Inside Universal Music's Big Bet on Hospitality - Oscar Serrano, UMusic Hospitality

Josiah: This is a really interesting brand on so many levels, but I'd love to hear in your words the story of UMusic and maybe going back to tell our listeners, how did this all come to be?

Oscar: Okay, so let me rewind a little bit about the history. Now we're in 2025. UMusic Hotels as a project was born a few years before COVID. Obviously, this is a project that is powered by Universal Music Group, which is the biggest entertainment company in the world. In those days, they already started talking about the superfan. It's something now, maybe now you start hearing about the superfan, what it means and what it brings to the table. And Universal Music Group, with a very good thought, and our founder as well, was the one that initiated that idea. They really initiated building hotels around a very specific music group. I'm not going to name the music group, but it's very well known -- and everything evolved from that idea to, why don't we just not focus only on one specific group or one specific genre, but we just open it to music in general? Because this is Universal Music Group. And obviously the catalog and the universe of music and genres and musicians is absolutely amazing.

So the idea started like this. We have that superfan, and we all love music. We all are connected by music. It doesn't matter which group, which band, which genre you like. If you listen to music on vinyl or CD or your digital player, doesn't really matter. We all are connected by music and that's absolutely something fascinating. And the company as well, at least Universal Music Group, felt that for us, developing a hotel company would be the physical manifestation of the brand in a way. Because now we can be in front of the consumer with our own brand and then making them participants in our own ecosystem. That was a little bit of the idea on how it started.

Josiah: And if I could just jump in there, Oscar, because I think this is fascinating. Sometimes there are other industries that are sort of ahead of where the hotel industry is, and I feel like music and entertainment could be one of those. So before COVID, I think this has only accelerated since then, but before COVID there was this shift towards experiences, people spending more money on this. So Universal sees this, they see the superfan, and you just think about the economics of the music industry. It used to be about selling records. That's virtually it. It doesn't really move the needle in terms of revenue. So you see live experiences, concerts, driving much more revenue. And then so Universal says, hey, there's more opportunity here. We need to kind of follow the money, follow what we're seeing. And that led them to hospitality.

Oscar: Yeah, exactly. And I would say this is a physical manifestation. It's a way as well to connect with your fans. Could be, again, fan of any type of music, any type of group. And that's quite amazing, especially the way the superfan thinks and moves and reacts. And I've seen it myself. Let me jump a little bit out of the pure hospitality side. When we opened the UMusic shop and you could see the popups around a very specific artist and the way that the superfan reacts, honestly, it is absolutely something impossible to believe until you see it. I've seen people queuing for four hours in the middle of the month of August at 40 degrees Celsius outside because they just wanted to get a hold of the latest item related to a specific artist. And this is like, wow, this is so powerful. People are so passionate about music, how music connects people and cultures and locations and creates communities. That's something absolutely unbelievable.

Josiah: But Oscar, I just got to jump in there because I think if I connect all the threads of your career, I think as an operator and then now as a commercial leader, it's interesting because you think about travel being this very emotional experience, right? It's a fun place to be a marketer. It's a fun place to be a commercial leader because people enjoy it, right? And they typically share. That being said, it's so interesting to look into adjacent industries. And so you've built your career in hospitality leadership, but then you look at entertainment and you see a level of engagement and excitement that rivals, it feels like, anything in hospitality. It's a whole other level.

Oscar: Absolutely. And that's why we always say that at UMusic, this is a journey through entertainment and hospitality. In other hotels, they will tell you we're all about hospitality, and then the rest is an add-on. For us, the entertainment is the core. In this case. And then around it, you just build your value proposition about hospitality and F&B and additional entertainment and retail, et cetera. But the music is the core. So music is not just a background that you just listen to when you just cross the lobby or you are in your room, or you are at the piano bar, or you are at the rooftop or whatever. The music is absolutely integrated within the whole entire guest journey. That's what it is. And that's what makes it absolutely unique. And in our case as well, powered by Universal Music Group, obviously it's such an amazing experience for our consumers because of what Universal Music Group brings to the table as well. That's what makes this unique.

Josiah: I love it. So it starts with this observation. You witness it. Universal obviously is seeing all the economics. They're seeing kind of the business potential here. What I'm curious about is how do you go from an idea, this amazing concept, into bringing this to reality? You opened your first property in Madrid. I wonder if you could share the story of that, because it's one thing to have an idea, it's another thing to bring it to life. Very different thing. A lot of work goes into bringing an idea like this to life. I wonder if you could share that journey to opening your first property.

Oscar: Yeah. So obviously that journey comes along with a lot of extra gray hair, that's for sure. It brings a very amazing journey in our case. Obviously, the first couple of years we basically focused our efforts on just building the brand. And when I say building the brand, it's not just creating a very nice and a beautiful logo and idea behind it. It's what comes along the way as well, just creating that guest experience journey at all levels, from operations to IT and digital to sales and commercial to F&B outlets. There is a whole story behind that.

Josiah: Would it be possible to jump a little bit into that? Because I'm curious, as you think of that whole spectrum of touchpoints, what were some of the touchpoints or the experiences that you felt were most important? There's obviously the music and the way of interacting with that. Maybe it was partially that, but what were the touchpoints you felt were most important to bring this to life?

Oscar: Yeah. Apart from, let's leave aside the more pure transactional touchpoints that any hotel in the world might have, and that's a given. Obviously for us, when we first sat down and we said, okay, how do we now build that unique guest experience journey? What makes it unique? And for us, it's how can we truly leverage the power of Universal Music Group and bring it to life at a consumer level? How can they really feel that, okay, I'm now at the UMusic hotel, this is what makes it absolutely unique. And those specific touchpoints, some of them very subtle, some of them very obvious, some of them very unique. That's what, for us, was the most important one. Because otherwise a hotel could be named any name in the world. You can really open it up and it doesn't bring any difference. But for us it's how could we really leverage that powerhouse that we have behind it and how the consumer can really feel it.

Music has to be across the whole journey, completely integrated. There needs to be very specific touchpoints. Some of them absolutely very hospitality oriented that you may have in other places, but always with a very specific touch around music. And that needs to live across the whole guest experience journey. So for us, that was one of the things that we said, because otherwise, what makes us unique and different? It's not only that you're named UMusic. What does it really entail? What does it really bring to the table? And for us that was, and it still is, one of the things that we continue always researching, A/B testing all the time.

You do not create a company with a very unique value proposition from day one. It takes a little bit of time in the planning process and then in the implementation process, and then you start to see what is the consumer reaction. That's pretty amazing, for the good and the bad. This is really welcoming from the consumer. This is just a blah. And in this one you can really see the emotion coming along. And sometimes you think, well, you are at the blackboard designing that, oh, this is going to be a winner, this is going to be fantastic. And then it is like, but the consumer didn't have an amazing reaction. And then you see small details that create such a difference.

Something very simple. We did a collaboration agreement with the School of Music in Madrid, and we have the students coming along every day and they perform live in different areas of the hotel. And as well for them it's a real life stage that they really use. Then you see the consumer, absolutely an amazing reaction. How they really feel that, and how they truly enjoy. And even if they don't even know who that person is, because it's not even an A artist, B artist or C artist, they're just students from the School of Music. But when they understand the story behind that, the narrative behind that, and you see the reactions like, hey, look at that. We thought that we might bring X, Y, Z, well-known artists, but look at that. We have these wonderful students from the School of Music and look at the reaction. That's something absolutely amazing and unbelievable to see.

Josiah: That's such a great example. I want to get to some other elements of your guest experience, but I'm fascinated by this notion of testing things and I'm also really interested in common beliefs in hospitality that turned out to be not that effective. So you mentioned you kind of think about a bunch of things, things that you thought may work, and through your testing you figure out maybe it doesn't work as well as you might have expected. Does anything in that category, things that you thought would work and ended up not working so well, anything come to mind there that you'd be willing to share?

Oscar: Maybe one of them that I could think of right now, top of mind, would be when we started as well creating the F&B experience, the F&B outlets. At the beginning we thought, well, let's just go with the basics, because that will always work. And then along the way, we realized that the expectations of the consumer was that somehow as well, different elements from, in this case, from the music industry would be integrated. I'm not talking about the product that you serve, but the experience by itself. So then we had to transform and think about how we work around the spaces where the F&B is taking place. We started with just the usual and regular restaurant that you open at the hotel that you serve breakfast, lunch, and dinner. Well, in a city hotel breakfast is going to always be the winner, but if you think that your restaurant is going to be working just as a regular restaurant in a city where competition is absolutely outstanding, there's an amazing F&B offering out there, it doesn't work.

So then you really have to say, okay, now we really need to integrate everything that comes around music, somehow entertainment into that experience, because otherwise it's just a simple food and beverage experience. Now it becomes more than that. And this is one of the things that we started at the beginning thinking that this is just going to work and we are just going to be fine. No, no, no, no, no. You need to bring that experience as well into things as simple as an F&B outlet.

Josiah: It's interesting to me because I think when you explain it, that makes sense. You want the guest experience to be consistent. But in the real world, there are often tradeoffs here. You're like, okay, if we have a pretty standard offering, you're probably thinking that way so that you can invest your time and energy in other things, right? You're saying, hey, we need to put our money, put our time, put our creativity in these other elements of the guest experience. You just have a standard good breakfast. And then what you found, it sounds like through your testing, is no, no, no, every touchpoint matters a lot. You need to think about how do you take this brand, make it show up in a breakfast offering or in a food and beverage offering. So that's really interesting to me.

I wonder if we could talk about the physical space of the hotel, maybe with Madrid as an example. My understanding is there's an old theater as part of the property. I'm very interested in properties having multiple outlets and thinking about this almost from a real estate perspective of a mixed use environment. And obviously larger hotels and resorts operate to this extent in some regards, but I'm curious how you think about the use of space at UMusic and how you think about the different kind of components of what might be on the property itself versus what's next to it, because it sounds like it's a very integrated experience.

Oscar: Yeah. Again, through that process when we were building the brand and opening the first proof of concept, because for us, Madrid was our first proof of concept. It's something that we could not say no to. When someone called us and said, hey guys, I know that you are in the planning process. We have this amazing opportunity. You really need to come here. And that was in summer 2022, and we landed at the end of the summer in Madrid, and we opened the hotel in November, which honestly, wow. In my experience, I've never seen an opening happen in only four months, period. We were lucky as well because we opened the theater with Antonio Banderas, with his musical company. He was at the theater every single day because he was the director and an actor. So for us it was the most amazing brand moment. This is only just a story of things that happen and why we arrived here.

But from a real estate perspective and from a consumer experience perspective, I'm just going to divide it in two. From a pure real estate perspective or from a pure asset manager or a stakeholder or investor, again, as we create ecosystems, we do not foresee just the room revenue as the core of the revenue driver. We foresee room within a full ecosystem of revenue drivers in this case. In some hotels, at least in my previous experience, room revenue was your core and then the rest we called them, at least in those days, extras. You had $2.75 extras per person per night that you are creating. And that was your KPI.

In this case, we foresee every space as its own ecosystem and then integrated with just one full ecosystem under UMusic. That's the way we foresee it. So you really need to, it's like having different P&Ls under just a master P&L. That's the way we foresee it. And then we need to interconnect them because obviously you will have experiences that are always interconnected and doing that cross pollination between them. Sometimes you might have cross pollinations, sometimes you might not. So that's number one.

From an investor perspective, it is truly interesting for them because they see the streams of revenues not only from room revenue, which remains very important obviously. Absolutely. In the case of Madrid, we still have 130 rooms that we need to fulfill every night, but as well, they foresee the revenues that can come from the theater, from the rooftop, from the shop, from the nightclub, et cetera. So that's number one.

And then from a consumer perspective, it becomes as well very interesting because in regular hotels, you might have maybe a couple of buyer personas. Weekdays and weekends. Weekday is most of it is going to be business corporate. They go to the city where you might have some leisure, whatever. And then weekend, you might have leisure consumer or leisure buyer. And then that's it.

In the case of at least the way we foresee and we envision our spaces and our business ecosystems is that we have different buyer personas. So you might have people that they just go to the shop and they will never stay at the hotel. People that stay at the hotel, that they will go to the shop and buy something. They will go to the theater, they will go to the rooftop, or they will go to the pool. And then vice versa. We have the theater. Right now we have Kit Kat Club Cabaret that has been in New York City and London, now is in Madrid. So you have that consumer that might come to the show and then it becomes a buyer persona for the show itself. It becomes a buyer persona for the rest of the outlets as well.

So it brings all these complexities because suddenly one narrative is not enough for everybody. You cannot only have one narrative when you go out there and try to market your product. You need to have a narrative for the theater spectator, for the hotel guest, for the UMusic shop superfan, for the couple that goes to the rooftop and because they live three blocks away from the hotel and the skyline of Madrid is so amazing, they come here and they have drinks when the sun is going down. So that what makes it unique. It becomes a very rich environment. Again, from a consumer perspective, but as well from a stakeholder or a shareholder perspective, that's something that's unique. We bring true value to the table.

Josiah: So fascinating. And there's another stakeholder I wonder if we could speak for a minute about, and that is Universal. I think this is a very interesting opportunity because they're running this big diversified business. They see the opportunity, they want to get involved in hospitality. How does this help their broader business?

Oscar: Well, first of all, because the hotels, they become the physical manifestation of the brand. That's number one. But as well, because those spaces, these assets where the brand becomes a reality, a consumer facing brand as well, is a stage for what they have and what they represent. From artists to genres to music content to their own music libraries, et cetera. So for them it becomes a huge stage where they can really portray what they have and what they represent.

When we go and talk to the artists as well, for them, it becomes another stage for them. And I'm not talking only about A artists, because we always think about the big guys out there, the big names out there, but there are so many thousands of artists. We're talking about a roster of over 7,000 artists that Universal handles. And many of them are not A or B type of artists as well. They're young people or young groups or new companies out there that are trying to venture and adventure into the music industry. And for them it becomes an amazing opportunity. It becomes a stage for them. And that's something as well amazing. Because you see young people, young groups that come to the table and it's amazing that, hey, now you have this additional opportunity to show off who you are.

And another couple of examples, a very young artist that not many people really know about them. And suddenly they perform at the main entrance of the hotel. They perform live to the audience that was on the street. So you could see the artist literally in the middle of the front door and hundreds and hundreds of people around that super young artist. And it was amazing to see the face, not only of the spectators saying, what is this all about? And then suddenly you could see fans taking pictures, but the artist itself, because like, wow, I have this amazing opportunity to portray who I am and what I represent and my talent out there. And UMusic becomes a wonderful stage.

And then you have the opposite. You have the big names out there as well. This is an additional opportunity for them to portray who they are and what they do, from content and music to retail merchandise. So that's another amazing opportunity for them.