By: Melinda Page
When the first Standard Hotel opened on the Sunset Strip in 1998, Andre Balazs, one of the most prominent impresarios on the Hollywood scene, was at the helm. The hotel was an immediate hit and defined a particular brand of Los Angeles chic: irreverent, exclusive, a little bit naughty. Celebrities and celebrity DJs partied in the hotel’s famously shag-carpeted lobby. Just booking a room bestowed on patrons a certain global cachet.
Not only was The Standard one of the earliest and most successful boutique hotels in the U.S., the brand has had remarkable staying power. Even as the hip factor of many other boutique hotels fizzled, The Standard has retained its original aura of lifestyle-defining exclusivity and allure across 20 years and five hotel openings.
And none of that hints at the most remarkable part of the story.
The twist that perfectly captures the current moment of a third-wave-coffee-drinking global citizenry is that The Standard is now run by a Thai executive.
Srettha Thavisin is president of Sansiri, one of Thailand’s most recognizable brands and a major player in high-end residential property development. In November 2017, Sansiri announced a US$58 million investment in Standard International, the parent company of The Standard hotel brand. That bought Sansiri a 35 percent stake in the U.S. company, making it Standard’s largest shareholder, and Thavisin replaced Balazs as chairman.
Thavisin, who has an economics degree from the University of Massachusetts and an MBA from the Drucker School of Management at Claremont Graduate University, clearly grasps the power of The Standard brand. In addition to the main acquisition, Sansiri also made smaller in- vestments in five other companies with strong lifestyle-defining identities as part of a total US$80 million package. They included $300,000 in Farmshelf, a New York-based vertical indoor farming start- up; $6 million in the U.K.-based lifestyle magazine Monocle; $6.6 million in Host-maker, a London-based management firm for Airbnb hosts; and $12 million in JustCo, a Singapore-based co-working group. The company also acquired the U.S.-based OneNight hotel booking app, which is part of Standard International.
The Standard investment is Sansiri’s first foray into the U.S. market. The goal, says Thavisin, is to develop a global lifestyle brand that appeals to people who live and travel far beyond Thailand’s borders. "Consumers are becoming more and more sophisticated. The younger generation embraces globalization very well and they have become more accustomed to a new way of living. This is important because we need to offer them something relevant, and being relevant might mean getting new ideas and technologies from abroad,” he says.
Sansiri isn’t necessarily trying to raise its own profile in the U.S. market. Instead, the company is looking to burnish The Standard brand. “The investment will help accelerate the growth of Standard International significantly, with planned expansion outside of the U.S. and into new markets in Europe and Asia. Standard International would in turn help drive Sansiri’s growth–for example, through The Standard Residence in Thailand,” says Thavisin.
The key overseas markets for the Sansiri brand, meanwhile, and the focus of its property marketing efforts, will remain in Asia – namely Hong Kong, Singapore, Taiwan, China and Japan. The company also claims it has no plans to diversify away from the residential real estate market; instead, it sees the new investments as a complement to its core business. The various acquisitions all work toward establishing a foothold in what Sansiri calls “next-generation living.” The company sees things like co-working spaces, indoor farming and hotel services indoor farming and hotel services as features that can be adapted and incorporated into its future residential developments, following the model of other mixed-use international developments that combine hotel, residential, commercial, and corporate spaces.
When asked what makes the U.S. market and U.S. brands attractive despite their relatively high price tag – particularly at a time when Southeast Asian markets are perceived to have much higher growth potential than those in Europe and North America – Thavisin claims location isn’t his primary concern. “We first look for investments that strategically complement our core business, rather than using geography as the main criteria. Hence, we have invested in innovative and synergistic companies globally, including JustCo from Southeast Asia,” he says. “The brands will help expand Sansiri’s international customer base, which currently contributes approximately a quarter of Sansiri’s revenues,” says Thavisin.
That may hint at the core of the problem Sansiri is facing and the real reason the company is eyeing foreign companies: slowing growth at home. “The growth of the real estate industry is tied with the growth of Thailand’s GDP, which we expect to see increase 3-4 percent in coming years. But Sansiri has high business growth ambitions,” says Thavisin. “This will definitely be one of the factors driving business for more diversification of investment.”
On the one hand, The Standard is a relatively safe bet for Sansiri. “Standard is a very strong boutique hotel brand that doesn’t need to be changed,” says Thavisin. “The team behind the brand and business has proved that by being who they are, they can deliver the best experience to customers.” What’s more, he says, the synergies that can be created between the new partners will create exciting new types of properties and living experiences, which Sansiri is uniquely positioned to provide.
At the same time, Sansiri is seeking to leverage new technologies to fuel its ambitions both overseas and at home. “Our company’s growth will be powered by new business models that are enabled by technological innovation,” says Thavisin.
The OneNight app, for example, is a mobile-only platform that allows people to make same-day hotel reservations after 3 p.m. at a steeply discounted rate. Participating hotels are curated and adhere to The Standard’s design-driven ethos, and the app has the potential to turn leagues of empty Sansiri apartments into revenue-generating overnight stays. This can be accomplished without building a single square foot of additional infrastructure.
Similarly, Sansiri has plans to expand Hostmaker into the Asian market, which could have similar results. The service handles the logistics of turning properties into short-term serviced apartment rentals marketed through online companies such Airbnb and VRBO. While Hostmaker’s listings aren’t as exquisitely curated as those on OneNight, both services could bring an endless number of like-minded hotel and apartment owners into the fold, assuming that Sansiri can work out the associated regulatory and legal issues.
While Sansiri’s $80 million suite of foreign investments may seem small in comparison to the billion-dollar acquisitions made by other Thai firms, it’s obvious that Thavisin is thinking big. “Online booking and same-day booking have increased dramatically in recent years. This is a global trend, and coupled with OneNight’s curated and enviable portfolio of hotels, it would allow for rapid disruption globally,” says the Sansiri chairman. “We want to be on the edge of the future, shaping new ways to work, new ways to stay, and new ways to live.”