ATLANTA—While the hotel industry conditions are challenging, the Main Street panel at the Hunter Conference earlier this week agree that for disciplined, long-term, people-focused hotel investors, the runway remains attractive.
The panel, moderated by Hunter Advisors President and CEO Teague Hunter, drew contrast between the Wall Street panel earlier in the day. The panel featured Alpesh Patel, owner of the Kana Hotel Group; Bo Patel, COO of Coury Hospitality; Mitch Patel, founder and CEO of Vision Hospitality Group; and Azim Saju, CEO of Ark Holdings.
While all acknowledged the macroeconomic headwinds—slower growth in revenue per available room, higher costs and elevated risk—panelists stressed that hotel performance is ultimately driven at the property and market level.
“We’re dealing with a lot of the same things that they talked about—slow RevPAR growth. It depends on the market,” said Alpesh Patel. Government-heavy markets are “not good” and some mid-tier markets are also “challenging,” he said, while areas with data center-driven demand are faring better. “There’s a lot of variation, and we’re all dealing with a lot of the same things … insurance costs, labor costs are going up.”
Mitch Patel framed the business as fundamentally microeconomic despite the macro noise. “Macroeconomics are important. There’s no question about it. But this is a microeconomic business as well,” he said, adding that success still comes down to “the brand that you partner with, the location within the market, how well the property is maintained, and, above all, people."
“This is a service business, a people business that’s layered on top of the real estate,” he said. In an age of online reviews, which are now further amplified by AI, differences in guest ratings are decisive. “If you’re going up to Marriott.com or Hilton.com and you see a hotel [with a] 4.8 rating, and another hotel at a 4.0 rating, that could be the difference in success or mediocrity.”
The risk in business today is very real. "I think Wall Street’s job, at least in my eyes, is to assess that risk. But ultimately, it’s about the entrepreneurial spirit,” Saju said. “It’s about the conviction you have in the deal. And if there was no risk, there’d be no reward. So, you have to take the risk."
Culture as Competitive Advantage
Across the panel, culture and leadership emerged as the core differentiators, much more than capital structure or brand flags.
“Culture will trump any business strategy any day," said Mitch Patel. He described a portfolio-wide analysis that linked top performance to top leadership: “What we also noticed was the hotels that were performing the best also have the most amazing leader, general manager at that property. Great leaders can inspire the team to perform better."
Alpesh Patel shared an example of internal growth within this company's ranks. One of his company’s flagship, high-volume urban Embassy Suites hotels is led by a general manager who started as a breakfast hostess at a small roadside inn about five years ago. That property now ranks in the top 5 percent for guest satisfaction in its brand. “That just exemplifies the beauty of this industry,” he said.
Bo Patel said his company recently hired four first-time general managers with similar “from the ranks” stories. “They can connect with [employees] at a different level because they’ve walked in those shoes more recently versus 10 years ago,” he said.
Saju underscored the need to pair culture with financial education. His company spends significant time helping frontline staff understand gross operating profits, cost variances and how performance affects their own trajectory. “We also try to educate our team to develop the entrepreneurial side,” he said. “How does [GOP] influence their long term growth—even the housekeepers."
Ultimately, he said, hospitality is “a tough business” to run, and teams need to grasp why ownership pushes hard at times.
Risk and Patient Capital
While the risks are real, panelists described them as the price of entrepreneurial opportunity—not a reason to sit on the sidelines.
“I want to qualify my response by acknowledging the risk in our business is real,” Saju said. “But ultimately, it’s about the entrepreneurial spirit. It’s about the conviction you have in the deal. … You gotta take your swings and then bet on yourself as an entrepreneur to figure it out. Bet on your culture, bet on your team, your ops team.”
Several speakers drew a clear distinction between institutional capital and “patient” Main Street capital. “The main difference between Wall Street and Main Street is also we have patient capital,” Mitch Patel said. With friends-and-family investors, he argued, they are not forced to sell on a tight timeline or by fund documents and promote structures that can incentivize suboptimal decisions.
On development, the panel was candid: This is one of the most difficult periods they have faced, given elevated construction and financing costs. “We’ve developed over 60 plus hotels, and it is probably the most challenging time right now to be developing hotels,” Mitch Patel said. In the wake of the worst of the pandemic, many expected construction costs to ease, but “it didn’t materialize because of something called inflation.”
Still, he sees reasons for guarded optimism. “We are seeing that construction costs are tapering, so there’s a little bit more clarity now than it was two, three years ago,” he said. With supply growth running well below the historical annual average and the low pipeline, he believes disciplined developers will be rewarded as demand grows into a constrained supply environment.
On the acquisitions side, Bo Patel said his group reviewed more than 50 deals and bought six, focusing on assets that could be acquired at or below replacement cost, with value-add opportunities and conservative underwriting. “What we saw is plenty of opportunities in terms of value add that was out there,” he said.
Saju, who is active on both new-build and existing hotels, warned that renovations now come with longer runways. Deferred maintenance, complex change-of-ownership PIPs, supply chain delays and the time required to rebuild business all weigh on returns. “It’s not [like] the renovation is done and the next day the business is back,” he said. “It’s going to take another 12 months [from the end of the renovation].
The panel closed with some protect investor capital, invest in people and culture, stay disciplined on deals, and maintain conviction through volatile cycles. “Storms will come and go,” said Mitch Patel. “In the long run, discipline wins.”