Hbs Case Study Marquee Nyc
It was 3 in the morning on a school night last week, and the party was raging at Marquee, one of the city’s hottest nightclubs.
At 10 years, it’s also one of the city’s oldest.
Marquee’s decade-long run at the top is so remarkable that a Harvard Business School professor has made a mini-specialty out of analyzing it, publishing two scholarly papers on how it has succeeded in a city where even the highest-grossing clubs often close within two years.
“The typical lifespan of nightclubs in Manhattan was thought to be about 18 months,” Prof. Anita Elberse’s most recent study says. “Of the top 10 grossing New York City clubs in March 2010, four — Lotus, Pressure, Home and Plumm — had closed their doors by 2012.”
Not Marquee. Even at 3 a.m., revelers were packed into banquettes and bars on two levels. Still more were lined up outside in the cold, vying for the privilege of paying a $50 cover charge just to join the last hour of the party.
In an industry notorious for fly-by-night owners and operators, Jason Strauss, 39, and Noah Tepperberg, 38, who opened Marquee in 2003, have not only kept their first club alive but built one of the most successful nightlife empires in the nation. They opened a second Marquee in Las Vegas in 2010; it became the highest-grossing club in the nation, with $80 million in revenue the first year.
Elberse, one of the youngest professors to ever get tenure at Harvard Business School, has been studying Marquee since 2008.
Her initial report — “Marquee: The Business of Nightlife” — offered one hardly surprising insight into the club’s success: charging a lot for booze.
It was routine, for example, for customers to pay $350 for a bottle of vodka that would have cost $25 in a liquor store so they could party with the likes of Bono, George Clooney and the Olsen twins.
But even with the success of “bottle service,” revenues were plummeting — from $15 million in 2007 to $5 million by 2011. Even Elberse, who looks as comfortable in the Marquee DJ booth as she does in her buttoned-up official portrait, wondered if she was witnessing the “last call for Marquee,” as her original paper put it.
Not so fast.
Other club owners might have milked Marquee for all it was worth and then sold it or just shut it down, but Elberse’s new study — “Marquee: Reinventing the Business of Nightlife” — reveals how Strauss and Tepperberg figured out the key to making the party roll on: “Focusing on electronic dance music and star DJs.”
Suddenly, wrote Elberse, “a venue that once was all about selling high-priced alcohol delivered to table customers (would) be converted into one that was at least as much about selling tickets to heavily marketed events featuring A-list and up-and-coming DJs.”
In other words, they adopted a business model similar to the one that has allowed places like Webster Hall and Roseland Ballroom to survive long past the usual expiration date for clubs (though Roseland is reportedly set to close in 2014). But instead of live rock shows, Marquee would be all about the superstar DJ, spinning the latest in EDM — electronic dance music.
Strauss and Tepperberg invested $3.5 million in a dramatic renovation of Marquee last year, one that literally raised the roof. Before, the DJ booth was off in a corner, out of sight and out of mind. The new layout has the DJ on a stage, front and center, before a giant, luminescent display that proclaims his name to everyone in the room.
“We saw this whole EDM thing was really blowing up, and we bet on it in New York,” Tepperberg told The News.
DJ Chuckie is now a marquee player at Marquee, flying in from his home in Aruba just a few hours before playing the club last week. He said he takes about 400 flights a year, and more than a half-million fans follow him on Twitter.
“Club owners are learning that electronic music is the way to get people in the door,” said Chuckie. “The DJ is the crowd-puller, the ticket-seller. We went from being seen as disc jockeys to being treated as artists.”
Treated as artists, but not starving like them: Star DJs like DJ Tiesto reportedly average $250,000 per night. Club owners get what they pay for.
“If it wasn’t for DJ Chuckie, I never would have come to Marquee,” said Brooklyn student Vedrana Bobinac, 23, who was at the club Wednesday night. “I’d rather just find a rave in Bushwick.”
You don’t need a Harvard degree to know that Tepperberg and Strauss were on to something — but if you’re studying for one, the pair will journey to Harvard on Tuesday to lecture business students about success.
One key: Adapt with the times.
“It’s not the name of the club or the brand or the neighborhood that’s most important,” said Tepperberg, who is a partner in 10 nightclub ventures in all, including a Marquee in Sydney, Australia. “Now people want an experience they can share with friends and show they were there.”
The pair’s most recent opening is a palatial Asian restaurant and lounge called Tao Downtown. The massive room has a full wall of elevated tables, perfect for watching the crowd.
Or taking photos to post to Instagram
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In June 2011 they launched Dream Downtown Hotel in New York City where the team operates all of the hotel’s food and beverage outlets including room service, Bodega Negra, Ph-D Rooftop Lounge, and Electric Room lounge. In March 2012, Tepperberg and his TAO Group partners made their first international foray with the debut of Marquee at The Star Casino & Hotel in Sydney Australia. In September 2013, the group once again raised the bar on nightlife with the introduction of TAO Downtown in New York City. In 2016 along with chef/partner Chris Santos they opened Vandal New York and Beauty & Essex at the Cosmopolitan of Las Vegas and also took over the food and beverage operations at Dream Midtown in New York City which includes 3 venues (PHD Terrace, The Rickey and The Fishbowl.
On February 1, 2017 Tepperberg along with his partners announced a first of its kind deal to sell a majority stake in Tao Group to The Madison Square Garden Company. Tepperberg and his partners retained a substantial stake in the Tao Group and continue to operate the company day to day. Together with MSG’s portfolio of acclaimed live entertainment experiences and complementary venues, TAO Group has also announced plans to move forward with the opening of more than 10 new venues,including new markets like Los Angeles, Chicago and Singapore.
Career successes for both Tepperberg and Strauss include receiving the Nightclub & Bar’s “Hospitality Operator of the Year” Award in 2006 for their work with Marquee and TAO, as well as being honored by Harvard Business School in March 2009 with a published case study about the dynamic duo’s myriad of businesses: “Marquee – The Business of Nightlife.” They were also named by In The Mix as two of the ‘50 Most Powerful People In Electronic Dance Music’ 2013 and by Billboard as two of the ‘Power 50 People in Dance Music’ 2014.
In addition to his hospitality ventures, in 2001 Tepperberg, along with partner Jason Strauss formed Strategic Marketing Group (SMG), a lifestyle marketing, special events, consumer promotions, and public relations company. SMG has the unparalleled ability to integrate lifestyle, entertainment, fashion, and nightlife programs that create and influence popular culture with unique brand experiences for consumers. Under the direction of Tepperberg and Strauss with partners in the agency Seth Rodsky, Brett Rogoff and Alex Cohen, the company worked with global brands including Coca-Cola, Donna Karan, Heineken, LVMH, NASCAR, Under Armour and Yahoo. In 2014 Tepperberg and Strauss sold their interest in SMG but have remained as advisors to the company.
After graduating from Stuyvesant High School, Tepperberg earned a BBA degree in Business Management from the University of Miami and currently resides in New York City.