EXCLUSIVE: “Our hotels become the fabric of neighborhoods” says Palisociety founder and CEO Avi Brosh

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Palisociety began life as one West Hollywood hotel, built from the ground up by real estate developer Avi Brosh. It now encompasses 10 unique boutique hotels with more on the way, including two new additions in San Francisco and Miami Beach. Here Brosh, Palisociety founder and CEO, discusses having no experience whatsoever in operating hotels, but how this, in many ways, was his greatest advantage.

“I had previously started a real estate development company and I had quite a bit of success in that arena. But I always thought maybe one day I wanted to get into hotels,” says Avi Brosh. Without the benefit of hindsight, it was a bold idea. Simply making the switch from one industry to another is easier said than done, no matter how similar they are. But Brosh pulled it off.

Roughly 12 years on, Palihouse West Hollywood has expanded into an entire Palisociety of hotels, with room-counts ranging from 30 to 100, as well as other hospitality establishments. It has hotels in Florida, Washington, Oregon and all over its heartland of California. In February alone, two new properties opened. These new projects can take anywhere between two and five years to come to fruition.

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Starting out as a real estate developer inexperienced in hotels, though, far from being at a disadvantage Brosh believes his ‘ignorance’, as he puts it, was his greatest asset.

I decided I was going to get involved and build the sort of hotel that I thought LA really needed

“I didn’t really know the first thing about it,” Brosh admits. “It seemed very mysterious to me so I just stayed away for all those years. But once I got to a certain level of success in real estate a specific property became available and it occurred to me that there was probably a great opportunity to do a hotel there.

“I decided I was going to get involved and build the sort of hotel that I thought LA really needed. I approached it very much along the lines of what I thought would be great as a consumer. So that’s how I got kicked off. I built the hotel myself, I did all the things that I would normally do in the real estate business, but instead of condos these were hotel rooms.

This is partly still the Palisociety ethos, except Brosh is a little more democratic when it comes to design now. “The aim was just to build a hotel that I thought I would like to stay in,” he reiterates, “that would be original. I think to a certain extent that’s still a big part of the endeavour. Only I think that I’ve now been able to broaden it and democratize a little bit more what we’re offering. So it’s not just for me but it’s for a much broader range of people.

“And I just want to add: ignorance is bliss.”

Brosh explains: “When you don’t know the traditional way of doing something, you’re able to do things that perhaps others wouldn’t. I had no idea what the tried and true ways were, so I was doing something completely fresh and off-the-cuff. I think that needs to happen in all industries, all businesses, in order for there to be innovation.”

When it came to developing the brand from one Palihouse into many, things happened organically, says the hotelier. The early stages of new projects, the building or renovation, always came naturally to Brosh because of his experience with the ‘bricks and mortar’ side of his real estate experience.

“I started it with one hotel, and that particular hotel – the Palihouse in West Hollywood – was very successful from day one,” Brosh says. “Then I really started to transition my business from being a development company to be more of a hotel company, meaning we were going to be more involved in the operating side of things as opposed to just developing them.

“And so that hotel led to a second hotel, which we approached this time with a little bit more knowledge. We opened that hotel to great success. It led to the next and the next and the next and now we’re a platform of 10 hotels all of which sit under the Palisociety umbrella. This includes all of our hotels, all of our restaurants and bars, all of our nightclubs. And so now we are this society of hospitality projects.

When you don’t know the traditional way of doing something, you’re able to do things that perhaps others wouldn’t”

Brosh has segued the business more into the hospitality and hotel operating nowadays, rather than getting his hands dirty with construction. But that does not mean he has forgotten his roots completely. “We do still use our development experience when necessary, to really be part of the overall creation of these hotels going forward. We really do understand the bricks-and-mortar component of the process.”

When asked why exactly his hotels are so successful, Brosh answers at once. This is clearly something he has pondered on a lot.

“There’s a couple of reasons, which I didn’t know going in. These were things that I learned in retrospect,” he starts. “One, is I think the hotels are a little bit smaller, more personal, than most hotels. And they really are an amenity to the neighborhood. We get a lot of repeat guests. They really become a part of the fabric of the neighbourhood. That’s really at the core of what we do, and I think people respond to that.

“We design all of the hotels internally, so it’s a very proprietor-driven kind of a feeling and aesthetic. I think people feel connected to the design because you can tell it’s not designed by committee.”

This is an advantage the boutique hotel market has over larger, more traditional brands, says Brosh. The big brands do not have the time or resources to individually design each property inside and out, so they feel less personal to the guest.

“A hotel in Seattle is going to be different to a hotel in Miami Beach by virtue of their location,” says Brosh “because we’re going to speak to what’s going on in that neighborhood. Our restaurants, our room sizes, our tone, all those kind of things are going to be unique to the location in which the hotel is set, which is a little bit more challenging. This is why, when the big companies, when they do a Hilton Garden Inn, every Hilton Garden Inn is the same. They need to do that because they just do so many. And that’s fine. But we are just a little bit more of a tailored, more bespoke approach.”

When it comes to the future, there are worries, even for a successful brand like Palisociety. When asked what challenges the company faces, Brosh avoids the dreaded A-word, but it seems plain enough what he is referring to.

I built the hotel myself, I did all the things that I would normally do in the real estate business, but instead of condos these were hotel rooms”

“The home-sharing platforms,” he says, “and this technology-based platform where people are commoditizing apartments, and people are utilizing them as hotels. I think that’s the biggest challenge.”

Yet in the face of competition from the likes of Airbnb, hoteliers like Brosh refuse to back down.

“But I think that hotel companies do better with more scale,” he continues, “and so for the foreseeable future it’s helpful for us to continue to grow, and give people more offerings around the country.

“We don’t have any big refurbishments planned – we really do design these things to stand the test of time. We’re pretty meticulous about maintaining our properties.

“But we have several hotels in the pipeline. And we’ve got several beyond that. At the moment we’re a little tight-lipped but we’ll probably announce three to five new projects all around the country in the new year (2020).

“At this point it’s about continuing to grow the platform, continuing to get better as hotel company, and those are our immediate plans.”

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Sam Lewis

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