Soho House furloughs majority of global workforce

Club was valued at $2B after most recent funding round

New York /
Apr.April 17, 2020 05:30 PM
Nick Jones, Founder and C.E.O. of Soho House (Credit: Matt Winkelmeyer/Getty Images, iStock)

Nick Jones, Founder and C.E.O. of Soho House (Credit: Matt Winkelmeyer/Getty Images, iStock)

Soho House, the luxury hotel and members-only club, has joined the plebeian ranks of hospitality firms besieged by furloughs layoffs.

The London-based company has furloughed the vast majority of its staff around the globe after shutting its exclusive venues, or “houses,” due to coronavirus.

In New York, Soho House said it has furloughed more than 590 workers, or nearly 90 percent of its 658-person staff. The cuts are taking place in its Meatpacking District and Dumbo locations, as well as its corporate office, Ludlow House and Soho Works, the company’s new co-working venue at 55 Water Street. A skeleton staff will remain working on a reduced schedule and with reduced pay.

All of Soho House’s 27 locations have been closed during the coronavirus pandemic, which has battered the hospitality industry as stay-at-home orders are in effect across the across most major cities. Since New York Gov. Andrew Cuomo’s executive order began on March 22, layoffs have struck the likes of the Plaza, Le Bernardin and T.G.I. Friday’s.

New York City’s Independent Budget Office released a report Wednesday that estimated the city could lose up to 475,000 jobs over the next year.

“There isn’t a business in our industry that hasn’t been affected by COVID-19, but our absolute priority has been… to guarantee as many jobs as possible during this prolonged shutdown,” a spokesperson for Soho House said in a statement.

The spokesperson said employees were paid for two weeks after the company closed its venues on March 17, and Soho House is continuing to pay for employees’ medical benefits. It set up a program to reimburse hourly workers who experience unforeseen costs. It has also created the Soho Impact Fund to disperse grants to employees who need financial assistance. The fund is supported by donations from Soho House’s senior management team, which is taking 40 percent pay cuts.

The vast majority of Soho House’s cuts stem from Covid-19, but the company also laid off a number of workers in late March. A spokesperson said 79 were impacted by those cuts, which took place as a result of a review process that was already under way before Covid-19.

Before social distancing measures were implemented to slow the spread of the pandemic, Soho House — dubbed “the most important club in Hollywood” by the Hollywood Reporter — had been in expansion mode.

Founded in 1995, it is backed by billionaire Ron Burkle’s Yucapia, which took a majority stake in the company in 2012. In October 2019, the London-based company raised $100 million at a $2 billion valuation from Simon Property Group and Raycliff Capital.

At the time, Soho House had 89,000 members across 27 clubs, and planned to double its venue count to 50. The club already has “houses” in New York, Miami, Chicago and West Hollywood. In 2019, it opened locations in London, Dumbo, Amsterdam, Barcelona.

However, the company has not been profitable. In 2018, it reported £65m in losses, compared to £60m in 2017.

This past fall, Soho House’s planned expansion called for a new workplace brand called “Soho Works.” In an interview with the Financial Times, founder and CEO Nick Jones described the venture as “bolt-on” workspace that he distinguished it from the WeWork.

After WeWork’s botched IPO last year, the co-working firm has weathered several rounds of layoffs.

More recently, it has faced scrutiny over its decision to keep its New York City spaces open despite several reported coronavirus cases at its locations. It has argued that its mail service makes it an essential business that is exempt from the stay-at-home order.
Although co-working firms have been split over whether to remain open or shutter, a loss in business is impacting companies’ bottom lines. Flexible-office provider Knotel has laid off about half its staff,  while the Wing, Convene and Industrious have also slashed jobs.


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