NewcrestImage's Mehul Patel

As head of a rapidly growing hotel company and this year's AAHOA chairman, Patel is comfortable with change.

SEPTEMBER 04, 2013: This has been a year of a lot of change for Mehul Patel, both in his professional life as Chairman and CEO of the newly merged NewcrestImage and in his role as current Chairman of the Asian American Hotel Owners Association. At NewcrestImage that change has been rapid and constant; the company completed its merger of Newcrest Management and Image Hospitality in May and has made several key divestures and acquisitions in the process. At AAHOA, Patel said, that change has been about making fundamental shifts in the way the association communicates with its members and industry colleagues. 

But for someone who got involved in his first hotel acquisition before he even graduated high school, change is just part of doing business. 

Patel’s start in the hotel business came when he and his family moved to Garland, Texas, from India when Patel was 13. From 1990 to 1993 he and his family worked and lived in a hotel—his parents as room attendants and Patel and his brother as everything from front-desk clerks to landscapers. “When your home is the hotel you learn the business that way,” he said.

From that point on their interest and investment in American business accelerated—and not in a way you might expect. The family’s first big investment was in a mailing business where Patel worked during high school, which they held then sold in three years for $1 million. Also during that time the Patels acquired their first two hotels, turned them around and sold them for profit. Six months after the Patels purchased their third hotel, a 94-room property in South Dallas, they lost everything in a hotel fire. 

At a point when many would have turned away from the hotel investment business, Patel was determined to see his investment through. “It was a challenge for a year and a half,” he said. “We incurred a lot of debt just to survive. We had a burned hotel. We were living in the hotel and we lost everything; nobody was working, it was a very hard struggle.” 

The lesson for him, Patel said, was learning how to build a hotel back from nothing. 

“I called hundreds of numbers and got turned down for loans because of our history. We had no cash flow,” he said. “I called the SBA and asked for preferred lenders in Texas and just called everyone on that list.” 

The hard work paid off. Finally one lender agreed to lend the family the money and Patel spearheaded construction and opening within nine months. “I was in college at the time. My brother managed the hotel during the day and at night I was the security guard,” he said. “I would sit out in the parking lot in a minivan keeping an eye on the property while I did my homework.” 

The struggle of rebuilding that property turned out to be a major turning point for Patel’s career. The hotel that burned down was unaffiliated and when it opened again Patel flagged it as a Howard Johnson. “When we sold that hotel in 2000 we doubled the cost of it,” he said. “The $2 million we made in that sale is what started me in building Newcrest Management. In 2000 I acquired three hotels and it’s been an upward trajectory since.” 

The change of the last 13 years hit a milestone in May when Patel’s company merged with the management-focused Image Hospitality to form NewcrestImage. In fact, the companies have been doing business together for years. The catalyst that made the companies think seriously about a formal merger was their joint sale of 20 hotels to Starwood Capital that closed almost exactly one year ago. 

“It was a pretty big moment for us to deploy that kind of asset,” Patel said. “We had to build our infrastructure to show its financial validity.” The sale included properties with an average age of less than five years and flagged under brands including Hampton Inn, Courtyard by Marriott, Holiday Inn Express, Country Inn & Suites and others. 

“For the last 12 months it’s been about selling to give us a fresh start,” he said. 

That “fresh start” included some major acquisitions, most notably the company’s June purchase of 25 company-owned La Quinta hotels in nine states, comprising 2,978 guestrooms for an undisclosed purchase price. Last October La Quinta began advertising its intention to sell 47 such non-core owned assets. Patel plans to re-brand the properties, mostly to economy names, and flip them. 

Patel is particularly proud of another project in the works—the company’s first dual-brand endeavor, the combined Courtyard by Marriott and TownePlace Suites at Dallas/Forth Worth International Airport, scheduled to open in about a month. In addition to that the company has seven more hotels under construction. 

“Our strategy now is probably 75 percent new-build and 25 percent acquisition,” he said, adding that the company is looking at a lot of portfolio deals right now. 

While new development is a priority, Patel said urban conversions, particularly involving historic buildings, add diversity to the portfolio. For example, the company in June acquired the 223-room historic Cotton Exchange Hotel in New Orleans’ French Quarter out of foreclosure for $17.8 million. Patel revealed the company will convert the property into the AC Hotels brand by Marriott—it should be one of the first of the brand’s U.S. outposts to open. 

AAHOA

The changes Patel is making as Chairman of AAHOA is a little different. At NewcrestImage it’s all about fine-tuning a well-honed business model. But at AAHOA the change required has been of a more fundamental sort. Patel has spent his term as Chairman fostering more open communication among AAHOA’s members, partners and industry colleagues, most notably the franchise companies. 

“We have to be realistic,” he said. “We’re working together, there’s no reason to fight so let’s find a win-win and just have open dialogue with no attorneys. We need to have good communication and solve issues face to face.” 

He continued with an analogy: “It’s a marriage we have with the brands,” he said. “In a marriage sometimes you fight but it doesn’t mean you’re looking for a divorce.”

With better communication as the foundation, Patel also has been building the association’s legislative strength, working hard to align with the American Hotel & Lodging Association to “build a coalition effort. When we’re facing a legislative effort we have to be together, to collaborate,” he said. “As an industry we’re organizing now and I feel good about that.”

How does Patel keep everything straight, between forging hotel acquisition deals and leading the fast-growing, 11,000-member organization that is AAHOA? His mantra is pretty simple—he keeps it simple. 

“Don’t complicate things,” he said. “We each have a life and we each have an expiration date. Every morning I wake up and try to simploify everything and break it down into well-defined goals.” 

“This year we’ve made a lot of changes and I want to make sure that change continues forward,” he said. 

➔ 75 PERCENT

Two-thirds of NewcrestImage’s growth is in new-build hotel development, mostly in secondary markets. “We like new development because we can go into a market, pick a brand and be the first one in.”

BY STEPHANIE RICCA: HOTEL MANAGEMENT