Alastair Stewart and Nicholas Hoare, CEO and COO respectively of etc.venues, are to take their successful urban day venue model across the Atlantic.
They revealed exclusively to CMW editor Paul Colston that they will go Stateside armed with a fresh US$100m tranche of private equity funding to roll out the brand in New York and the East coast.
etc.venues CEO Alastair Stewart was winner of the Transformational Leader award at this year’s EY Entrepreneur of the Year, London and South East. It is easy to understand why. He has grown the UK urban day venue portfolio seven-fold into a £70m ($84.8m) business, since he led a management buyout backed by Dunedin in 2006.
Further PE backing followed in 2012, and now Stewart reveals publicly for the first time to CMW his plans to double it again within five years. He will be backed by a further $100m of private equity funding from US global hospitality investors Gencom and Benchmark, the fund that took a major stake a year ago. etc.venues has already opened the first of three planned New York venues, with two more to come before the New Year. These will add to the 17 UK event spaces which, Stewart claims, have already seen etc. overtake both Hilton and Marriott in London for meeting rooms (with 278).
Stewart is not one for resting on laurels, and doesn’t suffer industry fools gladly. He is never shy to share his opinions. One is that the industry has not been successful in getting its valuable message across. “The conference centre sector has had its moments, but if we’re to get interest and investment we need some success stories,” says Stewart.
Most of etc.’s success has come in the capital, thanks to its booming meetings sector. London has nearly all of etc.venue openings, although Stewart notes its Manchester property has started to deliver. “We are seeing higher rates in there than in Birmingham. There is good demand and good rates.” By implication, it is a somewhat tougher ask in Brum.
Aiming for the Big Apple
So, how did the New York big idea come about?
“It is a personal vision. I’ve always wanted to take the business there,” says Stewart.
The etc. chief says the tipping point was when his UK private equity investors were not supportive of Stewart’s international expansion idea. “They are a UK-focused fund. Our finance director Paul Keen left and we changed from UK PE to American investors, Gencom and Benchmark.”
Another significant part of the new paradigm was Nick Hoare joining as COO last year. Hoare had previously worked at Dunedin so knew the business and its DNA well.
Since the Gencom investment the centre of gravity switched from London to New York.
“The whole ball game has changed from a good sized London business to transforming into a global business,” says Stewart.
He explains that, having honed the model in London and making it scaleable, it is now the aim to deploy in New York and benefit from the much larger market.
Stewart sees the urban day venue market largely dominated by four big brands: etc.venues (UK); Convene in North America; Chateauform (Europe); and Cliftons in Australasia.
“Previously, we had all stuck to our home markets,” says Stewart. “Convene may come to the UK, of course,” but he says etc. is more than ready to compete.
Stewart believes there is plenty to export and while acknowledging that in the US there is a bigger spread of activity, he maintains the pace of innovation has been much greater in Europe.
“Europe is so far ahead in technology and innovation,” says Stewart, while Nick Hoare adds that the UK approach to training and meetings means venue suppliers have had to adapt more quickly. “We had to evolve to keep up with demand,” he says.
Stewart can be forgiven for letting his eyes move to the bigger prizes. “The big change is our focus on larger venues,” he says. And they don’t come much bigger than the old Greater London Council HQ at County Hall, where Stewart and Hoare are holding court. “This etc.venue has been a huge success and symbolises our natural progression from training to big events,” says Hoare.
More good numbers, but there have been recessionary bumps along the road. What would Stewart have done differently with hindsight?
“Given how good the market has been we could have been more ambitious and done well. You can never know the cycle, but we could have been bolder with investment,” he admits.
HSBC goes hipster?
As etc. gets bigger and used to playing with the Big Boys of international PE, what of the new disruptors coming up behind?
“Some are trying to climb on the back of the co-working phase,” Stewart says. “It is driven by WeWork who have expanded significantly in London, making landlords think more carefully.” He believes that up to 1,100 people from HSBC are set to relocate to WeWork premises, but that they may be surprised to find there isn’t training space, but rather ‘cocoons’.
“We, however, occupy office space and rent on demand,” contrasts Stewart. “My view is that the conventional office will come back. You always need doors in business.”
Stewart does agree that the concept of Space As A Service (SPaaS) is very helpful in terms of raising capital and it’s why etc. has been repositioning towards being perceived as operating in the SPaaS sphere.
Investing in technology
Another important area where etc. wants to show leadership, says Stewart, is through investment in technology. “As a sector we are being woeful. We are one of the only companies [in the sector] with a proper online booking platform with live availability. Generally as an industry we are quite low tech.”
Stewart, an advocate for the nurturing of young talent in the industry, says we are in a war for talent. “We want to play up our entrepreneurial CV at etc. It may start with me [and the EY award], but it is something that should flow through the company.”
Holding on to talent is another knack of the Stewart reign. The distinctive etc. design DNA is something the company values high and is keen to export, with long-time Head of Design Frank Rosello.
Stewart sums up the state of the etc.. nation: “We are going to step it up now. The US looks at scale differently. Access to capital is a different ball game. With a much bigger market, you can become a much bigger player. We have the ambition to go in as a British brand. We’ve looked at people like Soho House, Pret, etc who have been successful and held on to their British model.”
To ensure that the etc. DNA flows across the Atlantic, management has a visa programme to enable it to take up to 10 UK staff initially. The launch team will recruit US colleagues, including a CEO.
“The design pen is being held in the UK,” Stewart underlines. “Consistency is a point for retaining quality. I’d like the same reaction to Frank’s designs as Soho House got for theirs.”
“Initially, the $100m of growth capital will fund another nine venues Stateside,” he says. “We’d like to prove a model out of New York, too,” Stewart adds, acknowledging that it would be an important move for raising capital, “most probably on the East coast”. He is also looking ahead at the possibility of licensing the brand in North America.
I have sat down to interview Stewart every five years for the past 15 years, although I’m wondering whether he will be in the chair opposite in 2024, as he signals the next part of his personal journey is to help Nick Hoare take over the running of the business.
“I’m not looking for a way out,” he assures. “All businesses need transforming. For etc.venues to go to next level it needs a bigger management team. Nick joined (June 2018) with PE experience.” That, we suspect, may save Stewart a fee or two on investment banking advice going forward. “I wanted to get involved in running a business,” Hoare says, explaining why he left Dunedin. “There was a certain serendipity and I linked up here with a management team I trust and a model that works. It can be transported to the US and be massively exciting.”
Stewart is coy only once, when asked about the challenges of the US labour laws in the business, where many large venues are heavily unionised. “Interesting practices,” is how he puts it. He does look forward, however, to realising higher day rates, albeit at a sacrifice of a higher cost base and lower margins, at least initially. “If the delegate rate in the UK is £100 for example, you can double it in New York,” he says.
He obviously relishes offering something different. “There is pent up frustration among US planners. I think we can do well on the back of that. US venues are extremely expensive. We can offer significantly better value.”
Stewart is aware of the pitfalls, and notes there isn’t the same strong agency network in New York as there is in London.
But, he is putting his faith in the importance of service and clearly looking forward to getting stuck in. “There are hundreds of people at etc. who do an amazing job of looking after people and getting the basics right. Service in New York can be patchy,” says Stewart.
While, etc. eyes may be on the West, Hoare promises not to lose sight of the UK and reminds that the brand recently opened 133 Houndsditch, its largest space in the portfolio. The vision remains: to double the business in 3-5 years.
A final Stewart tip for entrepreneurs?
“Work for someone else for a while!” is the answer, as well as a warning against false prophets: “We do live in a world of fake entrepreneurs. Sometimes there is not enough substance. Focus on integrity.”