Q2 2024 Soho House & Co Inc Earnings Call
Operator: Hello, everyone, and welcome to the Soho House & Co., Incorporated 2nd Quarter 2024 Results Conference Call. Please note that this call is being recorded. Everyone is on listen-only mode to avoid any background noise.
Hello, everyone and welcome to the Soho House, and you call incorporated second quarter 'twenty to 'twenty four results conference call. Please note that this call is being recorded every one is on listen only mode to avoid any background noise you won't have an opportune.
Operator: You will have an opportunity to ask questions to our speakers later in the Q&A session. If you'd like to ask a question during that time, please press star 1 on your telephone keypad. Thank you. I'd now like to hand over to Thomas Allen, Soho House & Co., Inc. Chief Financial Officer, you may now begin.
Any teacher asked question shower speakers later in the Q&A session, if you'd like to ask a question during that time. Please press star one on your telephone keypad. Thank you I'd now like to hand over to Amit.
Alan: Alan So house and coal incorporated.
Amit Alan: Chief Financial Officer, you May now begin.
Thomas Allen: Thank you for joining us today to discuss Soho House & Co's second quarter financial results. My name is Thomas Allen, and I'm the Chief Financial Officer. I'm here with Andrew Carnie, our CEO.
Thomas Allen: Thank you for joining us today, just Scott So I think our second quarter financial results. My name is Thomas Allen and I'm, The Chief Financial Officer, I'm here with Andrew Carnie. Our CEO. Today's discussion contains forward looking statements represent our beliefs or expectations about future events. All forward looking statements involve risks and uncertainties.
Thomas Allen: Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Some of the factors that may cause such differences are described in our SEC filings. Any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our Q2 earnings release, which can be found at SohoHouseCo.com in the News & Events section.
Is that could cause the actual results to differ materially from the forward looking statements. Some of the factors that may cause such differences are described in our SEC filings any forward looking statements represent our views only as of today and we assume no obligation to update any forward looking statements. If our views change by now you should have access to our Q2.
Thomas Allen: Earnings release, which can be found at Soho House co dot com in the news and events section. Additionally, we have posted our Q2 presentation can also be found on the news and events section on our site.
Thomas Allen: Additionally, we have posted our Q2 presentation, which can also be found in the news and events section on our site. During the call, we will also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from, our GAAP results. Reconciliations to the most comparable GAAP measures are available in today's earnings press release. Now, let me hand it over to Andrew. Thanks.
Speaker Change: Nicole we also refer to certain non-GAAP financial measures.
Speaker Change: These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results reconciliations from the most comparable GAAP measures are available in today's earnings press release now, let me hand, it over to Andrew Thanks, Thomas and Hello, everyone.
Andrew Carnie: Thanks, Thomas, and hello everyone. I'm going to update you on the quarter's highlights and provide an update on the progress we've made against our strategic priorities. I'll then hand over to Thomas to talk through the financial performance, give an update on our balance sheet and our guidance before moving on to Q&A. Q2 has been another strong quarter, with year-on-year and quarter-on-quarter growth in membership, revenues, and EBITDA as we continue to deliver against our strategic priorities of growing and enhancing membership and operational excellence to drive greater profitability.
Andrew: Finally to update you on the quarters highlights and provide an update on the progress we've made against our strategic priorities.
Andrew: I'll, then hand over to Thomas just flow through the financial performance given update on our balance sheet and our guidance before moving on to Q&A.
Andrew: Q2 has been another strong quarter with year on year and quarter on quarter growth in membership revenues and EBITDA as we continue to deliver against our strategic priorities of growing enhancing membership.
Operational excellence to drive greater profitability.
Andrew Carnie: Demand for membership continues to be very strong. Membership revenues increased 16% versus the same period last year and 3% versus the last quarter. Our global waitlist continues to grow, finishing the quarter at 111,000, and we welcome 6,000 Soho House members going to 204,000 members globally. Soho House member growth was driven by the strong opening of Soho House in San Palo, our first house in South America, and other new openings such as Mexico City and Portland.
Thomas Allen: Let me see if demand continues to be very strong membership revenues increased 16% versus the same period last year and 3% versus the last quarter, a global weightless continues to grow finishing the quarter at 111000.
And we welcome 6000, San House members going to 204000 members globally.
Thomas Allen: So every house member growth was driven by the strong opening of Sarah houses some Paolo I'll.
First house in South America, and other new openings, such as Mexico City and Portland, We now have 26 houses that have opened since 2018 I know, it's still in the ramp up phase we saw strong growth in houses such as Austin Nashville downtown L. A dumbo White city, Hong Kong and.
Thomas Allen: One of them this quarter.
Thomas Allen: As we think about the future. We also announced our plans to open a new set of houses in Madrid, Milan, Barcelona, and Tokyo over the coming years, helping to further strengthen membership demand.
Thomas Allen: Q2, adjusted EBITDA grew 2 million year over year to 33 million, it's worth noting that excluding our planned investments in growth with the initial losses at new houses, which this year includes Portland, San Paolo and budget that had a 4 million greater impact in the quarter EBITDA would have grown close.
Andrew Carnie: It's worth noting that excluding our planned investments in growth, with the initial losses at new houses, which this year include Portland, San Paolo, and Bodrum, that had a €4 million greater impact in the quarter, EBITDA would have grown closer to €20 million. Total revenues grew 6% year-on-year to £305 million.
Speaker Change: It's 20%.
Andrew Carnie: We saw a sequential improvement in in-house trends, driven by better footfall and spend per visit, with in-house revenues up 2% year-on-year and improving throughout the quarter. We are really pleased with the membership demand we are seeing in our new markets and ramp-up houses, which gives us the confidence to raise our financial guidance today on total membership and membership revenue while reiterating guidance on total revenue and adjusted EBITDA. Our goal is to provide our members with a great experience in service and our houses, which we have seen reflected in improved member satisfaction scores again this course.
Speaker Change: Revenues grew 6% year on year to $305 million, we saw a sequential improvement in in house trends driven by better thoughtful and spend per visit with in house revenues up 2% year on year improving throughout the quarter.
Speaker Change: We are really pleased with the membership demand, we're seeing in our new markets ramp up houses, which gives us the confidence to raise our financial guidance today on total membership and membership revenue, while reiterating guidance on total revenue and adjusted EBITDA.
Speaker Change: Our goal is to provide our members with a great experience and service and our houses, which we have seen reflected in improved member satisfaction scores began this quarter.
Andrew Carnie: We introduced more dining choices across all our houses, including new menus, new pop-ups, and one night only experiences. We continued our focus on service, rolling out further training, increasing the speed of service, and enhanced member recognition when members check in and eat with us. We increased the quality and variety of member events, which combined with the personalized event recommendations on the app, resulted in almost 20% more members attending events year-on-year and an increase in spend per member at events attended. Finally, we continue to provide members with unique experiences they can't find anywhere else. We delivered our first backstage Soho House pop-up at Glastonbury Festival and a sell-out house festival in London.
Introduce more dining choices across all our houses, including new menus, new pop ups and whatnot and the experiences. We continued our focus on service rolling out further training increasing the speed of service and enhanced member recognition when members check in and eat with us.
Speaker Change: We increased the quality and variety of member events, which combined with the pet's lives recommendations on the App.
Speaker Change: The almost 20% more members attending events year on year and an increase in spend per member events attended.
Speaker Change: Finally, we continue to provide members with a unique experiences they can't find anywhere else. We delivered our first backstage Sarah has publicly Glastonbury Festival and the sellout House Festival in London.
Andrew Carnie: We continue to focus on operational excellence, which leads to great profits in cash flow. Through our new global beverages deal, we've improved the quality and choice of drinks for our members and have grown margins at the same time. We continue to transform our back-of-house systems to help us achieve greater efficiencies, improve member service, and lower our costs. And we have further streamlined our corporate office to reflect the current operating environment and our plans for fewer new openings over the next couple of years.
Speaker Change: We continue to focus on operational excellence, which leads to greater profits and cash flow.
Speaker Change: Through our new global beverages deal with improve the quality and choice to Jinx for our members and have great margins at the same time.
Speaker Change: We continue to transform our back of house systems to help us achieve greater efficiencies improving member service and lowering our costs and we have further streamlined our corporate office to reflect the current operating environment and our plans a few new openings over the next couple of years.
Andrew Carnie: These strategic initiatives contributed to house-level contribution increasing 12% year-on-year, with house-level margins up approximately 100 basis points, despite more new houses having a short-term impact on our growth and margins. Now, I will pass over to Thomas to give you more detail on the numbers and our guidance.
Thomas Allen: These strategic initiatives contributed to house level contribution increasing 12% year on year with house ever margins up approximately 100 basis points. Despite more new houses, having a short term impact gross margins now let me pass it over to Thomas to give you more detail on the numbers and our guidance. Thanks Andrew.
Thomas Allen: Total revenues for the first quarter grew 6% year-on-year to $305 million. Membership revenue rose 16% year-on-year to $104 million, while in-house revenue was up 2% and other revenues were down 1%. House-level contribution was up $6 million, or 12% year-on-year, with house-level margins up almost 100 basis points to 27%, despite the short-term impact of new housing. Other contribution was down $3 million, or 16% year-on-year, due to the initial impact from Scorpius Broadroom, the timing of design and development fees, and lower stand-alone restaurant and townhouse.
Revenues for the first quarter grew 6% year on year to 305 million membership revenue rose, 16% year on year to $104 million, while in house revenue was up 2% and other revenues were down 1% house level contribution was up $6 million or 12% year on year with house level margins up almost 100 basis points to 27% despite the.
Thomas Allen: The short term impact of new house openings other contribution was down $3 million or 16% year on year due to the initial impact from score Pittsburgh from the timing of design development fees, and lower Standalone restaurant and townhouse cells, giving more details on revenue year on year revenues were up more than $16 million driven by the increase in <unk>.
Thomas Allen: More details on revenue. Year-on-year revenues were up more than $16 million, driven by an increase in recurring membership revenue. Membership growth and pricing drove a $14 million increase in membership revenue. In-house revenues were up $3 million year-on-year, while other revenues were $1 million lower. Lifelike in-house revenues for the quarter were approximately flat year-on-year, an improvement from the mid-single-digit year-on-year decline we saw in Q1. And trends were relatively consistent across our major geographic regions, the Americas, the UK, and Europe.
Thomas Allen: Recurring membership revenues.
Thomas Allen: <unk> growth and pricing drove a $14 million increase in membership revenues.
Thomas Allen: <unk> revenues were up $3 million year on year, while other revenues were $1 million lower lifelike and house revenues for the quarter were approximately flat year on year, an improvement from the mid single digit year on year decline. We saw in Q1 and trends were relatively consistent across our major geographic regions. The Americas U K and Europe Flash rest of world are.
Thomas Allen: Our second quarter adjusted EBITDA was $33.3 million, up $2 million year-over-year. Higher membership revenues were offset by opening Soho House Portland at the end of the first quarter and Soho House Sao Paulo and Scorpius Bodrum in the second quarter, compared to last year when we only opened Soho House Bangkok in the first half of the year. As you know from our maturation curves, we are confident that all will drive long-term profitability, but in the quarter, these new openings had a year-over-year impact on our EBITDA growth of approximately $4 million.
Thomas Allen: Second quarter, adjusted EBITDA was $33 $3 million up $2 million year over year higher membership revenues was offset by opening Suraj Portland at the end of the first quarter and so our Sao Paolo and Scorpius Bodrum and the second quarter compared to last year. When we only opened 'til as Bangkok in the first half of the year as you know from a maturation curves.
Thomas Allen: We are confident all will drive long term profitability within the quarter. These new openings had a year over year impact on our EBITDA growth of approximately $4 million now discussing our balance sheet.
Thomas Allen: Now discussing our balance sheet, we ended the quarter with $154 million of cash-in-cash equivalents. 10 million dollars higher than the end of the first quarter, and $665 million of net debt. We had positive cash flow from operating activities again in the quarter, our fifth consecutive quarter of positive cash flow. While we incurred sequentially higher capex in the quarter related to all our OPCs, our cash flow from operating and investing activities was still net positive. We continue to expect to spend $90 to $100 million on CapEx in the year, in line with our prior goal.
Thomas Allen: We ended the quarter with $154 million of cash and cash equivalents $10 million higher than the end of the first quarter and $665 million of net debt.
Thomas Allen: Had positive cash flow from operating activities during the quarter, our fifth quarter in a row and up approximately 80% from last year, while we incurred sequentially higher capex in the quarter related to all of our openings our cash flow from operating and investing activities were still net positive. We continue to expect to spend $90 million to $100 million of capex in the year in line with our prior.
Thomas Allen: Guidance.
Thomas Allen: We ended the quarter five times net debt to adjusted EBITDA, down from six times at the end of the second quarter of 2020. We announced in February the board had approved a new $50 million share repurchase authorization. Following the dissolution of the special committee in late May, we began repurchasing stock and bought back $5 million of shares in the company. Finally, after a quarter of strong delivery across the business and particularly good membership metrics, we are raising our year-end membership guidance to over $212,000 and increasing our membership revenue range to $410 to $420 million and $405 to $415 million. We are reiterating guidance for other key financial metrics, total revenue, and adjusted EBITDA. With that, let me hand it back to Andrew. In closing, it's:
Thomas Allen: We ended the quarter at five times net debt to adjusted EBITDA down from six times at the end of the second quarter of 2023, we announced in February the board approved a new $50 million share repurchase authorization.
Thomas Allen: The deflation of the special Committee in late May we began repurchasing stock and bought back $5 million of shares in the quarter. Finally, after a quarter of strong delivery across the business and particularly good membership metrics. We are raising our year end membership guidance to over 212000, and increasing our membership revenue range to 410 to $4.
Thomas Allen: <unk> million dollars.
Thomas Allen: 405 to $4 15 million, we are reiterating guidance for other key financial metrics total revenue and adjusted EBITDA with that let me hand back to Andrew.
Andrew Carnie: In closing, it's been a solid quarter for the business as we deliver against the goals we've set ourselves this year. I would like to thank our teams globally for their hard work and passion, and our members for their continued support and loyalty. I also want to mention that we plan on holding Investor Day in New York on December 5th. We look forward to sharing with you our plans for long-term growth and profitability and bringing to life our excitement about the significant opportunities ahead. With that, we will now open up to questions. Operator, we can take the first question, please. As a reminder, you can either ask your questions over the phone or submit them online.
Andrew: In closing, it's been a solid quarter for the business as we deliver against the goals we've set ourselves this year.
Andrew: I'd like to thank our teams globally for the hard work and passion and our members for their continued support and loyalty.
Andrew: Also wanted to mention that we plan on holding an Investor day in New York on December 5th.
Andrew: We look forward sharing with you our plans around long term growth and profitability and bringing to life, our excitement about the significant opportunities ahead.
Andrew: With that we will now open up to questions.
Speaker Change: Operator, we can take the first question. Please as a reminder, you can either ask your questions over the phone or submit them over the webcast.
Operator: We are now opening the floor for a question and answer session. Again, if you'd like to ask a question, please press star one on your telephone keypad. Our first question comes from Steven Zaccone from Citi. Your line is now open. Good.
Speaker Change: We are now opening the floor for a question and answer session again, if you'd like to ask a question. Please press star one on your telephone keypad. Our first question comes from Steven <unk> from Citi. Your line is now open.
Steven Zaccone: Great, good morning. Thanks very much for taking the time to answer the question.
Steven <unk>: Great. Good morning, Thanks, very much for taking my question.
Speaker Change: I wanted to focus on the house revenue encourage Matt could.
Speaker Change: Could you talk about any call outs by region, where things are progressing a little bit better than the overall trend and then the broader backdrop has seen some weakness. So how do you feel about your competitive positioning just given some of the macro data points.
Steven <unk>: Hi, Steven.
Andrew Carnie: I wanted to focus on house revenue improvement. Could you talk about any standouts by region, where things are progressing a little bit better than the overall trend? And then the broader restaurant backdrop has seen some weakness. So how do you feel about your competitive positioning, just given some of the macro data?
The first one five months as you've never met.
Speaker Change: Ship club. So we're really pleased to see the strength of our demand shift.
Our members are consistently using our houses.
Andrew Carnie: First and foremost, as you know, we're a membership club, so we're really pleased to see the strength of our demand for our membership, and it shows that our members are consistently using our facilities. So it was nice to see that our football trends improved sequentially in the quarter, but more importantly, as I mentioned, we saw spend per member improve in the last quarter. And I said in my prepared remarks that we have a lot of initiatives to improve these, which are really delivering results.
Speaker Change: So it was nice to see the artful trends improved sequentially in the quarter, but more importantly, I think as I mentioned, we saw.
Speaker Change: Last quarter I said in my prepared remarks, we have a lot of initiatives to improve these.
Speaker Change: Really delivering results regarding.
Andrew Carnie: Good Good Good Good Good Good Good Good Good Good, Any regional variants, the trends have been relatively similar across all our major geographies across America, UK, and Europe, the rest of the world, and including Latin America, so we're not seeing any real difference. We are seeing an improvement across the board from when we reported in Q1.
Speaker Change: Any regional variance the trends have been better to the semi custom <unk>.
Speaker Change: Thanks, Chuck fees customary key K get rest of world, including Latin America, So we're not seeing any real.
Speaker Change: Difference were seeing an improvement across the board.
Speaker Change: Reported in Q1.
Speaker Change: Yeah.
Thomas Allen: Okay, great. And then my follow-up question is just with the increase in the membership count guidance, Thomas, how should we think about preliminary planning for 2025? Is this a good run rate for us to think about on a going forward basis in terms of membership count growth?
Speaker Change: Okay, Great and then my follow up question is just with the increase in the membership.
Speaker Change: Vince Thomas how should we think about preliminary planning for 2025 is this a good run rate for us to think about on a go forward basis in terms of membership count growth.
Ed: Thank you Ed.
Speaker Change: I think it's early to give guidance for 2025 as we said we will host an investor day in December and we're going to talk a lot about our long term plans. So if you don't mind waiting until that.
Steven Zaccone: Okay, no problem. Thanks very much, guys.
Speaker Change: Okay no problem, thanks, very much guys.
Speaker Change: Okay.
Sharon Zackfia: The next question comes from Sharon Zackfia from William Blair. Your line is now open.
Speaker Change: Question comes from Sharon Zackfia from William Blair. Your line is now open.
Andrew Carnie: Hi, thanks for taking the question. I guess in terms of new house openings, are there any more plans for this year? And you cited, you know, a handful that you've announced. Are any of those coming in twenty five? Trying to figure out what we should think about for new house openings.
Sharon Zackfia: Hi, Thanks for taking the question I guess in terms of the new house openings are there any more planned for this year and you cited a handful that you've announced or any of those come in in 'twenty five.
Speaker Change: Trying to figure out what we should think about for new house openings.
Sharon Zackfia: Hi, Sharon.
Andrew Carnie: So, we said at the beginning of the year that we anticipated to open 2-4. So we've already opened two great houses, big houses, in Portland and San Paolo. Next up is Soho Muse House in London, which is our first muse concept, and it's a beautiful, unique house which is going to be very much aimed at our long-tenured members. So we're very excited about that for this year. We have Manchester opening early next year, and we recently announced upcoming openings with Barcelona for next year, and then following that, we have, in the future, Madrid, Milan, and Tokyo. So regarding the end of this year, we were very focused on opening.
Sharon Zackfia: So we said at the beginning of the year, we anticipate two to four.
So we've already opened to great houses big houses important allies.
Sharon Zackfia: Next.
Sharon Zackfia: Yes.
Sharon Zackfia: Nice house and.
Speaker Change: But she is all first music concert is a beautiful U.
Speaker Change: Cask is going to be very much aimed our longer tenured members. So we're very excited.
Speaker Change: This year, we have Manchester early next year, and then we recently announced upcoming openings with Barcelona for next year and then following that we have.
Speaker Change: In the future.
Speaker Change: Yes.
Speaker Change: Regarding the end of this year.
Speaker Change: Very focused on opening.
Speaker Change: Nice house.
Speaker Change: Okay and then on here in the third quarter I think we are lapping now that kind of Hollywood strike last year, which I think impacted your business in several areas can you talk about kind of how we should think about in house revenues as we go into the back half of the areas, we're lapping that impact.
Andrew Carnie: And then here in the third quarter, I think we're now lapping that kind of Hollywood strike last year, which I think impacted your business in several areas. Can you talk about how we should think about in-house revenues as we go into the back half of the year as we're lapping that? Yeah, that's a good question.
Andrew Carnie: Yeah, that's a good question. I wouldn't say the impact is totally gone right now. There are a lot of folks still in the entertainment industry that aren't back at work. And there are a lot of, there's a transition going on in Hollywood as well. So I wouldn't say that it's completely over. But what I would say, and I'd reiterate that across pretty much all our houses in the quarter, we saw an improvement in member spend. And we're confident on that continuing through Q3.
Speaker Change: Yeah. That's a good question I wouldn't say it's.
Speaker Change: The impact to take to the Gulf right now, there's a lot still in the entertainment industry.
Speaker Change: And there is a law.
Speaker Change: Does it transition going in Hollywood as well.
I wouldn't say that it's completely over but what I would say that reiterate that across pretty much all our houses in the quarter, we saw an improvement in Memphis spend.
Speaker Change: We are confident on that continuing through Q3.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Shaun Kelley: Your next question comes from Shaun Kelley of Bank of America. Your line is now open.
Speaker Change: The next question.
Speaker Change: Question comes from Shaun Kelley Bank of America. Your line is now live.
Shaun Kelley: Hi, good morning, everyone. Thanks for taking my question. Andrew Thomas, just wanted to ask about, you know, what you're seeing, like, as it relates to cross-border travel. Obviously, it's been a big theme; a lot of US and domestic hotel companies are talking a bit about, you know, outbound travel weighing on some of their domestic demand. So just kind of curious about, you know, your unique lens into that, what are you seeing, you know, pattern wise, Thanks.
Hi, Good morning, everyone. Thanks for taking my question, Andrew Thomas I, just wanted to ask about.
Andrew Thomas: What youre seeing.
Andrew Thomas: As it relates to the cross border travel.
Speaker Change: Obviously, it's been a big theme a lot of U S. Domestic hotel companies are talking a bit about.
Speaker Change: Outbound travel weighed on some of their domestic demand. So just kind of curious on you have a unique lens into that what are you seeing pattern wise and kind of any way you can track or give a little insight there.
Andrew Carnie: Good question. Hello, Shaun. We have had a good season in Europe, and that's the region that sees the most cross-border travel. We've, as you saw, on occupancy in ADRs, we brought it in-line with last year. Occupancy is slightly up, actually, so we have had a good season. We've had a fantastic last three weeks in Paris because of the Olympics. So, for the most part, we've continued to see really good cross-border traveling with our members across the world into the houses that we have bedrooms in.
Speaker Change: Good question.
Sean: Hello, Sean.
Speaker Change: We have had a good season in Europe.
Speaker Change: The region that we see most of the cross border travel.
Speaker Change: We've.
Speaker Change: As you saw on occupancy and ADR. So broadly in line with last year occupancy slightly up actually so we have had a good season, we've had a fantastic last three weeks in Paris.
Speaker Change: Because it really picks.
Speaker Change: So for the most part.
Speaker Change: Continue to see really good cross border shopping with our members across the world because of the houses that we have bedrooms.
Shaun Kelley: Great, thanks for that. And then, Andrew, in the beginning of your prepared remarks, you mentioned some houses that we would expect are doing well, Austin, Nashville, but you also mentioned downtown LA and Hong Kong, and those were names that, in the past, I think, have not been, you know, on the top of the kind of funnel or ramp. So are you starting to see, you know, either broadening out, I mean, some of those may be a little idiosyncratic with the kind of timing and, you know, timing of openings, but curious on both those two markets in particular, given you have several houses in LA, and obviously, Hong Kong is a bit of a unique gateway in Asia.
Speaker Change: Great. Thanks for that and then Andrew I noticed in the beginning of the prepared remarks, you mentioned some houses.
Speaker Change: I think we would expect are doing well Austin Nashville, but you also mentioned downtown L. A in Hong Kong and those names and in the past I think you've not been top of the kind of funnel or ramp. So are you starting to see either a broadening out I mean, some of those may be a little idiosyncratic with the kind of timing and timing of openings, but curious on dose.
Speaker Change: These two markets in particular, given you have several houses in L. A and obviously Hong Kong is a bit of a unique gateway in Asia.
Andrew Carnie: That's a great question, Shaun. We couldn't be more pleased with Hong Kong. We've got a fantastic new team in there since the beginning of the year. They've done a terrific job in Hong Kong, and we've seen terrific growth there throughout the year. So one of the things we're most pleased with, a complete turnaround in Hong Kong, and it's all down to delivering what the member really wanted in that city. Obviously, a big comeback in football as well, and the city's bounced back.
Speaker Change: That's a great question sure we couldnt be more pleased with Hong Kong.
Speaker Change: We've got.
Speaker Change: The team in the beginning of the year they've done a terrific job.
Speaker Change: In Hong Kong, and we've seen terrific growth throughout the year. So all the things we're most pleased with.
A complete turnaround in Hong Kong.
Speaker Change: Any slowdown to delivering what the members really wants it in the in that city, obviously, a big comeback fold as well.
Andrew Carnie: And then with Downtown LA, we've got really good programming in Downtown LA, and we've seen a really good ramp-up in our members. We feel really good about the service and the food that we're delivering now in Downtown LA. So that's another house that we're really proud of this year.
Speaker Change: <unk> bounce back and then we downtown L. A we've got really good programming and Thats, how we see the real good ramp up in our numbers.
Speaker Change: We feel really good about the service and the feed that we're delivering now in downtown.
Speaker Change: And the other half that we're really proud of this year.
Shaun Kelley: Great last question for me would just be Thomas you mentioned I think a four million dollar drag from the the new openings at least relative to last year can you just remind us like either was that you know all isolated to this quarter and or you know this the first half and just kind of how should we think about you know any incremental you know drag from those house obviously undoubtedly contemplated the guidance but just trying to kind of think about you know the out years and and modeling they're going forward Yeah, so Shaun, if you think about
Speaker Change: Great last question for me would just be Thomas you mentioned, I think a $4 million drag from the new openings at least relative to last year.
Speaker Change: Can you just remind us like either was that.
Speaker Change: All isolated to this quarter <unk>, the first half and just kind of how should we think about any incremental.
Speaker Change: Drag from hotels, obviously undoubtedly contemplated the guidance, but just trying to kind of think about the out years and modeling there going forward. Thanks.
Thomas Allen: Yeah, so Shaun, if you think about what we opened last year versus this year, so last year we opened Bangkok in the first half of the year and Mexico City in the second half of the year, and then this year we've opened the three sites that we highlighted, Portland, South Palo, and Bodrum in the first half of the year. And then, as Andrew said, we're likely only going to open up Soho Muse House in the second half of the year.
Speaker Change: Yes, Sean if you think about.
Speaker Change: What we opened last year versus this year to last year, we opened Bangkok in the first half of the year in Mexico City in the second half of the Air and then this year we've opened.
Speaker Change: We've opened the three the three sites, we highlighted Portland in Sao Paolo and Bodrum and the first out there and then as Andrew said, we're likely only going to open up Sohu news app in the second half of the year and so this year we've seen.
Speaker Change: Yes.
Speaker Change: Almost $404 million that we talked about the call was really impact what is it really the second quarter impact first quarter, we saw a bit of a drag too.
Thomas Allen: And so this year, we've seen a, you know, that's almost $404 million that we talked about, Nicole, was really the second quarter impact. First quarter, we saw a bit of a drag too. And then the second half of the year, which actually had a bit of a tailwind, given the impact of opening classes.
Speaker Change: And then second half of the year.
Speaker Change: It's actually flipped a bit of a tailwind.
Speaker Change: Given given the impacts of okay boss here.
Speaker Change: Thanks, so much.
Speaker Change: Okay.
George Kelly: Our next question comes from George Kelly of Roth Capital. Your line is now open.
Speaker Change: Our next question comes from George Kelly of Roth Capital. Your line is now open.
George Kelly: Hey everybody, thanks for taking my question. Um, first on Scorpius, and I apologize, I missed part of your prepared remarks, but, Can you talk about how the new Bodrum location is performing and your plans for opening in Tulum at some point, if that's still later this year? And then how do you expect Bodrum, given that you've seen it for a little while since it's been open, how do you expect it to perform as compared to the location in Mykonos?
George Kelly: Hey, everybody thanks for taking my questions.
George Kelly: First on Scorpion.
Speaker Change: And I apologize I missed part of your prepared remarks, but.
Speaker Change: Can you talk about how the new Bodrum location is performing.
And your plans for opening until.
Speaker Change: At some point if that's still later this year and then how do you expect the bodrum given that you've seen it for a little while since it's been open how do you expect it to perform.
Speaker Change: Compared to the location and weakness.
Andrew Carnie: Hi George. Good question. Firstly, Scorpius Mykonos has gotten off to another strong season. I think it's going to be one of our best, so that shows the strength of the Scorpius brand.
George Kelly: Hi, George Good question.
George Kelly: Sure.
Speaker Change: Firstly scope is making us has gotten off to another strong season I think he is going to be one of our best so that shows the strength of the scope is brand.
Andrew Carnie: Bodrum opened in June. I was there recently. It's a beautiful property. We've got our first private bungalows, which is the first accommodation at Scorpio.
Speaker Change: <unk> just opened in June.
Speaker Change: It's a beautiful property.
Speaker Change: Our first private Bangladesh, which is the first combination scope yes.
Andrew Carnie: And so we're very proud of what Tulum has delivered, and we're confident it will be another success story. Next year it will grow just like Scorpus Mykonos did. And we're confident in the future it will get to the same level as Mykonos. With Tulum, it's still under construction. As reported, there was a hurricane in that region, so the developers had to pause construction. And in that property, we'll also have an accommodation component, and we're excited to see the performance when it opens.
Speaker Change: Has delivered.
Speaker Change: Then it will be another success story.
Speaker Change: Okay.
Speaker Change: And we will.
Speaker Change: Next year. It will build just scope is making us is done and we're confident in the future you'll get the same level, let's make it up with too it's still under construction.
Speaker Change: As reported there was a hurricane in that region. So.
Speaker Change: At post construction and in that property will also have accommodation comparison.
Speaker Change: And we're excited to see the performance.
Speaker Change: Yeah.
George Kelly: Okay, okay, and that location will probably open next year.
Speaker Change: Okay. Okay.
And that location will probably open is it next year.
Andrew Carnie: Most likely. OK.
Speaker Change: Most likely.
George Kelly: Okay, and then the second topic I wanted to cover is just you speaking about member surveys and satisfaction. I know you're kind of regularly checking on those things.
Speaker Change: Okay, and then second.
Topic I wanted to cover it.
Speaker Change: <unk>.
Speaker Change: Speak about.
Speaker Change: Member surveys and satisfaction I know youre kind of regularly.
Andrew Carnie: I guess two so two questions. The first one is, what are you hearing that members are still maybe complaining about or wanting more of? Um, and then secondly, have you seen any kind of changes to attrition this year in recent quarters?
Speaker Change: Checking on those things.
Speaker Change: I guess.
Speaker Change: So two questions. The first one is what are you hearing that members are still maybe complaining about are wanting more us.
Speaker Change: And then secondly have you seen any kind of changes to attrition.
Speaker Change: This year in recent quarters.
Speaker Change: Okay.
Andrew Carnie: So we measure, we obviously do our surveys where we ask our members questions, then we have our weekly survey which measures our success on service, food, atmosphere, and experiences. While our members continue to unmoor themselves from these unique experiences and be in houses that are fantastic experiences for them, we've seen our scores improve on that. What members want us to continue to focus on is great service, friendly service, and member recognition when they're in their houses. I think I quoted those things in my pre-recorded remarks. That's what we're very, very focused on. What was the second part of your question?
Speaker Change: So we measure it we obviously do.
Speaker Change: Our survey, where we ask questions. Then we have a weekly survey, which measures mentioned is our success.
Speaker Change: Service suite.
Speaker Change: <unk> experience is one that has continued to a more of a unique experiences have been houses that.
Speaker Change: Fantastic.
Speaker Change: Experiences for them and we've seen scores improve on that.
Speaker Change: <unk> members.
Speaker Change: One is to continue to focus on these great service friendly service member recognition, whether in the houses and I think.
Speaker Change: Created those things on my pre recorded remarks.
Speaker Change: Very focused on.
Speaker Change: What was the second part of your question.
George Kelly: about whether or not you've seen any changes to member retention. I know it's consistent.
Speaker Change: Whether or not you're seeing any changes to member retention.
Andrew Carnie: No, it's consistent, so we're not seeing any changes.
Speaker Change: And it's consistent so we're not seeing any changes.
Speaker Change: Okay. Thank you.
Okay.
Speaker Change: We have reached the end of our Q&A session. Thank you everyone for joining today's call and we hope you have a wonderful day stay safe and you may now disconnect.
Operator: our Q&A session. Thank you everyone for joining today's call, and we hope you have a wonderful day. Stay safe, and you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.
Thomas Allen: Thanks, Stephen. So I think it's early to give guidance for 2025, as we said we'll host in the best of days in December and we're going to talk a lot then about our long-term plans. So if you don't mind, waiting until then.
Andrew Carnie: We now have 26 houses that have opened since 2018 and are still in the ramp-up phase. We saw strong growth in houses such as Austin, Nashville, downtown LA, Dumbo, White City, Hong Kong, and Rome this quarter. As we think about the future, we also announced our plans to open new Soho houses in Madrid, Milan, Barcelona, and Tokyo over the coming years, helping to further strengthen membership demands. Q2 adjusted EBITDA grew by €2 million year-over-year to €33 million.