A Look at the World’s Most Lucrative NightclubOctober 26, 2012 By: Steve Lewis
Pangea was a super continent that existed around 300 million years ago. All the known continents were squished together into one large mass. The club Pangea, mimicked this thought as it was considered all things to the A crowd when it opened. It dominated the club world during a time when uncertainty reigned. Michael van Clef Ault, a class act and Pangaea group founder, helped define the bottle service era and has expanded his empire to continents that long ago drifted far away. Nightclub Confidential sat down to discuss his journey and the most successful nightclub the world has ever seen.
Nightclub Confidential (NCC): Tells us about where your club career began and some of the highlights throughout the years.
Michael van Clef Ault: My nightclub career in New York essentially falls into two distinct stages. During the early to late 1980's I was a banker on Wall Street and to balance the stress of work I would throw parties. However, it didn't take long for the city's club owners to see the large numbers of highly affluent people I could pull. It started as a hobby and a great way to meet people, especially pretty girls. I never took it particularly seriously, but I certainly was aware that I had an enormous and influential phone book. Then, in the mid 1980's The New York Times ran a front page article about this kid with a 37,000 person phone book. And from that day forward, my career took on a meteoric trajectory. That same list is well over one million now.
The second stage was when I became a true equity co-founder of Second Story (Surf Club), Privé, MercBar, and the Surf Club Southampton. However, the shackles of dealing with other partner’s differing vision became a source of frustrations. Spy was my first lounge where I was able to go completely off the grid, with no influence or interference from anyone. I wanted to create the ultimate private Soho loft, with a spooky but elegant Victorian style. Spy was a total sensation from day one. The New York Times the “International Lounge Craze was born at Spy.”. It was a wild ride, which reinforced my conviction that one must chart their own path, and to follow a road already paved would inevitably lead to a rehash of someone else's dream. After Spy, "Lounge" became the buzz word in the industry worldwide. Virtually overnight, clubs were out, and lounges were in.
After Spy, I had a few tricks up my sleeves and went on to create Chaos in Soho, where bottle service became the norm. It was so successful that we opened locations in South Beach and then Brazil.
Pangaea was really a no brainer for me, and a journey very much back to my roots. Like Spy, Pangaea was a sensation.Expansion was inevitable and Pangaea Marbella, Spain and London were opened followed closely by Florida, Austin and our most successful venue in Singapore, the world’s most profitable club per square inch.
NCC: What are some of the challenges faced when opening new venues in other demographics?
van Clef Ault: It’s certainly challenging even daunting to open clubs in other cities and countries. In the case of Miami, I knew the markets, had watched them evolve, and more importantly, had large local mailing lists. With London, I had studied at Oxford and London School of Economics, so I understood that market well, and had many friends in the UK. Moreover, everyone knew Pangaea from New York.
Spain was easy as my family often summered in Marbella, and I had an extensive network throughout Spain. The Spanish love to party, so they needed little encouragement in understanding what we were attempting to achieve. However, Brazil was much more challenging. I had to spend the better part of a year going back and forth raising the money, finding a site, designing, training, and meeting all the top players. There were significant risks, crime, the mafia, and the fact that Brazil and Latin America had never had a bottle club. The enormous success of the club in Sao Paulo and the associated press ostensibly meant that I had displaced other club owners, and thus had to travel via a bullet proof car.
Singapore has a fully developed legal judicial system and a deep respect for property rights, but is highly litigious. We were in litigation for two years before Pangaea even opened. Fortunately, it is a fair system. In general, I would suggest that the ingredients for a perfect party are universal. However, the myriad of challenges and navigating the dynamics in order to be in a position to have that party are both endless and unique with each city, country, or continent.
NCC: You decided to move your business far east. Why did you make that decision?
van Clef Ault: I've always loved to travel. Having visited over 125 countries thus far, I can safely say, it's my favorite pastime and literal a means of escape. Studying the history, the art and architecture, the myths and religions of each country is fascinating. I suppose I've opened clubs in other countries in order to learn more about those regions. We chose Singapore, in particular, because it is the financial hub of East Asia.
However, in addition to owning clubs in Singapore, and three at The Hard Rock Casino in Florida, I have a global consulting firm called The Ault Group (www.theaultgroup.net) which conducts extensive nightlife related consulting. So in reality, I can work out of any city. Asia just happens to have all the growth and capital at the moment. The opportunities over here are just endless, whereas, the West is in a cycle of severe decline.
NCC: What are the differences in operations from one venue to another?
van Clef Ault: Each club is operated in exactly the same manner. Of course, with each new club we have an opportunity to fine tune and evolve our approach. Many things have changed over the years, like the music, but our bottle service and operational system has remained largely intact.
NCC: What are the differences when it comes to music? How much does it differ from city to city or country to country?
van Clef Ault: That's an interesting question. The music preferences really do differ from country to country. Ideally, I like to build two clubs next to each other as we have at The Hard Rock in Florida. The Gryphon is strictly house, with all the big names as regular DJs, and the other, Pangaea, is "open format" with an emphasis on hip hop. Pangaea New York was all house as was Chaos. Spy was totally open format, including the 1950 and 60's. In Austin, they really appreciated a wide range of open format. In many ways their music tastes were the most sophisticated. In Singapore, they are accustom to all the famous house DJs, as they play this region so commonly. But at Pangaea, we focus on commercial open format with an emphasis towards house as the night progresses. In Spain they love electronic lounge music, progressing into a strict house set. In Brazil, it was completely house.
NCC: Are you servicing locals or traveling connections at your venues?
van Clef Ault: Since Asia is where all the money and growth is, everyone is over here. And since Hong Kong and Singapore are the financial hubs, the mix of people from all over the world is simply stunning. So it's no surprise that our clientele mimics this demographic diversity. If I had to guess, I would say that our patron mix is 35% expat (mostly European and Australian), 25% Indian, 30% Singaporean, and the remainder a mix of Indonesian, Malaysian, and Russian.
On big weekends, like Formula One, we see many of the oil sheiks and Royal Families from the Gulf States, like Dubai, Abu Dhabi, Qatar, Bahrain, etc. A table that spends $100,000 or more is very common for us, in fact, we had two last night. An average table spend rate of $15,000 to $30,000 is more the norm. The average patron spend, including GA's, ranges between $300 to $400 per head. Of course, these are numbers that we never experienced in New York or Miami, and even the clubs in Vegas don't have average spends remotely in this category. Interestingly, no club in Singapore's history ever came close to these numbers either. So Pangaea's success over here is considered unprecedented for the country and region.
The fun part for me, frankly, is meeting so many successful, well-traveled, and educated people. Pangaea has so many heads of State, and meeting the Chairman or CEO's of the world's largest countries is a nightly experience. It’s a pleasure and honor.
NCC: Are there exportable Far East brands that would pursue ventures in the West?
van Clef Ault: It never occurred to me that the tide would flow in that direction. The overwhelming tide is running West to East. I can't tell you how many and how often I see the owners of American and European nightclub owners in Pangaea Singapore, often dutifully taking notes. In Asia, including the Ex-Pats in Asia, the universal outlook is that the West has seen its heyday and is headed for inevitable collapse.
The shared thought here is that the Euro will collapse, and that with a national debt of $16 Trillion and growing, that a Treasury/Dollar collapse is a mathematical certainty. And with so much money and opportunity over here, I can't imagine a club owner wanting to open in America. Vegas would be the exception, naturally. But successful nightclub owners in East Asia have fleets of Ferraris, jets, a string of hotels, and villas from Bali to Phuket. There are very few nightclub owners in America that have ever achieved these heights, whereas here, it's quite common. They certainly love New York and Miami, but would be more likely to buy a few brownstones in New York than to build a nightclub. There is, however, an overwhelming desire to have one's children educated on the East Coast of America. Without question, America is still considered dominate as it relates to our superior higher education.
NCC: Any other closing thoughts?
van Clef Ault: I would close with a general statement that of all the world's regions, and counties that I've consulted or open my own clubs, Asia is by far the most challenging. Breaking into any Asian market is very difficult as they have a fundamental mistrust of Westerners, and for good reason based on the unpleasant history of West Colonial dominance. Moreover, the concept of integrity is considered very much of a naive weakness, and a negotiation is not about finding an equitable middle ground, but rather, winner take all.
As it relates to nightlife, I feel as though I've sort of "done it", and so my intention is to move into pure consulting, and writing a book about the industry and my experiencing. I really feel a strong desire to help others achieve their dreams, avoid the myriad of pitfalls, and navigate what is a highly challenging industry. In these last 30 plus years, it's been an incredible journey, but looking back, it would have been helpful to have some guidance, especially in new markets. Given the daunting failure rate of nightclubs, it seems in retrospect insane to attempt it without some professional direction and oversight.
It was such a pleasure having top clubs in New York, and I look back on those days with such a smile. The late 70's with Studio 54, the 1980's, '90's and even the 2000's were a different time, and I consider myself so lucky to have experience and been a part of such a crazy industry. It was never the most lucrative market, but such fun. No doubt markets like Vegas and Miami are more lucrative, and mega money markets in India, Moscow, Indonesia, and Brazil are just starting to form. The emerging markets like China, India, and Indonesia are very tricky, but they party so hard, and the money is newer, more liquid, and therefor far more of it which becomes very compelling. But in my heart, I'll never forget the heydays in New York and South Beach. Those really were the days.