Soho House is bigger than ever. Is that a good thing?

Private membership clubs have intrigued society and society-watchers for centuries, as the members are often the pinnacle of wealth, power or — at the very least — the center of the see-and-be-seen scene.

No club excelled in wooing that last bucket like Soho House, which exploded in popularity and notoriety after first opening in London in the 1990s. It’s a grip on fame that might have included celebrities like Jude Law and Geri Halliwell (aka Ginger Spice) and “Sex and the City” appearances early in its life, with additional attention coming its way today. In fact, a Soho House in West Hollywood served as the backdrop of a recent Jennifer Garner interview in Allure magazine.

Approaching 30, Soho House & Co. — the new name for the publicly traded company — is as big as it’s ever been. Total membership across the company’s various clubs, which reached 169,000 by the end of March, is the company’s highest-ever member count. The company anticipates reaching 190,000 members by year’s end, Soho House & Co. CEO Andrew Carnie said on a company earnings call earlier this month.

“We have a long runway in front of us, and we’re making good progress,” he added of company goals to grow membership value and improve overall operations. “We’re confident that this will help us generate stronger, more consistent earnings going forward.”

But not everyone necessarily views that as a good thing.

Soho House attracted a following early on by being a membership club for the creative class instead of private clubs that historically catered to financiers, politicians or others who could afford hefty annual membership fees. Soho House wasn’t a snooze — but it was exclusive. Waitlists ballooned, and it wasn’t always clear what one needed to do to expedite admittance.

The company finally achieved a profitable quarter late last year but slipped in the first three months of this year to a $16 million loss.

Building profits with higher prices

To achieve more consistent profitability, Soho House needs more members and more houses around the world. That push for more members and profitability drew criticism — and reader and source feedback to yours truly — over the years that the clubs were getting too crowded.

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Others think a business like Soho House isn’t in the best position in economically wobbly times like the present.

“Soho House has a decent brand and a relatively niche but strong following but has been a cash-burning enterprise,” reads a report by financial research house Karreta Advisors. “It has survived the pandemic and [went public], but the current economic environment is not conducive to growing a high-end, selective membership platform business.”

The Karreta report points to Soho House raising prices to upsell members on spending more at each club. While the move appears to be helping the company boost revenue (up 33% for the year), there is concern that higher costs might drive some members away.

Soho House executives weren’t doing press interviews this earnings cycle, but the brand’s founder has previously refuted the economic argument that a company like his is seen as frivolous spending that is shed in down times.

“What we’ve always seen is that members love their home away from home,” Soho House founder Nick Jones said on an investor call last year. “They don’t like giving up their membership because there is a very long queue to join to get back in.”

The company’s waitlist for membership surpassed the 89,000 mark in the first quarter.

But the investing public doesn’t appear to be buying what Soho House is selling: The company’s stock price, as of Thursday afternoon, was down nearly 44% from its debut price when it first listed on the New York Stock Exchange in 2021.

No longer the only show pony

Another rising threat for Soho House comes from the traditional hotel orbit. Carnie pointed to the company’s diverse revenue stream of restaurants, hotels and memberships as a strength.

But hotel companies are also getting into this game.

The lifestyle hotel trend — pursued by all the major players like Hilton, Marriott, Hyatt, IHG and Accor — is all about offering more than just a place to stay. Instead, it means hotels increasingly build out restaurants and bars that locals are fighting to get a reservation for.

While catering to the ultra-luxury segment and a higher price point, Rosewood’s Carlyle & Co. club at its Hong Kong hotel is expected to eventually have a global presence with properties around the world.

Accor’s Ennismore lifestyle hotel offshoot includes the Gleneagles Townhouse brand, a new hotel offering in Edinburgh, Scotland, that also includes a membership club. Expect more hotel offerings like this to pop up around the world.

The battle of the members-only clubs is only getting started.

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