By Gamal Hennessy
Nightlife in the 1970’s was about discos. The 80s gave rise to the mega club. The 90s brought us lounges. The first decade of the 21st century made the speakeasy and the exclusive venue prominent. What major trend will permeate New York nightlife in this new decade?
Outside Influence
Nightlife is similar to any other local industry. It does not develop in isolation. Economic, political and social factors create environment for nightlife trends. The economic malaise, reduced regulation and residual attitudes towards sex and recreational drugs from the free love era of the 60s created a space for the Studio 54, Limelight and Sound Factory scenes. Rising real estate prices, increased gentrification, more scrutiny from City Hall and onset of AIDS caused a contraction in the market leading to smaller venues that charged higher prices without the decadence of previous years. The residential real estate boom, increased security concerns, on demand entertainment and social media shaped the current pseudo celebrity climate that we are currently experiencing. In order to predict what the next decade will bring, we need to look at the external factors that will come into play.
Economics
Pundits are predicting a “U shaped recovery” meaning that it will be some time before employment, wages and spending return to pre-recession levels. That means that at least in the short term bottle service won’t be as strong a trend as it was in the last decade. Commercial real estate costs will not come down significantly forcing operators to either go with smaller spaces that are economically viable or go for a major venue that can serve multiple groups of patrons to maximize the revenue coming out of the space.
Politics
A third term for Mayor Bloomberg probably signals a certain amount of status quo in the relationship between nightlife and City Hall. However, recent changes in nightlife leadership and the creation of the Nightlife Preservation Community could be the beginning of a stronger nightlife lobby and increased political influence. The new chairman of the State Liquor Authority has made some progress in improving the situation between nightlife and the state government, but pressure from local politicians and community groups could push back any gains that have been made unless the industry remains wary.
Social
Technology is on track to make niche entertainment and mobile connections more prominent. That means it will be harder to have one large venue catering to various different segments of the nightlife population all at once the way Studio 54 or Limelight did. It also means that because everyone is connected to the outside world all the time, it will be harder and harder to create a kind of escapist fantasy environment that nightlife represents. We won’t be able to escape because our connection to our world is always in our pockets. Finally, because everyone is in a position to broadcast their actions in real time and many of us are constantly trying to increase our popularity, status and image, the trend towards more and more outrageous public acts (whether real or staged) will probably increase.
It is too early to tell exactly what changes (if any) New York nightlife will see in the next decade. But it is clear that we need to look outside at our collective situation before we can look into our crystal balls. The operators and patrons who go out into the night with their eyes opened will be the ones who get the most out of the new nightlife.
Have fun.
Gamal
Follow New York Nights on Facebook and Twitter (because I’m also trying to increase my popularity, status and image)
By Gamal Hennessy
When tourists, graduates and other people choose where to visit or live, there are a lot of factors that they can take into account. Forbes, a well known financial magazine offers advice on this subject in the form of its annual list of Best Cities for Singles. The good news is that New York has risen to the top of this chart for 2009. The bad news is that our overall gains seem to come at the price of a weakened nightlife environment. Is NY nightlife really weaker than it was a year ago or does our nightlife have qualities that can’t be measured?
The Forbes Best List for Singles compares U.S. cities across seven different categories including culture, nightlife, number of singles and cost of living. Last year, NYC ranked 8th best city for singles beaten out by cities like Dallas, Seattle and Boston. The reason we barely made it into the top ten was because our cost of living is so high compared to other cities. Our nightlife was ranked number 1, even when compared to nightlife cities like Las Vegas, Miami and Atlanta because the number of venues in New York when compared to the number of singles was the highest in the country.
This year, New York is the top city for single people. Driving this determination is the fact that our cost of living, compared to the average salary for single people for New Yorkers has leveled during the recession. It is still expensive to live here, but you don’t need to be a millionaire to have your own place. The bad news is that the number of venues per capita has decreased from our 2008 numbers according to AOL City Guide.
The basic problem with the Forbes list is the same one that existed when we last covered the story. The methodology focuses on quantity as opposed to quality. It’s fine to count the number of single people or the number of bars in certain cities and rank them based on density, but it doesn’t really take quality or variety into account. Does each city have the same range of nationalities, education levels and backgrounds for singles to choose from when they go looking for a date? Is a bar in Charlotte count just as much as a bar in Vegas because they both serve beer? Is the experience the same when you can walk to fifteen bars in a five block radius instead of driving for 20 minutes just to get to one? If you think about single life by only tracking the numbers, you miss something substantial.
The Forbes study does point out a fact that New York and the nightlife industry needs to focus on. The recession, the SLA backlog and the NIMBY push have led to a consolidation of the industry. We are losing more venues than we are gaining. That means the city as a whole is losing more jobs, more revenue, more taxes and more potential for cultural growth. Our reputation as a nightlife capital can fade away if operators and patrons stand idle.
The Forbes List is not the last word on the health of nightlife in New York City, but consider this; Milwaukee and Portland came in with higher nightlife scores than New York. If tourists and college graduates look for a city to flock to and somehow come to the conclusion that nightlife in those cities can somehow be compared to ours we are going to lose the energy and the passion that those new people bring. Lists like this are not definitive pronouncements, but they are warnings to anyone who enjoys nightlife.
Have fun.
Gamal
By Gamal Hennessy
The first name in restaurant reviews moves into its 40th year with its annual nightlife guide today. In addition to a broad based look at venues in all five boroughs, the book looks at the trends emerging in both patron behavior and new venues. While some of the data reflects the impact of the recession, the overall picture shows that New York remains a prime location for nightlife.
Zagat started in 1979 as a collection of reviews for New York restaurants. Over the next four decades the company has expanded to dozens of cities and offers books and websites on shopping, dining and nightlife. The 2009/10 Zagat Nightlife Book used a survey of 6,000 nightlife patrons to determine that while people have changed their behavior because of the economy, nightlife as an industry has proven resilient to the downturn.
According to Zagat, New York City currently has more than 1,300 nightlife venues, including 100 new venues added in the past year. This finding is supported by our own Club Report that has continued to track new venues opening almost every week in spite of the economy. While there is no mention of how many venues were lost in 2008, the number of new venues is remarkable considering the economy and the stiff competition for drinking dollars. When you look at the contraction of other local industries in the past year, the Zagat data shows the strength of nightlife as an economic force in the city.
When it comes to the behavior of nightlife patrons, there is a definite shift toward less extravagant evenings. People are opting to go to less expensive venues, ordering fewer drinks when they go to their normal venues, or going out about half as much as they used to in an effort to save money. There was no information on the impact on bottle service, but anecdotal conversations I’ve had with promoters and other operators back this up this finding. In 2007-8 the average spent per person on liquor used to be $50-75 per night, now that number is down to $25-40.
The Nightlife Book also tracked other trends. It found that rising areas of popularity for nightlife include LES, Harlem, Park Slope and Williamsburg. It found that more new venues are underground speakeasies as opposed to the rooftop bars that have been in vogue for the past two years. It also found that the speakeasy trend is supporting a parallel rise in mixology in both new and established venues.
The 2009/10 Nightlife Book is available today and www.zagat.com has updates that can be delivered to your handheld.
Have fun.
Gamal
By Gamal Hennessy
There has been a lot written about how the practice of bottle service has become a scourge on nightlife culture. I know this is true because I’ve written quite a few of those articles myself. The recession has exposed a weakness in the business model that might put some operators out of business. But bottles are still flowing and some venues are thriving from it. So what is it that makes bottle service work for some venues and not work for others? A recent study suggests that it’s the patrons that hold the key to long term success.
Anita Elberse, Ryan Barlow and Sheldon Wong are students at Harvard Business School. They recently published a study called Marquee: The Business of Nightlife where they document the financial success of this long running venue and what goes on behind the scenes to make the venue work. One of the many interesting aspects of the study was the breakdown of Marquee’s bottle service clients. While this group is relatively small (40% of the patrons on any given night) they accounted for 80% of the revenue. And while any one could theoretically purchase bottle service, there were three main groups that Marquee provided this service to. There are celebrities who are so famous that they only have one name (think Diddy, Bono, and Paris). There are Upper East Side socialites who inspired the characters in The Devil Wears Prada, and Gossip Girl. Then there are the professionals who recently acquired wealth and were looking for a place to spend it. The last group has dwindled significantly, but between these three groups Marquee made more than two million dollars in their third year of operation.
The other point of interest in this dynamic is the time it took to cultivate the relationships that made bottle service work. The owners of Marquee, Noah Tepperberg and Jason Strauss claim to have spent half their lives developing relationships in the nightlife industry, interacting with potential clients in New York, Miami, Los Angeles and Las Vegas, and using Marquee as a national concierge service for established bottle service clientele. Their main focus was on the client who could consistently frequent the venue over several years, not the stock broker who would spend $100,000 in six months and then burn out. Based on the Harvard study, Marquee’s success is based on a decade and a half of work, not a flashy gimmick.
Marquee connects with people who have money to spend over an extended period of time. Among other things that they do, that practice has kept them running much longer than the average New York venue. Places that try to force bottle service on patrons who don’t have black Amex cards probably won’t last as long in this economy. And patrons who don’t have a name like Bono might want to think twice before trying to live this lifestyle. A prominent promoter I talked to last week explained it very well. ‘I don’t tell my customers what they should do with their money, but maybe the guys coming in from Newark who make $40,000 a year shouldn’t be spending $600 on a bottle of vodka. I think they can have just as much fun running a tab at the bar.’
Have fun.
G
By Gamal Hennessy
Last year I was offering advice on how to survive your office holiday party. This year the question is “will your office holiday party survive?” As companies fail and the market sinks, the lavish holiday party seems out of place this year. How can you keep the recession from ruining your holiday?
No one is surprised that companies are cutting back on holiday festivities. Event planning firms claim that 81% of all firms are planning an end of the year event. While this is a significant majority of all companies, it marks a 20 year low in end of the year activity, worse than both the period after 9/11 and the bursting of the internet bubble. This decrease in entertainment spending parallels a drop in bottle service that hit the nightlife industry this year as finance firms (one of the largest consumers of bottles) began to fail. Corporate perks are being cut on every level by large and small companies. It is only natural that the holiday party also gets hit.
While the majority of firms are planning a party, that party will not have the same level of extravagance as last year’s party. Many venues that host corporate parties are offering substantial discounts in order to lure budget conscious planners through their doors. Last year I was hired to be the DJ at an ad agency party. I spun in the Grand Ballroom of the Hilton on 6th Avenue, ate like a dog and made more money in a couple hours than I do playing all night at a bar. Something tells me that this year I’ll only be making bar money…if I get hired at all. And all those parties I wandered into even though I didn’t work there…that probably won’t be happening very much either.
But our recession does give us the chance to rediscover a fact that all nightlife natives intrinsically know; the price of the party has no relation to having a good time, and having a good time is the point of the party. Maybe you can’t drink so much free Grey Goose and Cranberry that you pass out in your cubicle, but can still enjoy time out of the office with your co-workers and friends. You can still appreciate the things you have instead of regretting parties of the past. And maybe this year you’ll be able to remember everything the day afterward.
Have fun.
Gamal
By Gamal Hennessy
Despite the gloom in the economic press there good things that can come out of the recession for nightlife natives. In spite of the bottle service decline and the community board moratoriums there is opportunity for a revitalized club scene. If recent history is any indicator, an infusion of new thinking can be the bright spot in an otherwise dark period.
From Problem to Playground
To understand the potential for growth, it makes sense to look at a previous crisis. In the late 1970’s America’s dependency on foreign oil spiked and the price of a barrel of oil jumped from $5 to $17 (which doesn’t seem that bared when compared to the price of crude today). That oil crisis contributed to economic malaise of the early 1980’s.
It was during this period that megaclubs opened and flourished. Between 1977 and 1985 legendary venues like Studio 54, Limelight and the Palladium defined nightlife culture. Entrepreneurs from other sectors understood that people need release and escape during periods of economic struggle. The result was a playground for the excessive 80’s that was imitated all over the world.
Fast forward
Today it is housing and credit that is causing the headaches instead of oil. AIG, Merrill Lynch and other investment banks are being torn down and sold for scrap creating a pool of finance, insurance and real estate (FIRE) workers looking for a new start. The fall of bottle service is a direct effect of this situation. The closing or repositioning of clubs that relied on this trend is the indirect effect.
But it is in these ashes that a new era in clubs can rise. The credit crunch has had a direct impact on real estate expansion in the city. Many people in the field see an inevitable drop in prices per square foot. As property prices fall and people look to take money out of the stock markets and put them into other investments, you also have a potential pool of talent coming out of the FIRE industries who can translate their skills into the hospitality industry. Rounding out the equation, you still have patrons who have the need for temporary escape from their daily lives. Some experts think that this combination will lead to a new period of growth in the nightlife industry.
Obstacles
Of course, the next Studio 54 isn’t going to just magically appear. Every new spot that opens is still going to have to find a way to get credit, deal with the community boards and police, overcome the jaded malaise of many veteran nightlife natives, compete with all the other clubs in the city and find a way to make money. There are sure to be a lot of failures but there is room for success. It will take creative thinking, personality and financial skill to make the next great spots work, but we have been in this situation before.
In the last few months, promoters have approached me asking my opinion on looking for the best club to buy and different ways invest. The advice I gave them isn’t original but I believe it to be sound. First, find someone who has experience over the long term that you can work with. Second, contribute your expertise and bring your people into the venue. Third and most important, learn how the whole business works. Those steps, a lot of work and some luck can revitalize nightlife in New York.
Have fun.
Gamal
