Top executives from NewcrestImage, Hersha Hospitality Trust, Vision Hospitality Group and Baywood Hotels spoke at the AAHOA conference this week about how their experience in family businesses has shaped their current successes.
SAN DIEGO—The 30th annual Asian American Hotel Owners Association convention kicked off Thursday with a panel of speakers talking about their successes and challenges in their family businesses, as well as sharing leadership advice for the next generation of hoteliers.
What all four executives agreed on right away is that people always matter most in the hotel business.
“This business is not about bricks and mortar; it’s about people serving people,” said Mitch Patel, president and CEO of Vision Hospitality Group. “Every day I wake up talking and thinking about our culture in our organization.”
Jay Shah, CEO of Hersha Hospitality Trust, echoed that sentiment.
“We can learn as much from our engineers and our room attendants as we can from our senior executives,” he said. “Whenever I visit a hotel, I talk to people who might otherwise not always have a chance to be heard.”
That investment in people and culture pays dividends in a company’s success, said Mehul Patel, chairman and CEO of NewcrestImage.
“My focus is building human capital,” he said. “As you grow your company, your job is to continue to nurture that. Your job is to bring more leaders into your company that bring you more success. The goal for every leader in this room is to have success for your people. You’ll find your success in them.”
All four panelists agreed that coming from family businesses and operating family businesses plays a huge role in how they lead their companies.
“My father’s still very involved in the business, I’m very close with my parents and work very closely with my brother,” Shah said. “The biggest takeaway we got from our parents were our values. It’s created a great foundation for our company.”
Mitch Patel also attributed his parents with laying a foundation of values.
“They came to this great country, settled here and took a huge risk with nothing in their pockets for a better life for the next generation,” he said. “My parents gave me an incredible foundation. We learn so much from hard work, honesty and integrity—those are the fundamentals of hospitality.”
Al Patel, president of Baywood Hotels, said “the family part of our family business is one of my favorite things.”
“My dad comes into the office almost every day still,” he said. “Being in the same business with each other has made us so close. I have friends who have nothing in common with their fathers and nothing to talk about with them, and (my dad and I) have so much in common and so much to talk about every day.”
Mehul Patel said one key to success in a family business is keeping that family feel intact while growing business credibility at the same time.
“My wife works with me every day, and that’s our backbone,” he said. “We treat our company like a family, but it’s very institutional too. You can have great family values and still institutionalize your business.”
Best deals and worst deals
Moderator and AHLA President and CEO Chip Rogers asked each panelist to describe the best and worst deals of his career, and the lessons learned from them.
Al Patel spoke of the first Hampton Inn acquisition his family made. “At that point, we had invested in more moderate-tier hotels, so this was a sea change for my family,” he said.
The success of that deal led to others, and the company was in active acquisition mode just prior to the Great Recession, which he said taught him a big lesson.
“The highs are very high in our business, but the lows are very low, so moderation is key,” he said.
Shah agreed that moderation is important. He described his worst deals as those corresponding to the recession, saying that sometimes the company was “overcome with development.”
“Development always has the potential to burn you, so it is about a more balanced approach to development deals and how we time them,” he said.
He also described a deal meaningful to his family as his best: “When I first came back to the family business, my brother and I had the vision of taking the limited-service hotel model to (top-tier) cities,” he said. “It doesn’t sound that innovative now, but my family had always done secondary and tertiary market investments, and we had this big idea to go to the city. That was personally very important to me because it was my thesis.”
Mehul Patel credited his company’s 2012 deal to sell a 20-hotel portfolio to Starwood Capital Group as his best deal.
“It made me feel good that I helped build something institutional capital would appreciate,” he said.
Another top deal on his list? The company’s decision to buy a sight-unseen property in New Orleans in 2013 and flag it as an AC Hotel by Marriott, a brand that didn’t have U.S. name recognition at the time.
“When you take a risk, the reward is much greater,” he said. “We took a risk and took a chance.”
When it comes to his worst deals, Mehul Patel had an optimistic take on them: “Something goes wrong in every deal, so you have to be able to learn something and make it better,” he said. “You’ll always make mistakes. With every mistake, you learn and it’s an opportunity to do it better the next time.”