A little peek behind the curtain: While interviewing hospitality leaders for the Lodging Luminaries podcast, I always try to mix in a bit of thought leadership – guiding the guests to provide takeaways that might help listeners better position their hotels – with a bit of “getting to know” the guest on a personal level. I’ll tell a bit of their career journey so listeners get a better sense of who they’re listening to.
For episode 4, there was no need to introduce Mit Shah to the audience. As CEO of Noble Investment Group, he’s an industry giant – almost a celebrity. His incredible story is well known: At 10 years old, Shah started cleaning hotel rooms at his father’s motel, moving on to laundry duties and then working the 7 a.m. – 3 p.m. front-desk shift every Saturday and Sunday. He says it’s that experience that created an opportunity for him to learn the business as an operator.
Fast-forward to a point in 2020 where, as CEO of Noble, Shah and the leadership team were forced to look at each one of the hotels in the portfolio and determine whether to keep them open or lock the doors. It was “unlike anything anyone could’ve fathomed,” he says.
Some 18 months later, Shah says he’s confident today that travel will come back bigger and better than ever. In this episode, he leans on his vast industry experience when discussing the importance of people meeting face to face and how hotels will have to adapt to new operating models to remain profitable. There will be winners and losers, he says.
Listen to the entire episode here or read highlights of the conversation below.
Q: You’ve built your career on owning and investing in hotels. When COVID hit, was there an ‘oh shit’ moment for you?
Shah: If you think back to 2019, here we are worried about 2% RevPAR growth and basically cost increases that meant our analysis was essentially flat. We’re very meticulous about budgeting, and we could never have imagined that ‘oh shit’ moment that you just described, which was ‘do you keep hotels open or do you keep them closed?’ That’s never been a part of the calculus.
What we were seeing happening with cities – shutting down in real time – with people that were working in our hotels, their livelihoods, their careers that we’ve helped build, in addition to the widespread concern about health and safety… and then there were those who still needed to travel, whether it was traveling nurses or frontline workers or national guard members… those days reminded me of the days after 9/11, where we’re first and foremost concerned about our team. But we’ve never had a concern like that – about keeping the lights on.
Q: Do you think there will be lasting impact on how frequently people travel?
Shah: No one’s ever advanced their careers without human interaction. Why’d you take that 6 a.m. flight? You did it for two reasons: It was either you and your family getting on that flight to go to Disney because you wanted to be first in line to go have this incredible experience that you’ll cherish forever, or it was to the conference or to the meeting so you can make a breakfast, so you could engage in that discussion face-to-face, that energy that we know takes place. That’s what happens at meetings. That’s what happens in conferences.
Q: How do you view the impact that Airbnb and short-term rentals are having on the hotel space?
Shah: Alternative lodgings are an important part of our business and VRBO has been around for a long time. Airbnb is a real business. Sonder, going public with a SPAC, clearly there’s value there. But U.S. RevPAR for hotels was increasing even with the advent of all this alternative lodging.
It shows people are buying experiences over other types of consumer goods – memories over merchandise. There will be winners and losers as we go forward – winning and losing markets, winning and losing brands. So, as an investor in this space, I think about ‘where do we want to invest from a market? What kinds of products do we want to invest in?’ Extended stay has always been a darling because it’s always had those kinds of aspects to it. So, when we think about the brands that we want to align with, lifestyle select-service and the more traditional core select-service brands continue to have a lot of value because of the standardization of the product experience, the security safety, the health safety. There’s no protocols in place for alternative lodging with this kind of stuff. I think those become more and more important parts of the calculus for people as they travel.