Justin Hemmes targets the US as the next step in his ever-growing pub empire
HAVING conquered the Sydney hospitality industry — with 70 venues in his empire and counting — Justin Hemmes is preparing for a new challenge. Taking on the famously fickle New Yorkers.
NSW
Don't miss out on the headlines from NSW. Followed categories will be added to My News.
FOR a man who has recently welcomed his second child, Justin Hemmes could be forgiven for pumping the brake.
The undisputed overlord of the Sydney hospitality scene, Hemmes will end the year having become a newly-minted father-of-two and — professionally — the owner of a raft of new hotels that total $250 million in sales in three years.
That buying rampage rounded another corner last week with the $15 million purchase of the Hotel Centennial in Woollahra from Anthony Medich — the 10th major venues acquisition of the past three years bringing his hotel total to 25.
That followed the Royal Hotel in Bondi which, according to an industry insider, he bagged earlier this month ‘for a steal’ at $30 million.
Before that; The Coogee Beach Palace (approx. $25m), Enmore’s QueenVic ($11m), The Newport Arms ($46m), The Paddington Arms ($5.5m), The Alexandria Hotel ($10m), The Tennyson Hotel ($37.5m), The Collaroy Hotel ($21m) and Marrickville’s iconic Vic On The Park ($25m) from John Singleton’s Australian Pub Fund.
Now he, he says, he’s shifting focus to the US.
“Hotels are definitely (on the radar) and it would be fantastic to open something in a place like New York,” says Hemmes, who has spent years making regular trips to the US on fact-finding missions.
The only issue, he says, is overcoming the mood of the fast-moving New Yorker.
“The problem, for me, is the difference between the Australian and the US markets.
“New York ... it’s a great city and it has these amazing venues,” he says.
“And I go there a lot. And I find if I go back after a year, I go back to this amazing places and no one is there.
“They’re not busy anymore. Everyone has moved on to somewhere else.
“I get to New York and I say to my friends; ‘Let’s go to that great place we went to last time’ and they always say; “Oh no, nobody goes there anymore’.
“And that really scares me. Because I make a point of going back and nothing about the venue has changed. It’s still as good as it was. But it’s dead.”
Sydneysiders he says, are far more loyal.
“If they like something, they go back. And they see through the plastic and the sugar coating.”
A long-awaited push abroad would follow an unprecedented expansion within the Merivale stable — a behemoth of a company with an annual turnover in the neighbourhood of half-a-billion dollars.
(Melbourne Cup day alone saw a turnover of $3 million.)
Comfortably positioned atop the Sydney hospitality market, hovering above rivals like Bruce Solomon and Matt Moran’s ‘Solotel’ and the Dixon Hospitality Group, Hemmes is now mirroring some of the world’s biggest hoteliers.
Not surprisingly friends say he is keen to emulate the prolific success of people like Barry Sternlicht — the US guru who started the W Hotel chain which now boasts 52 properties in 25 countries.
Or the Dream Hotel Group founder Vikram Chatwal.
“Though I don’t think I’m quite as big a thinker as those guys,” Hemmes laughs.
“A move overseas would alter our business model significantly and would be an enormous undertaking.
“But it’s something I have always considered ... depending on the market.”
Reading the market has become a skill for which Hemmes has become somewhat of a cult icon among both his colleagues and his rivals.
Staff at Merivale describe their hallowed boss as an Anthony Robbins-type figure such is his ability to motivate, while the company’s annual awards night — the Merivale Staff Awards — sounds more like an evangelical church service than a booze-up.
“They do everything but run across hot coals,” quipped one former staffer, who confirmed all venues are closed down for one evening a year so staff can party with abandon atop Ivy.
It’s a clever strategy. Merivale employs about 3000 people — with about 1000 staff turning over every year. It helps that they’re happy.
The other aspect of Hemmes’ genius, according to one business industry honcho, is his ‘cut-and run’ strategy; The ability to smell a dud and cut it loose, as evidenced back in 2011 when he shuttered Tank nightclub and built Mr Wong’s in its place.
(It’s also rumoured he’s set to scrap his American BBQ restaurant Papi Chulo in Manly and flip it to a Chinese dumpling spin-off to his popular Queen Chow in Enmore.)
“Tank was just starting to go off the boil and he timed it perfectly,” says the insider, who reveals Hemmes’ business nickname of ‘Mr 100%’ such is his strike rate.
“He’s very good at figuring out that if he is going to take a loss ... he does it fast and clean. and moves on.”
However Hemmes himself is quick to point out it hasn’t been all smooth sailing. His beloved live music festival Good Vibrations took a bath in 2011, losing enough money in one year that Hemmes shut the enterprise down completely.
“Ten years I ran that ... the 10th year we lost a lot,” he says.
“And I was so shocked that you could have a business for 10 years and not change anything fundamentally, and be in control and know what you are doing ... but still lose that amount of money? Never again.”
He has also encountered his share of bad PR. Among the worst; an official Merivale driver busted and later pleading guilty to cocaine possession back in 2011. Later, two Ivy bouncers jailed in 2012 for assaulting a patron — a case which ended in a private settlement between Hemmes and the victim.
There was another out-of-court settlement between Hemmes and a former employee who claims he was stripsearched and assaulted by the bar king in 2013.
And more recently, an ugly dispute unfolded between Merivale and the former owner of Coogee Pavilion (previously the Coogee Beach Palace) David Kingston which was quietly settled.
Despite it all the strength of his brand remains unaffected and his venues, continuously multiplying, reap nothing but commercial and critical acclaim.
In fact the only thing that raises his hackles is the suggestion that his growth in the Sydney market may lead to some inevitable homogenisation at the expense of smaller, independent operators.
“We’re not a Woolies,” he says adamantly.
“Every offering we have is different.
“We don’t duplicate anything and all our concepts are new offerings so the idea that we’re like a McDonalds or a Woolies and just building more and more of the same ... is ridiculous.”
Any personal regrets, he says, are limited to just one; that he started a family too late for his late father John Hemmes to see.
“That’s really the only thing that I look back and I think I wish I had have done differently,” says Hemmes, who lost his father to cancer in March 2015 shortly before he and partner Kate Fowler welcomed their first daughter Alexa in February last year.
His second daughter, Saachi, was born in July this year.
“You really don’t understand your own relationships with your parents until you have children of your own. And that’s something I missed with dad and that’s really something I regret. That I didn’t start earlier,” he says.
“Because having a family is the best thing I’ve ever done. And hopefully, when Kate’s ready (laughs) we’ll think about having another but that is something a little bit further down the track.”