in London in the last four years than in three decades, when the infamous Groucho Club entered the scene in 1985. 

But what does it take to set up your own private members’ club? It’s a question we have considered in detail recently after a client asked us to devise a plan for his Parisian townhouse that would generate a healthy cash flow. 

Although belonging to a private club full of people just like you is a resolutely British upper-class tradition, many other parts of the world have latched on. Soho House now has 42 branches worldwide, The Ned has opened off-shoots in Doha and New York, and the Arts Club is dazzling new members in Dubai. 

It’s a global industry that is set to grow by 11% a year for the next two years, when it will be worth $25.8 billion, predicts the research consultancy Mordor Intelligence.

But it takes more than having a beautiful building and five-star fittings. The competition is fierce, new concepts such as family clubs are constantly emerging, and closures are common. Set the bar too high with your membership fee and you will attract the super-rich but risk ruling out a younger and more “cultured, charismatic and social” crowd, suggests Martin Raymond, co-founder of trend forecaster The Future Laboratory. 

Hype and celebrity endorsement, meanwhile, can help to get the name out there. But a successful business needs to grow organically – and people need a reason to belong, and to keep coming back. 

“You join for the facilities; you stay for the people,” says Jamie Caring, founder of the lifestyle and hospitality marketing company, Sevengage, citing an old adage about members clubs. Nick Hamilton, co-founder of The Conduit in Covent Garden, which positions itself as a community for global changemakers, believes that clever programming is the key – regular, inspiring events that cement a sense of identity among members. 

So back to our client and their hotel particulier in Paris’s super-prime 16^tharrondissement – a building and a location that have the potential to be the perfect members-only venue. When extended, it will span around 8,500 sqft, which is a fraction of the size of the likes of 5 Hertford Street or Annabel’s, but more than big enough to house a club that, our feasibility study showed, could bring in a good income. 

Paris’s members’ club market isn’t nearly as mature as London, however. Parisians meet at restaurants or dinner parties, but the club mentality isn’t engrained in French society. While we knew that this property could become a desirable venue because of its luxurious facilities, we looked more widely at the options for this property – including a restaurant, bar/lounge, boutique hotel, or even a nightclub or live music venue. Knight Frank highlight another option in their analysis of the sector and that’s an establishment that’s a club in everything but name – a hotel/restaurant such as Chiltern Firehouse, for example, that inspires allegiance among UHNWIs through its food, design and exclusivity.  

Our feasibility study showed that the staff cost to run those facilities for the first year, before it was established, would involve significant cashflow and high risk. And although there may be a gap in the Parisian market for a new private members’ club, to be pioneering with this client’s property could be a gamble. 

Alasdair Pritchard from Knight Frank’s Private Office deals with clients from the Cotswolds to Asia who contemplate turning either an entire property, or part of it, into an exclusive club of some kind. But they rarely think about the costs involved, he says, nor the marketing and what exactly they are offering, and for whom. Then there are the legal requirements such as F&B licenses, and practicalities such as having plenty of parking. 

“Clients realise they have a property that’s sitting empty, they’re looking at it on the balance sheet and think, to offset costs, a design-led place with a lit-up onyx bar that caters only to cigar smokers or gin drinkers will be the thing,” says Pritchard. “They see it as another way to have fun. Then they realise it will be costing them about £1m-£2m a year and decide that renting out the property is a better bet.” 

For the best return on investment with our client’s Parisian property, we decided that this beautiful townhouse – which is worth about €20m – would work best as a high end, hotel-style rental property. With services such as a concierge and chef, and amenities including a spa and swimming pool, it would attract big corporate clients coming to Paris for an event such as the fashion show, or large, multi-generational families wanting a more exclusive and personal alternative to a traditional hotel. 

No commercial licence is required as it’s not a classic hotel. You can bring in the services when needed, rather than paying for staff full-time. And – unlike fitting out a property as a restaurant or a members’ club – this future-proofed solution has the benefit of flexibility. You have a luxury residence that you rent it out at a high price during peak periods and use it yourself at other times. 

In this case, we estimate the client will need to spend a further €12m-€14m on renovation, including extending the basement and first floor, and as a boutique hotel-style rental, it should bring in around €1m a year in income, based on 60% occupancy. 

We’re not forgetting about members clubs altogether, though. In London we are working on a new project in Marylebone which will have 14 residences and some common areas in need of a purpose. Rather than devote them to amenity space that residents rarely use – since in Marylebone, you have everything on tap anyway – we are considering the possibility of creating an offering that outside users can access, and a members’ club of some sort is one of the options. 

There is another area of opportunity that has yet to be explored and that is developing branded residences with a branded members’ club onsite. The amenities would be well used, it provides a good revenue stream, and the brand is likely to make this a destination address that, in turn, enhances the value of the properties. That, though, is one for another day…