Home Hospitality & Tourism More than one way to cluster


More than one way to cluster

Venture Group discusses its business model and future projects

by Nabila Rahhal

Rabih Saba and Marwan Ayoub are the founders of Venture Group, a development and consulting group known for its hospitality clusters.The group developed Uruguay Street in 2012, followed by The Village Dbayeh and The Backyard Hazmieh. Saba and Ayoub sat down with Executive to discuss their new venture, Restos St. Nicholas, as well as their future plans for developing more diversified clusters.

E   Can you tell our readers more about your newest project, Restos St. Nicholas, in Ashrafieh?

The project was a joint venture with the landlord [Emile Sabbagha], who is the owner of Sabbagha Development, a land and real estate development group. We would say it’s one of our most strategic and harmonious partnerships, not in the least because Emile is an engineer himself, and so was integral in the development process.     

Starting with this partnership, we developed what we like to call a boutique cluster that complements Ashrafieh. We’re answering a particular need: While in the evening people [in the area] usually go out, in the daytime, there is a high presence of commercial spaces like banks and offices, which require such F&B clusters.

E   How does St. Nicholas differ from your other hospitality clusters?

It’s more integrated with its environment. There are three access points on three different streets, so you can walk through it without sitting in any outlet or feeling that you’re entering a cluster.

Our other projects are introverted, but in this one, the facades are on the street, and you can see those dining. So, you see, there is a different concept development process for every cluster and every location we work with.

E    Looking back on your experience in cluster development, what are the lessons you have learned?

We started with F&B because this is our background, and where we come from. But we learned through experience that what we’re doing is much more than just having restaurants and bars; it’s about developing real estate properties, have them make revenue, yet retain their owners. So now we see our kind of cluster development from a different angle, which may not involve restaurants at all.

E   How does the cluster model operate at a wider level?

It works on the economics of proximity and answers a need. For example, we go into a rural city in Lebanon with a certain purchasing power and a certain understanding of a given service, like healthcare, and say that we’ll bring them expertise that they usually commute to the capital to access—for example, a medical center with a couple of floors for children’s healthcare and other types of clinics, with the same value they usually get in the capital.

E    So is that your outlook moving forward in your development projects?

That’s the next thing for us. There’s certain ceiling to what the F&B industry can accommodate in Lebanon. Now, we’re developing F&B clusters in Ramlet Al Baida, Zahle, Beit Mery, Ajaltoun, Saida [Sidon], and Sour [Tyre].

We’ll adapt the clusters based on the areas I mentioned because they are, in some sense, not as mature as the capital—with the exception of Ramlet Al Baida—so we’ll go with brands that are more affordable for the purchasing power of the area, and so on.

But again, there would be a certain ceiling. We’ll be developing these six to seven projects in the coming three years, and then what? We’re into development, so going forward we’ll look at other industries, as we have started doing.

E   So in total, you’ll be developing and managing around nine hospitality clusters? Isn’t that spreading yourself too thin?

On the contrary, our business model works better when there are many projects because it operates on economies of scale and scope. This is where an experience in one cluster would benefit the other.

E   What type of industries are you considering for your future developments?

We’re looking into a couple of concepts now, basically in the line of an office park and healthcare. But again, we’ll only develop value-added conceptual projects. You won’t see Venture Group develop a building with offices—it has to be a full experience: a compound where you get parallel activities, just like what we did with the restaurants.

You can see that our clusters have complementing services which cater to everything but shopping. So they are more community centers than a collection of restaurants or bars.

E    What makes a good location for a cluster from your experience?

It depends on the industry. For F&B, it has to be accessible and visible, and the proximal market or catchment area has to have a need for such a project. There are many factors we consider. We look into the build-up area designated by law, and as such, if it would be feasible financially to have a project.

E    How do you decide which industry would perform best in a certain location?

We consider the local market needs and the maturity of the area. We would not develop an F&B project with places to drink and dine out if there isn’t a lifestyle which suits such outings.

We, as Venture Group, would start with F&B because it’s a sure thing so far that we’ve done. If the F&B is not adequate—either because we already have a project in the area or the area doesn’t need an F&B-focused project—we would be looking at other industries.

E   On what basis do you select your tenants?

It’s product and price related. It depends on which F&B brands are willing and have the investment capacity to penetrate a certain area. They know better than us somehow, those big brands, where they want to go because they are more in touch with the consumers than us, and actually that’s how we test the market. From 10 phone calls, we can almost know whether a location in Zahle is good enough or not because these brands would tell us if they have potential clients in the area or not.

E   Lebanese are notorious for their short attention spans when it comes to F&B locations. How do you keep your existing projects viable, knowing that you celebrated The Village Dbayeh’s two-year anniversary in November 2017?

It’s all based on keeping them “happening.” There are two angles. The first is the normal dynamics of the consumer: You wouldn’t see a Hazmieh resident in The Backyard Hazmieh in August, but you would see many Lebanese expats there instead.

The other angle is how we add value to the project by having a calendar of events. These events keep people coming back. You visit an F&B cluster either because it’s within your community, or because there’s something happening, and that’s why events are important.

E   Last time we spoke, in 2016, you were developing F&B projects in Egypt. Can you update us on these projects and your expansion plans?

We signed projects in Saudi Arabia and Dubai, but our core presence as a company with a full set-up is in Egypt. We have a couple of projects there that we’re already working on, and a couple more in the pipeline. We also have our eyes on growing stable markets at the touristic level, such as Cyprus, but we want to grow organically and not burn ourselves by moving too fast.

Support our fight for economic liberty &
the freedom of the entrepreneurial mind
DONATE NOW

Nabila Rahhal

Nabila is Executive's hospitality, tourism and retail editor. She also covers other topics she's interested in such as education and mental health. Prior to joining Executive, she worked as a teacher for eight years in Beirut. Nabila holds a Masters in Educational Psychology from the American University of Beirut. Send mail
--------------------------------------


View all posts by

You may also like