Luxury Hotelier Eyes Private Clubs As New Business Model

As the coronavirus devastates the hospitality industry, hotelier to the stars André Balazs is gearing up for his next act: private clubs.

Balazs, whose posh boutique hotels have long attracted big stars like Brad Pitt and Leonardo DiCaprio, is planning to convert the Chateau Marmont in Los Angeles to an exclusive, members-only residential club by the end of the year, The Wall Street Journal reports.

If all goes well, Balazs may follow suit and convert his Tokyo, Paris and Milan hotels to private clubs as well.

Balazs is wagering that staying at a club with a limited and screened clientele will feel safer to stars and other high-end guests than a hotel with any number of strangers coming and going.

It’s not clear exactly how the business model would work; Balazs is apparently considering ownership stakes in the club as well as membership fees.

“There is something to be said for knowing people,” Balazs told the WSJ. “You can chat with them; you know where they have been.”

Still, the move comes as the bottom has fallen out of Balazs’ business. At the Chateau Marmont in L.A., the hotelier was forced to lay off the hotel’s staff in March as the coronavirus pandemic upended life across the country. Balazs faced criticism after the layoffs for only providing health insurance coverage until the end of the month. He later donated $100,000 to help support his former employees.

While few hotels could replicate the private club model, the industry as a whole has been experimenting with different models at a time when the number of bookings plunged by more than half in the wake of the coronavirus.

With flying pretty much out of the question for most vacationers right now, hotel chains are hoping to see a bump in business from families opting to drive to locations in their particular markets for “staycations.”