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It stated that they have some 50 restaurants, 40 hotels, and 20 residential projects (i.e. branded residences) either open or in development around the world. One of the first of these branded residences was here in Toronto. And as of July 2024, which was a major liquidity event for the company, it was valued at US$1.3 billion.
According to group CEO Trevor Horwell, their approach always starts with a restaurant: "It's an upside-down business model where the restaurant is the social engine. If we believe a Nobu restaurant can become a genuine social hub for locals, then the hotel and residences can follow."
I like this business model because as we talked about a year ago on the blog, "everything is branded." Knight Frank out of the UK estimates that the number of branded residences around the world is going to go from 611 this year to around 1,020 by 2030. So it seems destined to become a bigger part of our business.
But the other reason I'm drawn to it is because it's a good business to be in. If you own a brand that has value, you can do licensing deals all around the world — which is what Nobu is doing — and not take on the same equity risk that developers typically take on. It's capital-light.
However, the trade-off risk is that you're dependent on the continued attractiveness of your brand. If Robert De Niro ceases to remain involved and/or Nobu just loses some of its cachet over time, then the business won't do as well. But that's true of any hospitality-type business, or any brand for that matter.
Here's a recent video from The Wall Street Journal talking about the "secrets behind hotel design." It's interesting in that it gets into some of the ways in which designers are shrinking hotel rooms and then making up for it with amenities. This is a strategy you'll find in many other real estate asset classes ranging from multi-family housing to co-living.
But if you scroll through the comments, you'll see that the responses are overwhelmingly negative. In fact, I was hard pressed to find any positive ones. Most people simply don't like the idea of hotel rooms shrinking and of not having the same amenities. This is not surprising. The comments are similar to what you'll hear people say about shrinking condominium suites.
At the end of the day, though, the strategy outlined in this video is designed to cater to a very specific market: young travelers (roughly 25 to 40 years old) who want to stay somewhere fun and social — and at a reasonable price. Room size is the lever that helps bring rates down. But it's not for everyone, and that's why hotel companies have so many different brands in their portfolio. It's so they can precisely target different customers and types of travel.
Speaking from personal experience, I can tell you that my wife and I have stayed in numerous hotels where the entire room was basically just the bed. Here's Tokyo from this past winter. And in one particular hotel in Paris, there wasn't even enough space for me to fully open my carry-on suitcase. If I wanted to open and close the window beside our bed, I had to first close my suitcase.
I'd happily stay there again. The place was well-designed, clean, had good bathroom products, was in a great location, and the pricing was reasonable, especially for Paris. As a hotel customer, I consistently value design and experience over square footage. And the market suggests that I'm not alone. Cool and reasonably priced is often a winning strategy no matter what industry you're in.
If you would like to visit southern Ontario (specifically somewhere outside of Toronto) and stay in a cool design-forward lifestyle hotel, what are your options? The obvious ones are the Drake Devonshire, The Royal Hotel, and Wander the Resort in Prince Edward County (~2.5 hours east of Toronto).
Looking north of Toronto, The Postmark Hotel in Newmarket is a nice boutique hotel. But I can't think of any others and there aren't any lifestyle hotels in Muskoka. That's cottage country.
Moving toward the west, Elora Mill is a popular hotel and destination (with very high ADRs), but I would not call it a design forward lifestyle hotel. It's traditional luxury. So that's roughly it. Your only other options are trendy motels, such as the Beach Motel in Southhampton.
Now let's look specifically at the Niagara Peninsula (where we have proposed a design-forward lifestyle hotel). The three most popular destinations are Niagara Falls, Niagara-on-the-Lake, and the Niagara Benchlands. And each year, this region receives over 13 million visitors, 30-40% of which are American.
But again, I would argue that there are exactly this many design-forward lifestyle hotels on the Peninsula: 0. The market is dominated by Vintage Hotels, which is not this.
But that's set to change next year. The Clayfield, which is part of Hyatt's Unbound Collection, is currently under construction across from Stratus Wines in Niagara-on-the-Lake. The design is by Sid Lee Architecture out of Montréal (which
It stated that they have some 50 restaurants, 40 hotels, and 20 residential projects (i.e. branded residences) either open or in development around the world. One of the first of these branded residences was here in Toronto. And as of July 2024, which was a major liquidity event for the company, it was valued at US$1.3 billion.
According to group CEO Trevor Horwell, their approach always starts with a restaurant: "It's an upside-down business model where the restaurant is the social engine. If we believe a Nobu restaurant can become a genuine social hub for locals, then the hotel and residences can follow."
I like this business model because as we talked about a year ago on the blog, "everything is branded." Knight Frank out of the UK estimates that the number of branded residences around the world is going to go from 611 this year to around 1,020 by 2030. So it seems destined to become a bigger part of our business.
But the other reason I'm drawn to it is because it's a good business to be in. If you own a brand that has value, you can do licensing deals all around the world — which is what Nobu is doing — and not take on the same equity risk that developers typically take on. It's capital-light.
However, the trade-off risk is that you're dependent on the continued attractiveness of your brand. If Robert De Niro ceases to remain involved and/or Nobu just loses some of its cachet over time, then the business won't do as well. But that's true of any hospitality-type business, or any brand for that matter.
Here's a recent video from The Wall Street Journal talking about the "secrets behind hotel design." It's interesting in that it gets into some of the ways in which designers are shrinking hotel rooms and then making up for it with amenities. This is a strategy you'll find in many other real estate asset classes ranging from multi-family housing to co-living.
But if you scroll through the comments, you'll see that the responses are overwhelmingly negative. In fact, I was hard pressed to find any positive ones. Most people simply don't like the idea of hotel rooms shrinking and of not having the same amenities. This is not surprising. The comments are similar to what you'll hear people say about shrinking condominium suites.
At the end of the day, though, the strategy outlined in this video is designed to cater to a very specific market: young travelers (roughly 25 to 40 years old) who want to stay somewhere fun and social — and at a reasonable price. Room size is the lever that helps bring rates down. But it's not for everyone, and that's why hotel companies have so many different brands in their portfolio. It's so they can precisely target different customers and types of travel.
Speaking from personal experience, I can tell you that my wife and I have stayed in numerous hotels where the entire room was basically just the bed. Here's Tokyo from this past winter. And in one particular hotel in Paris, there wasn't even enough space for me to fully open my carry-on suitcase. If I wanted to open and close the window beside our bed, I had to first close my suitcase.
I'd happily stay there again. The place was well-designed, clean, had good bathroom products, was in a great location, and the pricing was reasonable, especially for Paris. As a hotel customer, I consistently value design and experience over square footage. And the market suggests that I'm not alone. Cool and reasonably priced is often a winning strategy no matter what industry you're in.
If you would like to visit southern Ontario (specifically somewhere outside of Toronto) and stay in a cool design-forward lifestyle hotel, what are your options? The obvious ones are the Drake Devonshire, The Royal Hotel, and Wander the Resort in Prince Edward County (~2.5 hours east of Toronto).
Looking north of Toronto, The Postmark Hotel in Newmarket is a nice boutique hotel. But I can't think of any others and there aren't any lifestyle hotels in Muskoka. That's cottage country.
Moving toward the west, Elora Mill is a popular hotel and destination (with very high ADRs), but I would not call it a design forward lifestyle hotel. It's traditional luxury. So that's roughly it. Your only other options are trendy motels, such as the Beach Motel in Southhampton.
Now let's look specifically at the Niagara Peninsula (where we have proposed a design-forward lifestyle hotel). The three most popular destinations are Niagara Falls, Niagara-on-the-Lake, and the Niagara Benchlands. And each year, this region receives over 13 million visitors, 30-40% of which are American.
But again, I would argue that there are exactly this many design-forward lifestyle hotels on the Peninsula: 0. The market is dominated by Vintage Hotels, which is not this.
But that's set to change next year. The Clayfield, which is part of Hyatt's Unbound Collection, is currently under construction across from Stratus Wines in Niagara-on-the-Lake. The design is by Sid Lee Architecture out of Montréal (which
But this is only one hotel in what is Canada's largest and most important wine region. It's also a region with two Michelin-starred restaurants, countless recreational and cultural offerings, growing cycling tourism, and much more.
We need more of this kind of offering, which is why we have also proposed a design-forward lifestyle hotel on the water in the Niagara Benchlands. Today, we refer to the larger mixed-use development as Project Bench.
For those of you that are interested, the Bench is a separate wine appellation from NOTL. It has an elevated and sloped terrain and a longer growing season that is ideal for Pinot Noir, Chardonnay, and Riesling. But in the end, we view these two subregions as being entirely complimentary, akin to Sonoma and Napa in California (incidentally, they also share similar differences in terms of style, climate, geography, and terroir).
A rising tide lifts all boats.
And we are of the opinion that a lack of design-forward accommodations — with global appeal — is holding back the economic potential of this region. And so we're working as hard as we can to correct that. If this opportunity is also exciting to you, please do get in touch. We're always looking to collaborate.
You can also check us out here for more about the project.
Cover photo from Beaumier
But this is only one hotel in what is Canada's largest and most important wine region. It's also a region with two Michelin-starred restaurants, countless recreational and cultural offerings, growing cycling tourism, and much more.
We need more of this kind of offering, which is why we have also proposed a design-forward lifestyle hotel on the water in the Niagara Benchlands. Today, we refer to the larger mixed-use development as Project Bench.
For those of you that are interested, the Bench is a separate wine appellation from NOTL. It has an elevated and sloped terrain and a longer growing season that is ideal for Pinot Noir, Chardonnay, and Riesling. But in the end, we view these two subregions as being entirely complimentary, akin to Sonoma and Napa in California (incidentally, they also share similar differences in terms of style, climate, geography, and terroir).
A rising tide lifts all boats.
And we are of the opinion that a lack of design-forward accommodations — with global appeal — is holding back the economic potential of this region. And so we're working as hard as we can to correct that. If this opportunity is also exciting to you, please do get in touch. We're always looking to collaborate.
You can also check us out here for more about the project.
Cover photo from Beaumier
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