Membership Collective Group Inc. Class A (MCG) Q1 2022 Earnings Call Transcript

Membership Collective Group Inc. Class A (MCG)
Q1 2022 Earnings Call
May 18, 2022, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Membership Collective Group's first quarter 2022 financial results [Operator instructions] Thank you. Greg Feehely, director of investor relations.

You may begin your conference.

Greg Feehely -- Director of Investor Relations

Thank you for joining us today to discuss the Membership Collective Group's first quarter 2022 financial results. Some of today's statements may be forward-looking, and actual results may differ materially due to a number of risks and uncertainties, including those discussed in our most recent annual report on Form 10-K filed on March 16, 2022. Any forward-looking statements represent our views only as of today and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our first quarter 2022 earnings release, which can be found at membershipcollectivegroup.com in the News & Events section.

Additionally, we posted our Q1 2022 earnings presentation, which can also be found in the news and events section on our site. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Reconciliations to the most comparable GAAP measures are available in today's earnings press release.

Nick Jones -- Founder and Chief Executive Officer

Hello, everyone, and welcome to the MCG Q1 2022 earnings presentation. My name is Nick Jones. I am the CEO and Founder of Soho House and the MCG. I want to start by giving you an overview of our Q1 performance, and it's good news we had a good start to the year.

January was problematic because the pandemic was still affecting our house openings. But by the end of January, all our houses were open apart from in Hong Kong. And we saw a really strong recovery. Our members were very keen to get back to the houses, and they also very much enjoy the fact that they didn't have to wear mask.

There wasn't social distancing and life seemed to be getting back to normal. That was really good to see. And our members' events were hugely popular with all our members globally. And it really felt like for the first time, it was back to similar levels of what we were doing in 2019.

We had exceptional membership growth in the quarter with 16,000 new members. The demand for members continues with the MCG waitlist at an all-time high of 79,000. We saw continued growth in recurring membership revenues, up 45% versus Q1 2021. And 12% versus the prior Q4 2021.

Retention remains at pre COVID-19 levels. We opened two Soho Houses in the quarter and are on track to open nine this fiscal year. I got to say the new houses we're opening; they are some of the best we've ever done. They really feel fantastic.

I've got to thank our design team for just doing such an amazing job. Our in-house revenues saw a strong recovery, up 440% versus Q1 2021. Even April this year was 14% up on 2019 levels, which is very, very positive. We delivered adjusted EBITDA of $2.3 million, which was up $25.1 million versus Q1 2021.

And I am excited to announce that today, we will be introducing 2022 guidance on the back of the Q1 performance and momentum in Q2. I just want to talk about membership because it's something I wake up every day and think about it. And what I think about is two things: A, how do I look after our existing members better. And B, how do I add more members.

And what really makes our members super happy is when we open new houses in new exciting cities. And membership is at the center of Soho House and Soho House is at the center of MCG. And I've been acquiring and retaining members for 27 years. The more global we get, the more exciting it gets, not just as a membership group of people, but also the different countries add such flavor and interest into our global membership.

Recurring membership revenues underpin our business. In Q1 this year, we added 10,000 new members, which is the best we've ever done. Our waitlist is sitting at 79,000, which again is the highest it's ever been and the retention of our members is higher than I've ever known it in 27 years. So naturally, we are very confident we will hit our membership target, which will be 40,000 new Soho House members by the end of the year.

We're on track to open nine new Soho Houses this year. We've successfully opened Nashville and Brighton in Q1. And we've opened Holloway House, which is in West Hollywood, California this month. And again, I just want to stress, these are fantastic houses.

The new members are so excited about them. And also the existing members who visit them just saying, my membership has gotten better. We're also adding new houses into four new countries. In the second part of this year, Scandinavia is going to get two; one in Copenhagen and one in Stockholm.

Those members globally when you look at what we have on CWH, which is our Cities Without Houses members are very, very strong cities. And then, later in the year, we're going to Mexico City, and then we're going to Bangkok. And what is happening is Soho House membership is becoming truly global with interesting members. Just a little bit more about Cities Without Houses because Cities Without Houses is what it says on the TIM.

It's the city where we don't have a house, but we have a membership base. And currently, we are in 72 cities where we have membership representation. We have membership committees and we have members. And within those cities, we put members events on and those members travel to cities where there are houses and use them, but also what they do is really show us that the city they live in really requires a physical house, and they help us find that physical house.

They help us find the local developing partner, and they are incredibly loyal to the house when it opens. Our new houses are the ones I've just spoken about, they're all in interesting buildings. They're all what I believe, are fantastic spaces. And they're on our asset-light model, where the local developer pays for everything.

Each one has a local design field because it's for the local membership. The design inspiration always comes from the building and the city. And that also runs through into everything we do in our houses. There's a global opinion but a local decision.

And our houses work on -- our house has been super successful with the local members. And we offer a home away from home for our global members. When our global vendors visit these cities, they don't want to visit a house, which feels like it was designed for every city in the world. They want to visit a house, which feels local to the city they're visiting.

And I'm incredibly confident that our pipeline of between eight to 10 Soho Houses per year is achievable. And this gets us to 85 houses by 2027. Our members would love that. I'm also very excited about other openings within the MCG portfolio.

We got the net opening in New York for the first time. Members have been asked -- London members, New York members have been asking whether Ned that is coming there for a very long time. And the early uptake of membership is super impressive. And we've got exciting plans for the future, for The Ned.

Andrew?

Andrew Carnie -- President and Director of the Board

Thank you, Nick, and good morning, good afternoon, everyone. I'm really pleased to speak with you all today with Nick and Humera. I'm really pleased with our strong Q1 results within a volatile operating backdrop that we witnessed in Q1. Specifically, there remained COVID restrictions in select regions earlier in the quarter, that progressively eased as the quarter progressed.

For example, Hong Kong house was closed during most of the quarter. I am, however, glad to say that our teams did an incredible job adapting in this environment and welcoming our members back to our houses. Notwithstanding the challenges I've just described, our team delivered record quarterly results in terms of revenue. This was driven by a strong rebound across Feb and March, seeing nice growth versus 2019, and we saw further momentum in April, which is super encouraging.

So I'd like to actually spend a few moments talking about the significant progress we've made on each of our strategic pillars, which we outlined at the time of our IPO. First, global expansion of Soho Houses is a priority for us. Nick has already discussed a lot of the details around our pipeline, our unprecedented demand. However, I would just like to reiterate our revised annual target is eight to 10 houses per year, which gets us to about 85 to 90 houses in five years.

Secondly, if you remember on the last call, I talked quite a bit about our Cities Without Houses membership. CWH is incredibly important to us and incredibly important to our growth. It provides us a low-cost, highly predictable path to opening new houses. To give you an example, both Nashville and Brighton houses we opened in Q1 had a very strong CWH membership, which ensured we open the house is perfectly tailored to what our members want in each of those cities and achieving our opening membership goals.

So I'm really pleased to say we've now expanded CWH to 15 cities across Africa, Asia and Latin America, which will really fuel our house openings in the next five years. Now on to enhancing membership value. It's really at the core of our long-term success. And Nick talked a lot about this.

We're really focused on growing the number of Soho Houses and it adds clear value to our membership. That's what you're seeing in our record waitlist, but also our Every House membership is at all-time highs of 81%. Additionally, retention rates of existing members are at record levels. So I'm really pleased that those three KPIs are really strong as a barometer for the membership value that we're delivering.

Additionally, events at our houses, which are key to our proposition for our members are starting again. As we see a semblance of normalized environment, we're really starting to put what our members love the most which is events back in our houses again. For example, for the first time since the pandemic our North American and U.K. houses across Feb and March had a full event program.

Each house put on 30-plus events across music, fashion, art, film, health, and well-being. And it was really great to see our events full with happy members. I'll give you a great example of this. In celebration of the Triumphant Return, South by Southwest , our Austin House offers several days of varied programming.

Musical arts included George Clinton and Sister Sledge and many more. From music showcases to panel discussions to pool parties to our events, members were treated to this best of South Bay. Now, on to creating new membership brands, which is our third strategic priority. This is important as it diversifies our revenue base and adds new revenue streams.

At the IPO, we said the key focus is to increase the share of wallet of our members by providing them unique value-add services from Soho House, focused on the new ways of working from Soho Works and being able to take the house home by Soho Home. We're really pleased with our continued growth in each, and both are resonating very well with our members. So first, I'd love to talk about Soho Home. Our new spring assortments, which are all based from our houses, resonated well from our members.

This resulted in a 150% revenue growth versus Q1 '21. That's off the back of over 100% growth in Q4 '21. So what we're seeing in Soho Homes is continued high growth, but most importantly, our members are really enjoying what we're offering in Soho Home, and that's why 70% of our sales are accounted by for our members. Our Soho Works membership jumped over 400% versus Q1 2021 as our members return to work, and I'm pleased to say that now all our offices globally are full occupancy, which is a great achievement.

And similar to Soho Home, what our members, are loving is a unique environment created by Soho House that allows a lot of flexibility in their lives for them to flourish in their work. Fourth is enhancing our digital experience for our members. We're midway through our digital transformation journey, which is three purposes: To really improve member experience and have a frictionless experience throughout their lives within Soho Houses, to enhance and improve our connectivity with our members, and thirdly, driving cost efficiency opportunities across our company. So firstly, on our apps.

We continue to invest in our existing members experience to our proprietary platforms that power the Soho House app. The SH.APP continued to improve throughout Q1 with feature enhancements, including the addition of health club bookings, which led to 75% of all global bookings made by the SH.APP, an increase of 500 basis points versus Q1 '21. We are addressing member feedback on our app by simplifying user experience, including improvements in navigation, home page and personalization, which members will progressively experience throughout Q2. Most excitingly, we're currently beta-testing our Soho House Connect app, which will provide the next level of digital connectivity to our members.

The new product is on track to introduce Soho House members this summer. So by the end of July, our members are going to have a fantastic app that we'll be able to book and pay throughout all our Soho Houses globally. And a really great way to connect digitally, both in the houses and at the houses. And that's something we've been working on for over two years.

So we're really excited about what our members are going to get from Soho House by the end of Q2. Operational excellence as we deliver our growth plans is a core pillar. While top line is incredibly important, and we are a high-growth business, we're equally focused on profitable growth and improving our margin and hitting our targets. We'll achieve this through operational leverage, targeted cost management, smarter procurement policies and better management of fixed cost as we grow.

This is demonstrated by an improvement of 300 basis points in House Level Contribution. In Q1, we ended at 21% margin versus 18% in Q1 '21. F&B margins for the quarter continued to grow and were ahead by 260 basis points versus 2019 on a comparative basis. Now I'd like to address a few macro clouds and how they relate to MCG and our margins.

The supply chain remains constrained. And we expect these constraints to continue for the balance of the year. To compensate, we have significantly diversified our supply base over the last 24 months, which has alleviated a lot of the pressures and that's resulted in Soho Home being able to continue its exceptional growth and us opening our houses, which we've opened now three quarters to date, and we feel very confident on opening our 9, as Nick mentioned earlier. Inflationary pressures, we expect to continue throughout 2022.

We have strong pricing power, which we have demonstrated already this year. And combined with better procurement and F&B margins can offset the near-term pressures. Regarding labor, we have multiple initiatives in place to retain our existing colleagues and also find new colleagues, and we're already seeing the benefits of our efforts. Finally, we continue to build on our ESG program, House Foundations.

We're incredibly proud today to publish our first ESG report, which outlines our goals and key initiatives for 2030. Our strategy uses the foundations we've built over 27 years to have a positive impact on the people around us, the lives of our members and our environment. We have strengthened our commitment to help people from lower socioeconomic and underrepresented backgrounds to have access to the creative industries. By 2030, 5% of our annual Soho House membership intake will represent members in our creative access programs.

And in the last quarter, we expanded our Soho House membership program to nine -- to 13 cities and welcomed over 170 new members. To ensure we minimize our impact on the environment, we have set environmental goals, which include net zero and carbon emissions by 2030 and reducing waste across all our operations globally by 50%. In Q1, we launched our Waste No Food Campaign in North America, increasing total sites that divert food from landfill from 65% to 74%. So as you can see, each quarter, we're making progress against the targets that we're going to outline today through 2030, and we'll always update you on our progress against them.

So in summary, I recognize we're operating under a volatile macro environment. Within that backdrop, I'm really pleased with our performance and also our progress toward our strategic goals that we outlined at our IPO. Importantly, we continue to see our high retentions in our members, demand for membership being at all-time highs and we continue to open our new houses, which ultimately drives the most value to our Soho House members. However, I recognize that we do have to carefully navigate the coming years in terms of balancing growth and demand and profitability, which we are very focused on.

I'm now going to hand over to Humera who will drill into the numbers and our results and share with you for the first time our 2022 guidance.

Humera Afzal -- Chief Financial Officer

Thanks, Andrew, and good morning, everyone. Here are some of the highlights for Q1 2022. Overall, it was a good quarter for us with total revenues of $192 million, representing an increase of 165% year over year with growing contribution across all three of our segments. These results were delivered despite a number of restrictions prevailing particularly early on in the quarter due to the Omicron variant in most of the territories in which we operate in.

It's worth noting that there continue to be very strict restrictions in Hong Kong throughout the whole quarter, which are only now being eased. We saw continued growth in recurring membership revenues, which were up 45% versus Q1 '21 and 12% higher than Q4 '21. Our in-house revenue saw a very strong recovery, up 440% year over year during the quarter, driven by the increase in mobility and strength in leisure spending from our members. Our improved performance reflects continued focus on cost management, as well as strong top line performance, particularly as our houses travel up the maturity curve.

Given our confidence in our recovery, we are now introducing fiscal year 2022 guidance on the back of our first quarter performance, as well as our current trading. Turning to some of the details of our Q1 2022 performance on slide 12. As noted, our total revenue in Q1 of $192 million increased by 165% compared with the first quarter of '21. In the quarter, membership revenue, our recurring revenue income stream increased to $58.8 million or 45% above Q1 '21 levels and accounted for 31% of total revenue in the period.

This was driven by the growth in our Soho House membership base year on year. In-house revenue in Q1 continued to rebound strongly overall despite the Omicron impact, increasing to $87.8 million, a 440% improvement year over year. Other revenues of $45.5 million also showed a very strong recovery, up 191% versus '21 and sustaining the recovery seen in Q4 '21, where we delivered $42.8 million. This was driven by the continued robust performance of Soho Home, and we also saw a recovery of public restaurants in the U.K.

and North America. Also aiding our other revenue growth was improved performance of The Ned London for which we receive a management fee and growing contribution from Line and Saguaro hotels, which became part of the group of MCG in June 2021. House-level contribution benefited from significantly reduced restrictions year on year and robust membership growth both in the second half of last year and the first quarter of this year. However, this was partially offset by increased operating costs and the impact of new openings, which you're aware tend to impact contribution in the first one to two years.

House contribution margin for Q1 '22 is 21% versus 18% at Q1 '21. This improvement is predominantly due to the flow-through of additional membership fees and higher sales flow-through. Other contribution also improved strongly from a loss of nearly $12 million in Q1 '21 to a positive $4.6 million predominantly due to growth in our retail offering year on year and improved performance in our restaurants and townhouses following reduced restrictions. Moving on to the revenue bridge.

This slide sets out the building blocks of our year-on-year revenue growth in the first quarter. You'll see here the three main drivers to our improved revenue performance, and they include membership growth, much improved in-house revenue performance. And finally, the revenue from our other businesses. Membership revenue growth was driven by 19,819 new adult paying members in existing houses since Q1 '21.

And 6,916 new members in the new houses opened during '21. We also added 1,677 new members from the two new houses opened during Q1 '22 although it's worth noting that a full quarter's revenue would not be recognized given that members would be joining only partway through the quarter. Frozen members continue to drop quarter on quarter now at a level of 3,519, which is below pre-pandemic levels. We also increased our Every House membership fee for those members renewing from February 2022 onwards having not raised membership prices since 2019.

Other memberships contributed to circa 30% of the revenue growth versus the same quarter in 2021. The in-house revenue increase of 440% versus Q1 '21 to $87.8 million was aided by our new house openings in Nashville and Brighton. The fact that we experienced fewer COVID closures and restrictions overall versus Q1 '21, leading to increased footfall through the houses. There were also price increases across food and beverage.

And as a reminder, the price increases were a weighted average of 5% across categories. RevPAR in February and March was above comparable of 2019 levels, led by North America and U.K. North America RevPAR was 22% higher in Q1 2022 versus Q1 2019, and U.K. RevPAR was 30% higher in Q1 2022 versus Q1 2019.

This overall RevPAR growth of 4% in Q1 2022 versus Q1 '19 on a like-for-like basis was driven by higher average daily rates. It's worth noting that occupancy levels were impacted due to the Omicron variant in January before rebounding February and March, and this improvement has continued into April. Other revenue growth came from various sources, including revenue from Mandolin and the Vallauris restaurants, as well as contribution from the Line and Saguaro Properties, which were not part of the group in Q1 '21. We saw improved management fees from The Ned London due to increased activity versus Q1 '21.

And additionally, there was continued strong growth in Soho Home offering showing revenue growth of 150% versus Q1 '21. Turning next to EBITDA. Our adjusted EBITDA improved from a loss of $22.8 million in Q1 '21 to a positive $2.3 million for Q1 '22. In terms of the key drivers of the improved performance, EBITDA growth year on year is predominantly driven by four key aspects.

Firstly, increased membership revenues were volume-driven with significant increase in full paying Soho House members year on year, as well as membership fees from new houses. Additional membership revenue was driven by improved occupancy at Soho Works. The next driver is the recovery of in-house contribution through increased footfall given fewer restrictions year on year. As noted, there was an impact of the new houses on house contribution, but at the same time, the positive benefit of other houses progressing up the maturity curve.

Within other contribution, we benefited from continued growth in retail, as well as improved performances from our restaurants and contribution from the Line and Saguaro. Finally, EBITDA growth was partially offset by increased G&A expenses. Firstly, due to the increase in business activity as compared to Q1 '21, and also increased support costs for our new houses. We also saw wage inflation at our corporate office.

And finally, we incurred $4 million of costs in the quarter related to being a public company. However, strong cost control and vacancy management of support sites further helped to offset some of these G&A expense increases. Overall, operating expenses grew at a rate below the revenue growth rate. A further driver of the increase in EBITDA margin was an employee retention tax credit gain of $2.5 million.

As you know, we report our adjusted EBITDA burden for growth, meaning that we include expenses that are associated with the growth of our business. The bridge on this slide shows some of these expenses. Firstly, preopening costs were $4 million in Q1 2022, lower by $0.8 million in the same quarter prior year. Secondly, noncash rent, which is the difference between the rental costs in accordance with GAAP, and the actual cash cost was $3.4 million in the quarter.

And finally, deferred registration fees were $2.4 million in Q1 2022. The table on this slide shows our cash and debt position as at the end of Q1 2022. We ended the quarter with $285 million of cash and cash equivalents and restricted cash and net debt of $423.5 million. As previously noted, on March 9, 2022, we exercised our option under the Goldman Sachs Senior Secured Note Purchase Agreement to issue $100 million of additional notes.

The company also repurchased 342,972 shares for $2.6 million during the first quarter 2022. We utilized $18 million for capital expenditures and anticipate FY 2022 capex broadly similar to 2021 levels. We also paid $4 million for a new energy supplier deposit in the U.K. And as you can see from our loan maturity profile, the vast majority of our debt currently runs out to 2027.

We do not anticipate any difficulty in refinancing or extending the facilities during 2024. Overall, our liquidity profile, including undrawn debt of circa $93 million provides us with sufficient flexibility to fund our operational needs, as well as our capacity to grow. Our priority remains to generate free cash flow and pay down debt in the short to medium term. Looking ahead to the balance of fiscal 2022, we remain confident about the overall recovery of our MCG Group revenues given the positive momentum of Q1 '22 carrying through into Q2 '22.

Total MCG membership increased by a further 3% in April. And together with our high level of member retention, record waitlist numbers and growth from new houses, membership continues to be a very valuable recurring revenue stream. Based on our confidence in our recovery, I now believe we can provide the following guidance. In terms of our house members, we anticipate ending the current fiscal year between 160,000 and 165,000 members.

That should translate into total MCG membership revenue, including non-house members, in the range of $270 million to $280 million. From a total revenues perspective, for MCG, we anticipate a range of $950 million to $1.025 billion. We are targeting adjusted EBITDA between $80 million to $90 million for fiscal 2022. And for clarity, this is without adding back preopening costs, noncash rent and deferred registration fees, which we currently estimate to be a total of $60 million combined for the year as a whole.

We're still cautious about the emergence of any future COVID-19 variance, and this guidance assumes no future unforeseen interruptions from the emergence of any such variants. We're also mindful of continued inflationary pressures. However, we have several cost control measures in progress to counter some of these concerns. Notwithstanding these headwinds, we expect to deliver sustained margin growth within the short term.

And now I'll pass you back to Nick.

Nick Jones -- Founder and Chief Executive Officer

So what a year so far, and we're nearly halfway through it. Then my god, it feels like things are really getting back to normal plus-plus. COVID feels like it's in the rearview mirror. Members are super excited to be back.

All our events, which are happening in the houses are full, our rooftops are full. There's a real excitement just to connect again with human beings in spaces that they are familiar and they love. And our team are doing a brilliant job executing our growth plans, all in good time, three houses already open, and I'm super proud of them. And I feel so positive about the future.

And I just, again, want to thank our very incredible loyal members. I want to thank the patience of the 79,000 people who are on our waitlist, and I want to thank the teams who put so much work and effort into making Soho House work.

Questions & Answers:

Operator

[Operator instructions] Your first question comes from the line of Steven Zaccone from Citi. Your line is open.

Steven Zaccone -- Citi -- Analyst

Great. Good morning, everyone. Thanks for taking my question. I wanted to start asking on the price increases that you've taken both on membership and then also on food and beverage.

How are members taking these increases to rates. Is there room to increase it a little bit more as we go through the year? That would be very helpful. Thanks.

Nick Jones -- Founder and Chief Executive Officer

Thank you for that, Steven. Well, as Humera mentioned in her bit, we have put the membership price up for every house members, ranging between 10% and 13%. I remember, there's been no resistance to that at all. Our members are -- they realize that things have gone up in price.

They're pretty -- they're very logical about that. So that has been received with no problem whatsoever. As far as menu prices are concerned, we're always reasonably priced in our houses. And -- but we've had to pass inflationary prices on to our members.

They understand that and they get that. So as far as room rates are concerned, again, our room product, I believe, is some of the best on the market. And again, we're very lucky in the fact that we don't use any booking engines to drive our bookings. We don't use Booking.com or we don't pay any commission to anyone to book rooms.

And we always pass that on to our members. So they always feel that they're getting a benefit. So our members are fine about the pricing. And if inflation does keep going up.

We won't hesitate to pass some of it on.

Steven Zaccone -- Citi -- Analyst

OK. Great. Very helpful. Then my follow-up was just on the guidance, much appreciated for giving guidance this year.

I'm curious how you think about '23. I know you're not providing guidance for that today, but is there a way to contextualize maybe the exit rate that you'll come out of this year as a potential run rate for the business?

Andrew Carnie -- President and Director of the Board

So I think on 2023, I think what we're going to say today is we're comfortable where we're seeing 23% EBITDA expectations today. Our focus is getting through this year, and that's why we wanted to provide the guidance this year, which reflected Q1 and that's what we wanted to give you guys today.

Humera Afzal -- Chief Financial Officer

And just add to that, in terms of the ramp-up for the margin, it increases quarter on quarter. So first quarter is typically a lower quarter, second quarter will get better, and that's supported by  office opening, which is a very high-margin business. Q3 again gets stronger than Q4 because of Christmas, New Year bookings and that sort of thing. So in terms of the ramp-up to the margin, you'll see ramp-up through the year.

Steven Zaccone -- Citi -- Analyst

Great. Thank you for the detail.

Operator

Your next question comes from the line of Stephen Grambling from Goldman Sachs. Your line is open.

Stephen Grambling -- Goldman Sachs -- Analyst

Hi. Thanks. Maybe another follow-up on the guidance. Could you just help break down maybe the revenue guidance into other revenues and in-house, especially the KPIs in each of those, as well as give us a little bit more color on how you're thinking about in-house contribution?

Humera Afzal -- Chief Financial Officer

Hi, Stephen. So in terms of the revenue breakdown and the weightings between the three different segments, I'd say that Q1 is a reasonably good indicator of the different weightings. Q1 in terms of sort of the membership revenue, we've always said between 27% to 29%. I think that's consistent.

There may be a bit of variation between in-house and other, but broadly, that breakdown and that weighting will be consistent. And in terms of margin and house-level contribution, I'd point you back to the maturation curve. The houses are going to progress up the curve. They are progressing up the curve versus 2019, which is the last normal year.

So I'd point you back to that. I don't see any anomalies coming through.

Stephen Grambling -- Goldman Sachs -- Analyst

And maybe an unrelated follow-up. How has developer-funded capex lending rates moved over the course of the quarter? It just seems like there's been a lot of moving parts in the capital markets around hospitality in particular. So I'm wondering if there's anything that's changed there? And if you can help clarify maybe how much developer-funded capex are you anticipating this year?

Humera Afzal -- Chief Financial Officer

So in terms of the rentalization of the capex spend by developers, that's typically around the 5% to 7% yield. That hasn't really changed for us. We're not seeing that changing in the short term in any of the deals that we're negotiating now. Our debt, as you know, is at around 8.5%.

So that still represents a good cost of capital relative to the cost of our debt.

Stephen Grambling -- Goldman Sachs -- Analyst

Awesome. Thanks. I'll get back in queue.

Humera Afzal -- Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of Bo Lloyd from Lloyd Holdings. Your line is open.

Unknown speaker

Hi. Yes. Just wondering if you can provide a little bit of insight based on your members without houses. What region is kind of showing the most demand or maybe area of opportunity for growth?

Nick Jones -- Founder and Chief Executive Officer

Hi there. So Cities Without Houses is a really successful membership program for us. And the areas where we're seeing most success actually where we're opening houses. So for instance, in Stockholm, with our founder members are already there through CWH members, same with Copenhagen.

So we see very strong growth in other cities in America on CWH, San Francisco, Portland, where we're eventually going to be opening physically and other cities around. So it's a really good indicator of how popular -- potential physical house will be in that city. And obviously, over COVID -- over two years of COVID, we haven't been doing the activity that we were doing pre-COVID. And now that's back in full swing.

We've expanded to 72 countries now. And it will be something I'll be really pleased to report on in future calls.

Unknown speaker

And just a quick follow-up as well on property kind of, I guess, type. I know you have your more traditional density properties and then you have your more farmhouse and maybe back in Kansas state. Just curious if there's any insight as to the strategy as to property type mix in the future? Do you continue this to be more in city? Or is it more maybe essentially a state-style properties as well?

Nick Jones -- Founder and Chief Executive Officer

Well, we've got four types of houses. Soho House, we've got the large house, big house. We got medium houses. We've got little houses, and we got the resort-style houses.

And we plan to expand all four types equally over the coming years.

Humera Afzal -- Chief Financial Officer

To give you a bit more color on that, actually, in 2022, I'd say five of the nine are medium houses, one or two are small and the remainder will be large. Looking forward to 2023, there's probably one experiential, four medium and four large, that's the rough breakdown for the next couple of years.

Andrew Carnie -- President and Director of the Board

And I'll add a third on that. So if you think about North America, our largest region, which is seeing a huge amount of growth, we're going to add a lot more of the experiential houses into North America which will again increase the value of our membership because most of the folks, our members in North America are every house. So if you think about the farmhouse concept we have here, which is incredibly popular with all our members, those kind of concepts will be coming to North America to round out our North America membership. So that's the way we see the experiential houses is really adding value to our biggest regions.

Unknown speaker

Thank you.

Operator

Your next question comes from the line of Joe Greff from J.P. Morgan. Your line is open.

Joe Greff -- J.P. Morgan -- Analyst

Hello, everybody. Another couple of questions with regard to your '22 guidance. Your membership guidance implies 32,000 net adds over the next three quarters. I was hoping you could help us understand the breakout or the contribution coming from houses that are opening in '22? And the balance of '22, houses that opened last year and earlier in the 1Q and a ramping and then maybe contribution from houses that opened prior to 2021.

Andrew Carnie -- President and Director of the Board

Yes, great question. So I would think of it a little bit like this. You have our existing houses. So you think about what we call vintage houses, pre-2018.

We will add between 5% to 10% of members in those houses. And we've been doing that for the last 27 years because of the natural usage of our members within those existing housing. So I would always think of that as a real strong indicator of the strength of our business that we can always add each year between 5% to 10% members in those houses. That's almost like like-for-like comparables.

Then your 2018 houses up until '21, they're the houses that we've opened recently, and we -- that's where we can ramp up the membership a lot more this year. So you're going to see roughly  a third of the new members going in our newer houses. And then, as we've always said, when we opened the new houses, the nine this year, we always intend to open with a minimum of 1,000 members. So it's -- I would think about it in those three buckets, a good ramp-up on the 2018 houses to '21.

The new houses opening of about 1,000 each, and we're actually beating that right now with Nashville and Brighton. And then, the like-for-like growth in our existing houses.

Humera Afzal -- Chief Financial Officer

The other variation to notice is actually the regional variation. So for instance, North America sees a significant portion of growth with 38% of the balance of the year is coming out of North America. And this also points to the point we've made before that the geographical mix of our membership is changing, moving more toward North America, and that's the higher price point, which also drives margin.

Joe Greff -- J.P. Morgan -- Analyst

And then do I imply from your overall guidance that other segment, the non-Soho House segment, is profitable for the rest of the balance of 2022?

Nick Jones -- Founder and Chief Executive Officer

Yes.

Humera Afzal -- Chief Financial Officer

Well, it's various matter. In total, yes, there will be ups and downs within that.

Joe Greff -- J.P. Morgan -- Analyst

OK. So it's not -- I use from your comment that it's not in each quarter that other segment is P&L positive.

Humera Afzal -- Chief Financial Officer

Yes.

Nick Jones -- Founder and Chief Executive Officer

Yes.

Joe Greff -- J.P. Morgan -- Analyst

OK. And then, my final question -- and maybe you referenced it, and I missed that. I had some technical difficulties. Can you give us an update on the CFO search, please?

Andrew Carnie -- President and Director of the Board

Yes, I can. We are very close to finding Humera's successor, and we'll be announcing in the next few weeks. We've done a huge search globally with Humera involved. We're obviously very sad that this is Humera's last call, but we'll be announcing our new CFO in the next three to four weeks.

Joe Greff -- J.P. Morgan -- Analyst

Great. Thank you, everybody.

Operator

And there are no further phone questions. I will turn the call back over to management for any web questions.

Unknown speaker

We have no online questions at the moment.

Nick Jones -- Founder and Chief Executive Officer

I mean, I want to talk about -- there's a lot of the news at the moment about potential recession. And I just want to sort of talk about our experiences with recessions in the past. You think we've been going for 27 years, and there have been a few of them. And what we found, particularly in the last one in 2008, but actually members didn't give up their membership.

They ended up using the houses more. And they expected good value when they come to the houses, but the one thing they didn't want to give up because they realized it was a home away from home, and they also realized that to give up their membership, that was an incredibly long queue to get back in. So I just want to assure anyone who's on this call, but we're not worried about a recession. No more questions?

Operator

And there are no further phone questions at this time. Mr. Nick Jones, CEO and Founder, I'll turn it back to you for any closing remarks.

Nick Jones -- Founder and Chief Executive Officer

Well, my closing remarks are we're delighted to be back open again. It's what we do best. It's great to see our houses full. It's great to see our waiting list get even bigger, even longer.

It's fantastic to see the new houses open. It's very sad to see Humera go. So I just want to personally say thank you. And I want to say generally, thank you to all our leadership team, Andrew, who's in the room with me for their constant support and help while we get this business flying on all cylinders.

Thank you.

Operator

[Operator signoff]

Duration: 47 minutes

Call participants:

Greg Feehely -- Director of Investor Relations

Nick Jones -- Founder and Chief Executive Officer

Andrew Carnie -- President and Director of the Board

Humera Afzal -- Chief Financial Officer

Steven Zaccone -- Citi -- Analyst

Stephen Grambling -- Goldman Sachs -- Analyst

Unknown speaker

Joe Greff -- J.P. Morgan -- Analyst

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