Convene Hospitality CEO Ryan Simonetti On Big Funding and New Markets

In March, Convene Hospitality Group (CHG) secured $230 million in strategic growth capital amid a surge of organic and acquisition-driven expansion.

The confluence of funding and business growth has seemingly brought Manhattan-based Convene to a new level as a platform for meetings, events and hospitality-branded services. The result may already be redefining how a proptech startup founded in 2009 has grown into a firm large enough that it may be leading the redefinition of hospitality technologically and operationally.

In light of Convene’s recent funding and acquisitions, Ryan Simonetti, president and CEO at Convene, is making it clear that he is looking to aggressively grow the business.

Commercial Observer spoke with Simonetti in mid-May about Convene’s recent funding, the evolving nature of the company, and the future of hospitality and shared spaces post-COVID and in the age of artificial intelligence.

This interview has been edited for length and clarity.

Commercial Observer: This year Convene Hospitality Group secured huge funding, made an opportunistic acquisition, and will soon open two new venues in Manhattan. But what are you doing to keep busy?

Ryan Simonetti: [Chuckles] As you may have heard, we had a pretty big announcement that TPG Angelo Gordon led a new secured credit facility for us. And then as part of that, Ares Management, who has kind of been our core private equity partner and helped us recap the business coming out of the pandemic, also invested additional dollars in equity, which is great. 

Our balance sheet is clean, and we’ve got a ton of cash to really start to think about playing offense.

Even before this year, Convene had been evolving steadily, hadn’t it?

I’d say the biggest evolution of the platform is it really becoming a multibrand hospitality platform globally and at scale. I think that’s allowed us to not just think about growth organically, which is still the core focus, but to start thinking about M&A as more a core part of the strategy. 

Since the pandemic, we bought a pretty large U.K. meeting and event operator called Etc.venues in 2023. Also, we ended up buying NeueHouse, which is an incredible brand, out of a Chapter 7 bankruptcy earlier this year. So I think the capital gives us the opportunity not just to continue to grow organically, but to be a bit more acquisitive when it makes sense for us. And that might be new market expansion, or adding a brand or product offering to the platform.

As to why so much has happened lately, I think that this idea of human gathering, this idea of experience — and, to some extent, you could argue the transactions running around real-life experience — are making people want to come together to meet, work and host events of all sorts across our platform. 

I almost think about live experience as the counter to artificial intelligence, which is the other end of our trade. We’re seeing so much demand for in-person experiences globally across our brands and portfolio. We have to be smart and very thoughtful and strategic, but it feels like the right moment to start to put the foot on the gas a bit. And, obviously, having the balance sheet, the capital and the strategic institutional partners to do that thoughtfully is a big piece of that.

Convene has navigated the black swan event of COVID, as well as other challenging macro issues, and apparently has emerged stronger than ever as a company. Having gone through various challenges, where do you see the greatest growth for your now multifaceted business? 

Thanks to a little bit of luck and a lot of resilience, and a team that refused to throw up the white flag and quit, we were able to not just survive, but to some extent, you could argue, thrive. 

When you look at the things that are really important in business, our employee engagement is better than ever, and our net promoter score for client experience is 83 globally today across all our brands. Relatively speaking, that’s unheard of. Happy and engaged employees and clients lead to financial success, so we will soon have 40 locations globally, with three to open over the next 12 to 15 months. 

In dollars and cents we’ve got a business this year that will do into the hundreds of millions of dollars in EBITDA [earnings before interest, taxes, depreciation and amortization]. I think, most importantly, generating free cash, post-growth capital expenditure, which for any business is an incredible milestone. 

So, when we look at the opportunity set, we will continue to double down on the things that are working, and that’s both market and brand. We remain excited about growth in New York and London, but we’re also proactively looking at adding new locations in markets that we already have a presence. 

In San Francisco, we have one location and are actively looking at adding a second, if not a third. In D.C., Chicago and Boston, we continue to see a huge opportunity to add, which we plan on doing. And then we’re starting to look at new markets. Talking to our clients, I always say, “Where do you need us?” We don’t have a presence in markets like Miami, Atlanta, Los Angeles, Austin, San Diego and Dallas, so, over the next three to five years, not only will you continue to see us grow where we are, but we will look to add some of these new markets to meet our clients where they need us.

Who are your primary clients these days? Is it still real estate owners, the brokerage industry or other space users? 

If we look at our revenue globally, it comes from what I would think about as large, global, multinational organizations. So you could think about the largest companies, whether that’s in financial services, technology or professional services. 

And then we’ve got a lot of other customers across the middle market, as well as small businesses, where we have thousands and thousands of customers. I think last year we hosted just over a million attendees globally, and that obviously doesn’t include our workplace and memberships, which are also performing incredibly well, and something that we’re obviously proactively looking to grow. What we’re seeing is that our clients are spending more money with us as we continue.

The locations in which you want to grow primarily include the Sun Belt. Is there a particular reason? Are your clients or potential clients expanding there more than elsewhere? Is it the tech industry that’s driving that?

One of the things that we do when looking at growth, generally speaking, is look at where our clients have a need. Where do they have a propensity to spend? And when it comes to things like meetings, events, large-scale conferences, it’s more and more special events, which is something we’re really excited about. We’re actually building out our first two really independent special event venues, The Mallory, [in the Terminal Warehouse at 261 11th Avenue in Manhattan], and then we have The Aperture that’s under development at 124 East 23rd Street with Williams Equities.

Is Convene’s outsourcing of space still primarily in areas near its clients’ corporate offices, or is it now more about destination events and meetings?

It depends a little bit on the market. When you think about markets like Miami and Nashville, and, to some extent, even markets like L.A. or San Diego, those are obviously what I would consider more destination markets. And you’ll see a lot of our large clients that might be headquartered out of New York, for example, still going to those markets to host really important gatherings, so they tend to be more destinations by default. That’s definitely a trend and something we’re catering to, obviously. 

There’s also a continued trend toward outsourcing. I think smart heads of real estate or workplace are not only thinking about how to deliver an incredible experience, but, when thinking about doing that, also thinking about what you want to do on your own within the real estate that you control and what you want to intelligently outsource to brands like Convene. 

Whether it’s a meeting event, special event, or workplace, we continue to see a large and growing shift toward outsourcing, period. And it’s not just by the large global multinationals that make up 50 percent of our business, but even mid-market companies.

What part is hospitality playing within Convene’s overall concept? Is the company trying to expand hospitality into some kind of multi-shared space model, or just include what we used to simply call hotel space?

We don’t have any short-term plans to open up a Convene NeueHouse-branded hotel anytime soon, but you never know. Don’t put anything past us. We like to innovate, and, to some extent, trailblaze. I think, when it comes to hospitality, in our mind you can’t deliver experience if you’re not hospitality-first. To us, that’s everything from the design, to the food and beverage, to the technology — and most importantly — to the on-site service delivery.

People don’t realize this, but if you look at our business, we do nine figures in catering revenue a year. We do almost nine figures in AV production technology revenue a year. Some people think of us as a seller of space, but we’re really not. If you actually look at the revenue in the company, we’re probably running one of the largest catering companies in the country that no one’s ever heard of.

Given the current growth of inflation, how can you maintain costs and be an affordable alternative for your clients? And how does technology, particularly AI, help with that, and your ability to deliver services?

It’s a great question, and I think I’ll try to answer it in two parts. 

One, obviously being here in New York, I think we’ve probably felt the inflationary pressure as acutely, if not more, maybe than any other place on Earth over the last five to six years. Particularly, if you think about the cost of rent, transportation and food. As an organization, we are doing our best to minimize and optimize that where we can. 

The nice thing about being a large organization is you start to get the benefit of purchasing power and economies of scale in a way that other smaller operators don’t. To some extent, I think that’s allowed us to — while there’s no doubt it costs more to host a meeting or event at a CHG property today than it did five years ago — we do think that, while we’ve had to pass on some of that inflation, we’ve still been able to try and create real value for our clients using the scale that we have.

To some extent, we help do that when it comes to things like AI and technology. I think you’d have to be a fool to not be thinking about what the implications of AI are going to be, not just on your business, but on society as a whole. If AI increases productivity, well, that should also increase our time to do things that we love and enjoy. And we feel like being together in person around live experiences of all different shapes and sizes, there should be more time and more willingness to do that.

We understand how important technology is to everything that we do — our data, our systems and infrastructure. How do we leverage technology, data and software to better deliver against the needs of our clients? At the same time, how do we create a better experience for our team by taking away some of the manual work and letting them do the things that they enjoy doing? That’s focusing on delivering for our clients. 

We have a pretty robust three- to four-year strategy where we hope not only to be a digitally native business, but, more importantly, AI native. We see a huge opportunity for AI to help us better deliver for our clients and create a better experience for our team members. Those two things in hospitality are intrinsically entwined, and we want to go out and do both of those over the next three to four years.

Philip Russo can be reached at prusso@commercialobserver.com.