NEW YORK — Mit Shah, who has built a successful business out of investing in branded select-service and extended-stay hotels for decades, is delighted to see the top hotel brands flocking to the space.
In an interview with Hotel News Now at the 45th Annual NYU International Hospitality Industry Investment Conference, the CEO of Noble Investment Group said the moves by the brands follow a similar shift travelers are making.
Marriott International announced the tentatively named Project MidX Studios; Hyatt Hotels Corporation launched Hyatt Studios; and Hilton announced plans for a lower-midscale, extended-stay brand tentatively called Project H3.
"You could ask yourself, 'Why is all of that happening?' And I think it's really the trends of how consumers are thinking about how they stay and how they live," he said. "This product type, let's not mistake it with some of the top-tier, upscale, extended-stay brands like Residence Inn and Homewood Hotels and Hyatt House. But these are types of hotels that really do cater to the widest swath of travelers and those who live for longer than 30 days."
Editor's note: The interview was recorded on June 5, ahead of the completion of the NBA Finals. Click here to listen to the podcast.
Shah said the midscale, extended-stay segment is "the nexus between hospitality and multifamily," and the streamlined operating model bodes well for the industry in the long term.
He said there are a couple of reasons why he expects to make continued investments in the segment.
"One is from a cost-to-build standpoint, even though constructions costs are $230 to $240 a square foot, we believe that we can build these with land for $130,000 to $140,000 a key," he said. "We believe $90ish [revenue per available room] in these assets, and because we believe we can run them with circa seven to eight full-time employees ... you can start really generating those same kinds of profit margins."
For more from HNN's interview with Mit Shah, listen to the recording above.