The working partnership of Hersha Hospitality Trust's Hasu and Hersha Shah is what's made the real estate investment trust successful over the years, starting with the acquisition of its first hotel in Harrisburg, Pennsylvania in 1984.

Hersha Group was formed from that single-asset acquisition, and the company went public as a REIT in 1998 under the name of Hersha Hospitality Trust. The company has 36 hotels with 5,802 rooms in seven gateway cities across the U.S.

During the "How We Built This" panel at the Independent Lodging Congress' Indie Confab Philadelphia 2021, Jay Shah, CEO of Hersha Hospitality Trust, said the company was named after his mother, which is "fundamental to the company in many ways."

Hersha Shah managed the business for many years while Hasu Shah managed profit and loss statements. It was a great working partnership, which wasn't widely accepted by other Indian families at that time, Jay Shah said.

Hasu and Hersha Shah moved to the United States from India shortly after being married and started the business not long after, so they were balancing a lot of things, Jay Shah said.

"My parents were very, very early in partnering as a husband and wife where they had their personal life, they had their married life, they had their lives as parents to my brother [Neil Shah] and I, but they were also partners to these professional matters, and it was very important," he said. "I think that has served the company very well because it’s informed values for us from as far back as 30 years ago."

The story of how Hasu Shah's father built his business in Mumbai plays into the company's urban strategy, which focuses on owning hotels in seven main gateway cities in the U.S.

Hasu Shah said his father moved to Mumbai on his own at the age of 14 and worked in a store until he soon realized he didn’t like working for someone else and started his own brokerage business. His company owned real estate all over Mumbai, which included apartments and storage facilities.

Hasu Shah was a chemical engineer, but he decided he wanted to work for himself just like his father. He continued to work as a chemical engineer before giving it up to go full time with his hotel business.

After Hersha and Hasu Shah bought the 125-room hotel in Harrisburg, they doubled the property's revenue from $450,000 to $920,000 within 15 months, Hasu Shah said.

“Immediately, I gave up my job because we had enough backing,” he said.

Hasu Shah said he didn’t know how to rent out rooms; he was more interested in how to grow the business. He added that he still does not know how to “rent a room.”

Jay Shah said his father was "more of a remote owner and operator, and mom, she was very good at understanding connection with the guests and understanding connection with the team."

Hersha Hospitality Trust has shifted its strategy from owning limited-service properties in secondary and tertiary markets to focusing on more urban markets, Jay Shah said. While the Shahs grew up in central Pennsylvania, Jay Shah said they were very familiar with the big urban markets from traveling.

He said the company likes having hotels in seven urban markets — Boston, California, New York City, Philadelphia, South Florida, Seattle and Washington, D.C. — because they "account for 50% of every individual traveler coming to the United States."

"Close to 35% to 36% of the country’s GDP is generated in our markets," he added.

Because of the density and economics, these cities tend to leverage technology and digital innovations better, “which has provided a terrific tailwind for us across the last decade and a half," Jay Shah said.

Hersha Hospitality Trust was also the first to build a Hampton Inn in New York City, Jay Shah said, noting that was a big deal at the time.

"We did something branded because it was a bit of a conservative move as our first urban [property], and the conventional wisdom was a Hampton Inn was going to perform at the nationwide average of Hampton Inn performance, plus maybe 15%" he said. "You were going to get a 15% premium for being in an urban center."

Most of the 3-star hotels in Manhattan are 5-star hotels that failed to renovate, Jay Shah said, but he and his brother Neil Shah, president and chief operating officer of the company, had the idea of building a 3-star, purpose-built hotel in Manhattan, which wasn’t a widely supported view at that time.

“Neil's and my view was that if you purpose-build design-forward, 3-star product, you're not going to be operating at a 15% premium to the nationwide average," he said. "You're going to be operating with a 15% to 20% discount to the full-service hotels in the market, and there's a lot of real estate between those two data points, and we happened to be right.”

Hersha Hospitality Trust is one of the largest owners in Manhattan with 15 to 17 hotels and 10 to 12 of those have been built from the ground up, Hasu Shah said.

Building those 3- and 4-star hotels in Manhattan has served as a major revenue source for the company over the years, he said.

“We’re hoping New York City will turn around. It has not [yet], but hopefully it eventually will,” Hasu Shah said.