Have lifestyle hotels run out of steam? Ft. Eric Jafari of AENDRE

[00:00:00] Eric Jafari: When hoteliers hear the word wellness, they immediately turn to someone sitting by a pool waiting for their massage. And yet if you speak to the modern consumer, the millennial, the GenZs, how they would define wellness, it's literally the opposite.

[00:00:29] Matt Welle: Hi, everyone. Welcome back to another Matt Talks hospitality. And we're getting into the business of building hospitality companies from the ground up. Where do you find the right buildings? How do you raise the capital, create the brand, and then you make the numbers work? Eric Jafari has done this multiple times across Europe. He cofounded companies like Locke, Edyn, and Birch, brands that have helped redefine some of European's lifestyle hospitality landscape. At Edyn, he led a 1.5-billion-pound pan-European development and investment platform, and now he's launched a new brand. Now, I'm gonna say butcher it.

[00:01:01] Eric Jafari: It's AENDRE. Yeah. It's AENDRE. That's the umbrella brand. That's not the hotel brand. So, the hotel brand will be released within the next few months.

[00:01:07] Matt Welle: Other brands underneath the AENDRE brand, but this is basically a platform that acquires, develops, and operates wellness and lifestyle hospitality brands. Thank you for joining me today, Eric.

[00:01:16] Eric Jafari: I'm excited for this.

[00:01:17] Matt Welle: So, then tell me about AENDRE. Like, what's the logic? And what's the brand? And what are the brands underneath it then?

[00:01:21] Eric Jafari: So, okay. So, AENDRE was created. I was at Locke, in Edyn, for about 10 years. After we went through our kind of succession planning, I resigned in the tail end of 2023. And so, over the course of the last two years, the team and I have been working on launching a new brand, the first of which opens next May. And then there'll be a first hotel, the first, actually, three hotels all open over the course of the next 18 months here in London. I started in the lifestyle game because, candidly, I was catering to myself as a consumer. I was scratching my own itch. I don't have a background in hospitality.

[00:01:57] Matt Welle: Very jealous that you get to do that.

[00:01:59] Eric Jafari: Well, it was a very difficult road, so I don't know if you should be that jealous. It's incredibly painful. You know, they always say if you knew then what you know now, would you go through that journey? And every single time, the founder always says, "No, it was horrific." And not go too off piece here, I think it was earlier this year, because as I went into kind of this platform, this was kind of the third or fourth platform that I've launched. I kind of thought, "I've done it three times before, how difficult could it be?" No. This will be easy. I've got a track record. I've generated high returns.

[00:02:33] Matt Welle: So, basically, you get dumber as you get older and you do more brands. You're like, yeah, this sounds super easy.

[00:02:38] Eric Jafari: And then, like, I remember a year and a half into it, I was like, "Oh my God. Why did I agree to do this again? Why am I putting my stuff through this agony?" We're at the other end, so I'm feeling a lot more excitable today, but the journey is always infinitely more difficult than they say it's gonna be. And it's never what you think it'll be. The challenges are always things that you wouldn't even think about, which is amazing considering I've opened 40-something hotels, and yet I'm still surprised by the number of surprises that come at me every day.

[00:03:08] Matt Welle: So, what's the thing that's broken that you're trying to fix with this particular brand?

[00:03:12] Eric Jafari: Two things. One, I will tell you from my perspective, the lifestyle hotel game is dead. I think, and before I give you the second answer, I remember the first time I walked into a lifestyle hotel. There were probably many, but the one that really stuck with me was when I walked into The Delano in Miami. You walked in, and you see incredible curtains hanging from the sky. It was what I would have pictured utopia to be like, beautiful people everywhere. You know, they had a sushi counter over here, and then you walk through the hotel, and then you have this huge pool and people jumping in and out of the pool. And I just thought, this is mind-blowing. Everyone was, and the first thing I thought was I only live 30 minutes from here, but I'm booking a room for the night. Because I want to be part of this ecosystem. I wanna have the full experience. I remember the first time I stayed at the Mondrian in Miami, it was the same thing. The first time I…

[00:04:07] Matt Welle: The Ace in New York was one of those places that I just, the energy was off the charts.

[00:04:12] Eric Jafari: Oh, you know, before the call, we were talking about the NoMad. Yeah. I remember the first time I looked into the NoMad and had that chicken there. I thought, "I can't wait to come back." It was a mind-blowing experience. And back then, when you bought a room in the hotel, you were in essence buying a ticket to serendipity, the hope that something fun and exciting would happen that evening. Now, you might pay for it the next morning, but it was worth it. You had an incredible story. You probably made new friends. You probably made a bunch of mistakes. There was something magical that happened that evening. I guess the question is, well, let me ask you, Matt. When was the last time you had that type of an evening?

[00:04:53] Matt Welle: I haven't in a long time, and I stay in very nice hotels for fun. Like, for business, yeah, sure, I'll stay in a corporate boring one. But for fun, like, we look for it. And now we end up in brands like Rosewood, which I love. I think, from a quiet luxury point of view, it's wonderful. But that buzz that you get from, like, one of those original lifestyle hotels, I haven't had that in a while.

[00:05:12] Eric Jafari: I think it's a chastity. I think it's heartbreaking, right? I would venture to say they're probably. I think Broadway does a good job from time to time with the rooftop. Yeah. We talked about The Broadway earlier. Still, I mean, Chiltern's closed. I think Chiltern is incredible, and I think Chateau Marmont. But you think about the number of lifestyle hotels that are out there, I find it shocking that I could only name three, and that I can reliably count on it delivering that memorable experience. And so I spent a lot of my time kinda wrestling with the question of why. Why has…

[00:05:47] Matt Welle: You found out why?

[00:05:48] Eric Jafari: Well, I'll give you three reasons why. And this is just my own opinion. And then I'll tell you in my opinion what defines, what are the kind of the tells of a lifestyle hotel. But I think the first reason is when you walked into a lifestyle hotel back then, the disparity between a Marriott and a Delano was so vast that, think about it. Let me take a step back. Think about the reasons why. The Delano and Mondrian were both developed by Ian Schrager. Ian Schrager wasn't a hotelier. He was a lifestyle. He was a nightclub operator. And so in order to operate a successful nightclub, you had to apply grandeur and a certain degree of surreal application to the design. And so, I just took all of that skill set and applied it to hotels. You didn't know any better. And so because of that, when you walked into a hotel that had that type of design, you immediately knew it was going to be an amazing wild night out. The two weren't separated. The operator for the hotel and the operator for the nightclub were the same visionary. The industry finally picked up. By the way, the industry first said, "Oh, this is a fad." And the number of times I heard this, "Oh, no. This is a fad. This isn't sustainable." That was back in the 80s. Then in the 90s, no, no, it's still a fad. This is just a one-off. 2000s, I was still hearing it's a fad. And then in the early 2010s, what happened? I'd say it was 10 years ago. I still heard the conversation; it was a fad 30 years into it. The moment people stopped saying it was a fad, that was the end of the lifestyle hotel game. And the reason why people stopped saying it was a fad was because the likes of Hilton, Marriott, IHG were paying through the nose, your 16x, 20x multiples to buy these platforms, these brands, because they knew they couldn't replicate it. But that was the first one, I think.

[00:07:47] Matt Welle: Like, I walk into some of those lifestyle brands that, you know, those big brands have, and I'm like, I can pick out the furniture that's come out of our catalog somewhere, but it lacks the heart. Like, you see that everything, I guess, design-wise kind of fits, but the heart is missing, and the heart has to come from humans, right?

[00:08:04] Eric Jafari: Everything works well. It's a well-oiled machine, but that's it. Magic that takes place in imperfection. The magic happens when we make mistakes. It's when we experiment, when we're willing to take risks, when we're willing to do something to offend the wrong consumer.

[00:08:21] Matt Welle: What is the Eric Jafari hotel lifestyle? Whatever the new word is for lifestyle that actually we have to now reinvent, but what does it look like in your view?

[00:08:31] Eric Jafari: I'll get to that in a second. I wanna, I think maybe if I answer, and there's two other reasons in my opinion as to why lifestyle's dead. One is because we all sold out. I did the same to the big group. Yeah. We made money. Yeah. I think the second is that when the big brands realized, "Oh, jeez, the same square footage room at 25 square meters in a lifestyle hotel generates a 50% premium versus a traditional hotel." What did they start doing? They started hijacking the design palette. And so next thing you know, what made the lifestyle segment unique, it was a combination of three things. It was incredible programming. It was a great design and great food. Well, a lot of the bigger operators started hiring the Martin Brudnizki, the Michaelis Boyd's to just give me a copy of a Soho house, just give me a copy of a, and that was it, didn't happen overnight, but just slowly over time. The way we all book hotels, it used to be, okay, I'll go on one. Oh my God. Look at how unique that looks. That must have a great nightlife. Now, it's like you book something that has an amazing design, and the reviews are good, and you show up. You're like, and people will ask you, how did it go? It was fun. It was inoffensive. Yeah. Yeah. It was inoffensive. Okay. So, that was the second thing, I think, that has killed the lifestyle. There is a third, and it's a weird one. I actually think it's the, I attribute let's say it's Bonvoy. I'd say it's Bonvoy, and I'll tell you why. And I'm picking up Bonvoy specifically. There used to be a time when people used to go, "Okay. I can either stay in a boring hotel for £200 a night, or I'm gonna push myself. I'm gonna spend £300, £400, because I can stay at the Standard. I can stay at one of these exciting hotels." But now it's a harder decision to make because two things have happened. One, a lot of the more exciting hotels have now, which ones are exciting, which ones aren't, the ones that are, they used to claim to be exciting, are now, as a consumer, they don't know what standard was bought by Hyatt, or they partner with it. Most of these consumers don't have that level of detail that we have. They're privy to that. All they know is, oh, Standard used to be an amazing hotel to stay at. Why is it? It's good, but I didn't see the guy puking off the corner and, you know, the naked people swimming in the pool. Well, what's happened to all that? And so I would say that loyalty has made it a lot harder for consumers to justify paying the premium, and they can when they can do something for points. That's today. Okay. I think two things before I tell you. Nowadays, what are the two tells as to whether it's a good lifestyle hotel? I'd say the first one is the door policy.

[00:11:10] Matt Welle: Well, there had to be a new word for it. Like, we can't just recycle lifestyle. We have to now come up with a new category, I think.

[00:11:15] Eric Jafari: Yeah. I guess so. I guess so. We'll come up. I'm glad that by the end of this call, maybe you can, I'll just hire you. I don't need to hire the branding agency. I made a mistake. I should have you come up with a name for what we're gonna be called by the end of this. The two tells for whether it's a good lifestyle hotel, by the way. And this is, I'd say, the first is what's the door policy. And what I mean by that is if I can get into the hotel common areas and they'll let me in, then I don't wanna stay there. I don't wanna stay there. So, you think about Hotel Costes, you don't know what the door policy is, and you show up. Although that's another good lifestyle hotel, these are classic now. It's been there for 30 years. I don't know about today, but up until a few years ago, you show up, and unless you have a friend of a friend who you're staying at the hotel, you're not getting in. So, that's the first one. You know? Chiltern has it. Chateau Marmont has it. Costes has it. So, if they're willing to let me in without me having to, you know, make some calls..

[00:12:12] Matt Welle: Gravel.

[00:12:13] Eric Jafari: Yeah. Yeah. I don't wanna do it. Alright. So, that's the first one. Second one is the founder consumer? Is the founder still a consumer? The reason why Chiltern and Chateau are so magical to this day is that on any given day you walk in, you'll see Andre having oysters with champagne, talking to people in the time of his life. He's enjoying himself.

[00:12:39] Matt Welle: Our entire industry has been asset light, so you'll never find a founder, builder in the building anymore at this point. So, do you believe to recover that segment, the only way to do that is if you actually own, operate, and run the brand end-to-end?

[00:12:52] Eric Jafari: Yeah. If you think about a kind of modern asset-light model, it only actually makes sense if you've got a hyperscale. The asset-light model doesn't actually make the operator any money if all you've got is 5, 6, 7 hotels. I'm not sure it works without having some degree of ownership in the underlying real estate. Yeah. It's a hard thing to say. I just think the faster you scale, and I know this firsthand, that at our peak, we were opening 8 hotels across 6 countries during COVID. Was horrible. Very hard to maintain the magic when you're spread out like that they do. I mean, there are some operators who do it very well. Yeah. I think there was a time when Soho House was doing it well, but it's just, at some point or another, the wheels fall off.

[00:13:41] Matt Welle: Yeah. It does break. Yeah. It does break. And that's why I'm worried for brands like Aman or like, Rosewood. I've been big fans of their properties. And I think, actually, they're doing very well, but I see their expansion plan. I'm just terrified of what they'll do at scale.

[00:13:55] Eric Jafari: Take the owner of Aman, is it, Doronin?

[00:13:58] Matt Welle: Sergei. I think it's, what's his name? I'm not sure, but…

[00:14:02] Eric Jafari: I spent a lot of time speaking to one of his ex-number-twos, and he would tell me he had an obsession. He was the consumer. He had, like, if you walked in and the wardrobe wasn't a walk-in wardrobe of a certain size and space, he would go mental. He had a kind of relentless rejection to compromise, and that's what you're paying for, which is.

[00:14:24] Matt Welle: You have to have that price.

[00:14:25] Eric Jafari: Yeah. When you're staying.

[00:14:26] Matt Welle: Yeah. You have to have that price.

[00:14:27] Eric Jafari: Yeah. It's no surprise to me that Aman is kind of destroying, kind of the big brands. I made the mistake once to partner with a big brand, and I remember they had a brand person there. And we were talking about a lifestyle hotel, and you could just tell she knew nothing about the segment. And she was opining on, well, shouldn't you put, like, graffiti over there? I remember thinking to myself, this is no wonder the product feels bland because the decision maker is more concerned about the room size and the back of house requirements than they are about any of the guest experience.

[00:15:02] Matt Welle: Well, I used to work at Hilton, and I remember when they started doing lifestyle brands. And I saw the guys on stage, these white males on stage in terrible outfits. And I was like, you're talking about launching lifestyle brands and the Waldorf Astoria brand, but you don't reflect it in the way that you stand up on stage. And, like, you can't teach that kind of, like, it has to be lived, and you have to find founders that deeply, deeply feel that passion for it. So, I just, that's why I struggle with the big brands running those kinds of firm lifestyle or luxury brands.

[00:15:33] Eric Jafari: I mean, I will say to Hilton's credit, they hired a friend of mine by the name of Kevin Osterhaus. He's one of the best in the business. Now the question is, and Kevin will never admit it to me. Will they give Kevin the autonomy he needs to deliver the lifestyle experience? They got the best. You can't get any better than Kevin.

[00:15:49] Matt Welle: But will he get stuck in the machine?

[00:15:51] Eric Jafari: Yeah. Yeah. Whether they give him the autonomy is a different story.

[00:15:53] Matt Welle: So, you're opening the first hotel next May, I think you said, in London? Yeah. What will be distinctly different in that hotel?

[00:15:59] Eric Jafari: Well, listen, it comes down to my personal obsession. I guess I've got two sides to myself. There's the side of myself that runs a wild night out at the Delano in Miami, but I learned ten years ago that if I was going to work in private equity and open 4,500 rooms and work 90 hours a week, partying every night is not going to help me sustain that level of productivity. And so very early on in the journey, I had to turn to optimization, things that would help me cope with the pressure. And that started off with eating healthy, then it kind of over time moved to things like meditation, and you know, ice baths. And it just kind of slowly evolved over time. And I realized a lot of what I wanted from the lifestyle experience, the nightclub experience, was that was two things. It was the dopamine high, your sense of euphoria, and community, the chance encounter. Whether it's, yeah, I met my wife at Bungalow in St. Martins lane Hotel. I mean, thank God, you know, I did. It's that chance encounter that changes your trajectory. Some of my greatest business deals have been enduring those hours. So, it's the community, it's the social element, and it's the wellness element. And in my opinion, the hotel industry is failing in both categories right now. The social element we've talked about, we haven't talked about is the wellness element. When hoteliers hear the word wellness, they immediately turn to someone sitting by a pool waiting for their massage. If you speak to the modern consumer, the millennial, the Gen Z, even the Gen X, who are urbanites, about how they would define wellness, it's literally the opposite. It's the various boot camps. It's Othership New York, where you're in a sauna with 50 other people doing breath work right before you go in and do your ice bath. It's the run club with Diplo. It's communal. It's loud. It's the dopamine high that you used to get from the nightclub that you may get from time to time, but not as often anymore. It's making sure that when you go to eat, you might be tracking your macros. You want your food to be seed oil-free. Is the food organic? It's going to sleep at night on a cooling mattress, an Eight Sleep mattress. It's tracking your vitals. What it isn't? It isn't this once-a-year detox escape that you have to remortgage your house for. It is part of their day-to-day lives. And when you travel for one or two nights, fine. Maybe you're willing to not partake in the run club or so on and so forth. But if you're traveling for a week, which the average length of stay for a foreign international traveler coming to London, is in excess of five days now. You speak to any one of these consumers, we've got a saturated hotel market; none of them feels like they're having their fitness, wellness needs met. Yeah. Not one.

[00:18:54] Matt Welle: But it's the thing we cut out very, like, if you're an operator, often they cut out any space that they can turn into a bedroom. So, the gym has to be a tiny gym. The spa has to be a tiny spa, like a treatment room, and then they call it a spa. And I'm just like, at what point do we go back to prioritizing those spaces for the guests that stay in the rooms? And it always feels that over time, everything will be chipped away until you're just left with a bed factory effect on it.

[00:19:19] Eric Jafari: I actually take this step further. A space isn't, you remember the telltale sign about the lifestyle hotel, what's the door policy? That door policy really applies to any common area. If your local community, the people who aren't staying in the hotel, don't think that your wellness spaces, and more importantly, your gym, your run club, your HIIT class, your meditation class. If that is not the best program in London for the locals, then why stay at the hotel? Anyone can stay in a gym anywhere. This is the irony. We assume that what we want is exclusivity when we go to these hotels. What you want is you want the magic, and magic happens with energy. Energy happens with people. Yes. The amenities are important, and the way that the space is designed, the gym has to be the most beautiful gym you've ever seen. The sauna has to be the most magical. From a design standpoint, from my perspective, those are all table stakes. But what's more important than that is the crowd. How do you curate a crowd within those spaces so that those spaces become the most sought-after spaces in London, in Amsterdam, in New York? Because let's be honest, a day, the target consumer cares more about that than they do Studio54. That's not to say that they don't want a crazy night out. They just wanna earn it. Ibiza, Mykonos, that's not going anywhere. But I have so much more fun in Ibiza or Mykonos or Berlin when I feel like I've paid my dues.

[00:20:53] Matt Welle: But that level of demand that you're looking for, so, like, people wanting to get in the door effectively, can you only achieve that in Paris, London, like, the major cities? Or could you do that in, like, Amsterdam or, like, a smaller city where you don't necessarily have that level of demand?

[00:21:06] Eric Jafari: I mean, if you look at kind of Amsterdam, some of the most amazing wellness concepts are in Amsterdam today, and they're really nailing it. I mean, you look at Saints & Sinners, Growth Cycle, I mean, I could go through a list of 20 concepts that have nailed both the community and the wellness angle. There are some brilliant wellness steps. The difference is that as of today, if I'm a consumer and you think, like, kind of a 24-hour day of a consumer, they want somewhere they can go get their healthy food. They want somewhere where they can go do their yoga or meditation. They need somewhere else where they can do their HIIT class and a straight-up training. And the issue is that at this point in time, it's all bifurcated. It's all, even in New York, in New York, you ask my friends, the biggest frustration is that they're walking down to Canal Street at the bottom to go to Happier grocery. And from there, they're going up to learn to go work out and go do another HIIT class, which is kind of a contrast there. Then you gotta go across town to go do your gym workout. Everything's spread out. And so the thing that I would say Nick Jones figured out very early on, as related to his community, he knew who his community was, and he was like, okay, how do I create an ecosystem where everything happens under my roof? That's the work we've partnered with a group called LHC. They own the Dean Hotels. A lot of what we're obsessing over at the moment, between now and opening, is how do we create this ecosystem where everything that this consumer needs is under one roof? From you know, the type of food they eat, to the meditation class, to this hot and cold, to the gym, to the rooftop experience that they want, that they don't feel like they have to compromise on anything.

[00:22:43] Matt Welle: Yeah. Well, I just went to Nick Jones' new project, which is just down the road, I think, in Covent Garden. And this hotel has this grocery store. And I went there at the weekend, and it was absolutely buzzing more than any grocery store I'd ever seen, but it was part of the hotel and the beautiful gym and spa facilities. And it's just, like, all the things that connected in there were so very special, and I'm excited for seeing those concepts pop up where you get everything in one building.

[00:23:08] Eric Jafari: Yeah. Saint Clement's. I'll be curious to see. I'm looking forward to seeing that. I think he's done a great job at the Corner Shop. But, yeah, he's going big with that on. I mean, some of his rates are high. He's going through some very high rates. It'll be interesting. If he pulls it up, he'll be very impressed and very happy because, like, our hotel is only a 5-minute walk from his. It's also exciting to see. For a while there, I was quite upset because you think about, we had some amazing pioneers: you had Andre Balazs, you had Alex Calderwood, you know, with Ace, you know, you had Nick Jones, I can go through the list, and there was a time there where they'd either all sold out or checked out to see Nick kind of re-emerging with Saint Clement's and, you know, Ian's, you know, opening a new public in in Los Angeles, I'm excited because there was probably a good period there where a lot of innovation just came to a standstill and hoped up they face.

[00:24:04] Matt Welle: Yeah. Well, they know what real exciting kind of lifestyle looks like. And for them to come back with independent brands again and to do it for a second or third time, that shows, like, okay, so they see what the brand has done with the originals, and, actually, like, we need to go back and fix this because there is a space, and it's not being served at this moment.

[00:24:23] Eric Jafari: Yeah. Agreed. Agreed. So, it's exciting.

[00:24:25] Matt Welle: Is it harder to raise money for this concept versus raising for just your average, you know, Marriott or Hilton or IHG brand that you put on a roof? Like, you're trying to do something distinctly different. So, is it much harder than raise capital to fund that?

[00:24:40] Eric Jafari: Infinitely harder today than it's ever been to raise capital. Even with my track record, it's still difficult. But there's a reason for that. I think, one, what investors want is they just want you to replicate what you've done in the past. They didn't want to do that.

[00:24:55] Matt Welle: No one. Yeah. No exciting entrepreneur wants to do that again. Yeah.

[00:24:58] Eric Jafari: So, that's the first issue. I think the second issue is that if you are going to create something disruptive, you really need to ensure that your investor is 100% aligned with your vision. And the ideal is that your investor is the target consumer. That is the trifecta. Because then I'll never forget, and I won't name any names, but I'll never forget the dialogue I was having with one of my investors. They were like, why don't we just put a Starbucks on the Ground Floor? And I was like, oh, man. Or, "Why don't we just convert the Michelin-star restaurant into a meeting room? We'll make more money." Those types of dialogue are so disturbing. And the reality is, what happens is when you do that, yeah, you probably do make more money in the short term. It's just what you've done is, over the long run, you've destroyed any brand value. And so, it doesn't; these are the types of conversations that are very hard to have with investors unless they get the big picture. And we're really, I would say that Keith and I both incredibly fortunate that the backers that we've partnered with on this, I mean, not only do they get it, in a lot of cases, I'd say that in some cases, he's got probably better taste than I do. He's like, I don't think you should do this. I think you should do that. And I was like, Jesus Christ, you're right. And so that's just a really privileged position to be in. We're in a great position. So, we've got some great partners, and they want us to eventually, over time, you know, set up one in Paris. So, I'll never scale at the pace that I did at Locke, that has its challenges, but I do also acknowledge that over time, there's a benefit to the consumer. You've set up that outpost for them in Paris, or in Milan, or Madrid, or in Barcelona, the types of places.

[00:26:40] Matt Welle: But I imagine if you have a commercially successful business, the investors are happy. They're like, right, let's do more of that faster. How do you retain the balance? Because what you're saying is, like, you don't wanna extend a lifestyle brand too fast because you'll destroy it, but how do you, because investors are like, yeah. Great. Let's just do 10 of those.

[00:26:55] Eric Jafari: We spent two years talking to our investors before we ever did our first deal. And it's just, and listen, the reality is it's just like marriage. Everyone wants to race to get married or to have kids, and then when you have kids, it's like a nuclear bomb to the relationship. I love my boys. It's amazing, but it's the single most difficult thing you'll ever do, other than maybe starting a startup. There are so many parallels between the two. Take your time. I know you wanna raise money, right? You're going to be living a lot longer with this individual by your side than you did without. Really go into it with your eyes wide open because things will always, just like in a marriage, everything is easy during the honeymoon period. You need to know that during the difficult period, they see eye-to-eye the way you do. Because if they don't, the littlest of things will start, kind of, putting in larger cracks that'll become bigger later.

[00:27:50] Matt Welle: Fair. And I think that's advice that I've received as well, early on, thankfully, because whenever we talk to investors, it's like, well, who's the person behind the person that's in the boardroom? Like, we're trying to really uncover them because I'm like, yeah, this is a 10-year ride. It's harder to divorce and invest it than it is to divorce a husband or wife, I think, at this point.

[00:28:07] Eric Jafari: Yeah. That's true. A lot harder. A lot harder. There's a lot more at risk.

[00:28:11] Matt Welle: So, where does technology sit in that, like, lifestyle experience? Does it have a place there, or you're like, I don't really care about the technology?

[00:28:18] Eric Jafari: Yeah. 100%. I love it, and if I wasn't in hospitality, I'd be an AI. I'm obsessed with artificial intelligence. I know a lot of people say that it's the end of the world and so on and so forth. And maybe they're right, but in the meantime, it's an incredible tool.

[00:28:32] Matt Welle: That's great.

[00:28:35] Eric Jafari: So, okay. Listen. I think the first one. I'll never forget a conversation with a friend of mine. He had just gone to, or maybe the hotel. A very, very nice hotel in the British countryside. You know, they were charging £1,500 a night. And I'll never forget, he came back, and I was like, "Hey. So, how did it go? Was it an amazing stay?" And he was like, "Eric, it was my second stay." He was like, "I won't stay there again." I was like, "Okay. Well, how come?" "You're paying that kind of money. You know, I'd called them in advance, told them to set up my picnic basket in order to take my partner. We're gonna have a picnic in the back. And they didn't remember the order. They didn't remember what I ordered last time. They didn't even remember who I was." I'm always sitting here and going, okay. On the one hand, that's a training issue. Sure. You can train your staff, but most people don't remember people's names. I don't. I'm terrible at names. I remember faces, not names. For me, that's a technology issue. I listen. There are all the table stakes, right? The, you know, RMS, PMS, all of those table stakes. But if you can create the right type of tech, your team, the moment that consumer walks through the door, "Oh, Matt's back. Oh, you know what, Matt? I tell you what, I noticed that you've already booked the massage for 3 PM. After the massage, around 6 PM, we have a glass of champagne, your favorite Saint Laurent carte waiting for you in the air in the bar, and if you want to book…" It's just that personalization is very difficult to pull off right now. It's hard, and there's a lot of groups say that they do the the the create bespoke products. It's very difficult. I personally have faced that this era of AI revolution will help deliver that amazing experience. I mean, if we harness it the right way, the types of experiences that we can deliver to our guests will far surpass anything that we've been able to do in the past. And that, to me, is incredibly exciting. There's that, obviously, you know, all of the cost savings, your robots checking people and all that stuff.

[00:30:30] Matt Welle: Yes. No.

[00:30:31] Eric Jafari: I'm sure you're gonna see a lot of hotels. There's all of that, you know, the cost-saving element. AI has made me a better leader. It's made me a better friend. It's made me a better father. For someone who ruminates and obsesses over everything, just having something to turn to and go, "Hey, one of the employees did this. What's your interpretation of that?" And I've already uploaded the personality profile. It comes back and goes, "Oh, it's because of this, this, and this. They're don't look at things the same way you do." And I'm sitting there going, like, having the best psychologist on the planet sitting by your side, getting advice on how best to manage. You couldn't do that. I guess, I don't know, have you seen the movie Billions before? It's a bunch of traders, but they've got this psychologist. Now, you don't need to hire that house psychologist. You've got AI that can do it for you.

[00:31:22] Matt Welle: No. It's so good. And I think one of the things that luxury hotels, lifestyle hotels, they have more data about customers because they know exactly where you spend money, what you spend it on, all the history profiles, but they're also sitting on the worst legacy tech stacks in the world right now. So, they can't actually do anything with it. It just sits in this, like, blob of text somewhere in a silo. And I think, you know, some of the brands that are, honestly, technology-wise, further ahead are the economy brands, but they don't have anything in the profile. So, we were deploying AI to tell the receptionist, saying, "Are you aware that this customer is, you know, lactose intolerant, a large defect or whatever?" But we don't have the rich dosage profiles because they're just doing, like, high-speed kind of check-in, check out, check-in, check out. I get really excited about the lifestyle brand because suddenly, we have the data. We have AI on top of it. You just gotta connect the dots through. And, honestly, when we started deploying our AI tooltips and actions, the hotels where it's the most effective are the cool lifestyle hotels who actively maintain the profiles. So, there's just this thing where all the innovation right now happens on the budget brands or the economy brands and mid-scale brands, whereas all the lifestyle luxury hotels are stuck on their old legacy stack because they're so afraid of migrating into the cloud, where they actually get the benefits of AI today.

[00:32:33] Eric Jafari: Yeah. It can also be quite overwhelming. Where do you apply the difference? I mean, listen, unfortunately, rightly or wrongly, we went from being a fairly hotelier, especially in the lifestyle game. What people found to understand about the lifestyle game is that if you were in lifestyle, it was highly likely that you were the type of founder who was experimental. You were trying new things. The only way you create a product that is different, unique, that stands out is by doing what nobody else is doing, which means experimenting. But experimenting means that you make mistakes. What I've noticed is that since COVID, is that people are too fearful of trying something new. The funding behind them doesn't want them to experiment. The senior-level executives, and so everyone is kind of rooting their decision-making in fear. And because of that, you end up with a bland product.

[00:33:28] Matt Welle: So, how do you drive that culture?

[00:33:30] Eric Jafari: Yeah. I guess in response to that, the only people who are delivering a unique-ish experience are the kind of ultra luxury, if you wanna call it that. But even there, like, more often than not, you know, you spend that £1,000 a night. You kind of walk away going, was that really worth £1,000? I just, yeah, the room size was big. The beach was nice. I don't know.

[00:33:50] Matt Welle: But I'm more focused when I've paid that amount of money on what the service delivery will be because I'm like, well, now I'm being charged by the second almost, so I want this, it's supposed to be really, really good. And don't make me wait to pick up my luggage, or you know, when they take the luggage from you at the door, because, like, they're gonna bring it to you, and then you just sit in your room waiting for 15 minutes for them to deliver the luggage. And you're like, I just wanna go to the beach at this point.

[00:34:13] Eric Jafari: By the way, that's one of the reasons I don't like it when they take my luggage. I hate that weight because, yeah, I hate it.

[00:34:17] Matt Welle: I am fighting you for it.

[00:34:18] Eric Jafari: So, for now, I'm like, you know what? Just, it's okay. It's okay. I'll take my own luggage. Here's £10 not to take my luggage. I think it's difficult. I think the conversation that has to be had with everyone is what is it that leads to people rooting every decision in fear? In my opinion, I attribute that to a kind of siloed thinking. Operations thinking that they're the most important organization, finance thinking they're the most important, sales thinking they're the most important. When something goes wrong, they're pointing fingers at one another. Some of it has to do with compensation. You know, if operations is rewarded on, you know, guest satisfaction scores, whereas, you know, and development's rewarded on delivering on time and on budget, it's inevitable. And when something goes wrong, these fingers are gonna point either way. Development's gonna say, "Well, you guys aren't maintaining the buildings." Ops is gonna say, "You guys delivered to a poor spec." Part of it, from my perspective, is harmonizing compensation, making sure that everyone is focused on the same outcome. We're all rowing in the same direction, and there's no, I have zero patience, and I made this mistake at Locke, and a thousand other mistakes. If he has zero patience for the finger-pointing, political jockeying, if I find that there's a leader, even if they're incredibly productive, I find that there's a leader who values their team more so than they do this collective, they're out. You have one warning, you're out. It is just, and I think, unfortunately, if I think about what were the biggest mistakes I made during the journey, one of the biggest mistakes I made, and I said this on past podcasts. If you're going from a zero EBITDA company to a 100 million EBITDA company, and you know you're going to have that hyper scale, and you've got, you know, unlimited capital behind you, it's really enticing to want to bring new big names from the big brands. Why? Because it looks good on paper. Your funders are happy because you've got gray hair at the table. You've got, you know, some good CVs. You know, the founder needs some kind of checks and balances around them. That looks great. That sounds great. What they don't tell you is that that skill set of going from 0 to 200 million is literally the opposite skill set of going up a corporate ladder of an organization that's already worth 2 billion.

[00:36:40] Matt Welle: So, what do you look for? If people listen to this and they wanna work for you, what is the thing that you look for in employees that makes them different from those people that scale over and over and over?

[00:36:49] Eric Jafari: Hunger. Like, hunger for disruption, hunger for wellness, hunger for the lifestyle, the irony is people are like, well, you can't ask for wellness and lifestyle. You can. In fact, 99% of the time, the same person who's doing yoga and CrossFit and contrast therapy is the same person that's partying in the nightclub on a Saturday night or going to Fabric on a Sunday. It's the same consumer. It's just on Monday, they're getting their dopamine high from the ice baths. Saturdays, they're getting their dopamine high from something I'd rather not say on this podcast. It's a deep passion to want to create something that really is unique. And so for me, that's the most important piece of the equation. Your CV. It's seen so many great CVs. It's not as important to me. If they don't fit, I have this long document now, maybe out of personal trauma that I've created, that lists out what it means to work here. I require that they read it, and then I sit down with them, okay, what's your interpretation of what you've read? If they haven't read it, it's never a good sign.

[00:37:51] Matt Welle: We have to finish it and round up, but I'm just so inspired to just keep talking because you built the building and the property that I wanna book, and that's the thing that excites the heck out of me because I've been missing this. And I didn't realize it until this podcast that I'd actually been missing. I thought I just didn't find the right brand where I get that vibe, where I get blocked at the door. I kind of want to fight to get in. So, I'm very excited that you're building this now, and you're building it in my neighborhood in London, where I go to shop a few times a year. So, I can't wait to see this come to life in the coming months. Good luck with building it, and I hope to get you back once you've opened it so we can actually talk about kind of what the magic is that you've created there. But, best of luck. I'm really excited to see this come to life.

[00:38:33] Eric Jafari: Thanks, Matt. I think the last thing I'd leave you with is that I'd always made the mistake of thinking that you can nail 100% of that experience the very first day. And what I've learned over the years is unhopeful. You know, they say Mozart, when they asked Mozart, "How do you feel about the fact that you make such incredible music?" And his comment was, "There's what you hear, and there's what I initially heard in my head. And what you hear, unfortunately, is only 70% of what I heard with my head. I wish you could hear the whole 100%." Although I'm very proud of what I've done in the past, I think in all honesty that they're only maybe 50% of what I wanted it to be. And this time, I'm determined for it to be as close to 100% as possible. But here's the big but. I acknowledge the fact that it may not happen the day you show up, that very first day. A year later, if it's not close to 100%, then I have to have a hard conversation with myself and the team.

[00:39:33] Matt Welle: I think the thing that's different is that I can feel your passion. I know it's there because you've experienced it and you've seen the lack of that somewhere. And I don't doubt that you'll get there because I can feel it, and it's so rare that I speak to a hotelier who's a genuine hotelier who cares deeply about creating something new and something exciting. And I think it's that feeling, like, I don't know, you're gonna do this thing. And, yes, day one, we always go to new opening restaurants in Amsterdam. We're always disappointed, but we do always go back 6 months later to see if it's got better. And very rarely, it does get better. But if there's a right person that I see in the restaurant on the floor navigating, it's like you said, the operator has to be in the restaurant, in the lobby, has to be around. And as long as that person's there to spot everything that goes wrong, they'll fix it. And I think I felt that today, so I'm very excited about it.

[00:40:21] Eric Jafari: Oh, yeah. Listen. The last thing I'll leave you with is that I'm incredibly privileged. I have the right capital partner. I've got incredible team members. I've got incredible partners. In fact, one of my partners is actually based in, that went to Amsterdam, Keith. I'm not sure I would have been able, I know for certain I wouldn't have been able to pull it off without them. So, with them by my side, I'm incredibly excited to see how things turn out over the course of the next few months.

[00:40:45] Matt Welle: Nice. I'll be watching. Thank you.

[00:40:47] Eric Jafari: Alright. Thanks so much, man.