Nobu Hotels: Lodging as Its ‘Speedboat’

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Nobu Hotels believes there are many advantages to running a hotel company as a successful restaurant operator.

The company’s established reputation as a dining destination all but guarantees real estate partners a significant return on investment on both its lodging and food and beverage offerings, according to CEO Trevor Horwell. Hospitality also comes second nature to the growing chain.

Nobu Hotels began in 1994 as a fine dining concept, before opening its first luxury hotel in Las Vegas in 2013. Horwell now calls Nobu Hotels’ lodging business “the speedboat of the company,” due to its fast expansion in the past decade.

The hotel chain operates nine hotels in several markets around the globe, including London, Manila, Barcelona, and Chicago. Nobu Hotels also expects to open five new properties by the end of the year. By the time it opens its 20th location, Horwell expects revenue for Nobu Hotels to exceed $600 million, excluding any contribution from its restaurant business of which the company now runs 42 worldwide.

Trevor Horwell further added “We know we have a good business and intend to grow it very carefully. Probably 40 locations in the next five to eight years, opening about four a year, is satisfactory for us.

From our perspective we have a good strategic foundation. What I mean by that is look at the markets we’re in. They are very well selected and fit with the Nobu Hotels customer.

We don’t just go into markets and plant flags because in the long term it would compromise the product. Hotel companies plant a flag and tell the owner “Look, we can give you this return.” But they are not adding value in both rooms and F&B returns.

All hotel companies lose money or break even on F&B. We make just as much in F&B as in the room. So we want to give owners a return on both. What’s the point of having F&B if it’s just there to service 20 guests a day?”