Developing or owning a hotel can be a scary endeavor, but those who have done it say it's also rewarding.
Dipal Patel, managing director of Frisco, Texas-based Shyana Hospitality Management, started in the industry at line-level roles such as housekeeping. Over the next 25 years, she has owned, operated and developed hotels.
"Starting out acquiring or developing a hotel is a little scary but it is really rewarding," she said, speaking during a panel at BWH Hotel Group's Fifth Annual Women in Leadership Forum in Cleveland. "We purchased our first Best Western — we just purchased a small percentage to start with — and that's how we got started."
To get the ball rolling, she said it's imperative to build relationships with lenders and ask for advice from peers, talk with developers within a desired market, see what opportunities there are and assess the cost of the project.
Speaking with community leaders can also help smooth the process.
"[Ask] what are their needs, what type of hotels are they looking for, what size. That makes permitting and zoning changes a lot easier," she added.
Sheila Patel, founder and CEO at Tampa, Florida-based Sheldon Management, said her journey began with a Best Western franchise hotel in 1998. Along the way, she desired to invest in additional hotels and dive into new construction. She's made a commitment to keep an eye out for commercial real estate opportunities, form relationships with brokers within her city and economic development department as well as her architect and engineer. By knowing what's coming to her markets, it's allowed her to acquire and develop more.
Kristen Pike, regional director of development at Phoenix, Arizona-based BWH Hotel Group, said every hotel company must continue to create and reinvent its programs with the goal of boosting female and minority entrepreneurship. BWH's new program, Team Up, is tailored toward to that goal, she said.
"It's a program that's going to help incentivize females and minorities. We're going to have royalty discounts, other financial incentives, lower reduction of fees, ongoing support, you'll get a mentor and support through the [furniture, fixtures and equipment] process," she said. "We're all going to work together to make sure that you're moving in the right direction and achieving that dream of hotel ownership, wherever it may be."
Fear of Failure
Sheila Patel said failure is a possibility in any business venture. She admitted she has dealt with many losses, mishaps, mistakes and costly decisions along her road to success, but she doesn't view them as a negative or an excuse to quit.
"When you hear the word 'No' over and over again and your plans don't turn out, see that as a teaching moment," she said. "Stay the course and don't give up."
In Dipal Patel's mind, failure is not an option.
"That doesn't mean I don't fail," she said. "But I don't look at it as a failure. I didn't fail, I just have to figure out how else I can get to where I am going or what I need to do. What windows are cracked open. How can I push through."
Allison Neary, director of business development at Atlanta-based hospitality lender Stonehill, said when reflecting on past failures, she realized they ultimately led her to where she is now.
Instead, she now thinks of those moments as learning lessons.
Building a Network
Neary said she's part of the CREW Network, referring to an organization of commercial real estate women, and has found a supportive community through it.
"It's not only women that are in financing or women that are in hotels — it's being able to meet designers and all types of women that have a say in different aspects of this industry," she said.
Joining her local hospitality alliance group also helped her to get a pulse on whats going on in her community.
Sheila Patel recently joined a CEO council in her community, which she found has become a space where members can talk about the struggles they are facing.
"It's amazing because I was able to find out that others were going through the same thing," she said. "We have roundtable meetings and we come up with solutions."
Tips for Financing
Between rate hikes from the Federal Reserve, worries of a recession and construction overruns over the past couple of months, financing right now "is a madhouse," Neary said.
"It's definitely scaring a lot of lenders," she added.
From her team's perspective, they are seeing some banks or lenders beginning to pull out of hospitality completely due to its cyclical nature. Alternatively, lenders are reducing their leveraged loan exposure on new-construction hotels.
Stonehill PACE is a balance sheet C-PACE lender — which stands for commercial property assessed clean energy — that works with commercial real estate owners and developers.
"Not saying this to scare anybody; there are definitely alternative forms of financing, but it is just a little bit trickier to find that financing if you're looking at developing something nowadays," she said.
Neary suggests fostering relationships with a variety of lenders, including debt funds, U.S. Department of Agriculture loans, Small Business Administration loans, historic tax credits, opportunity zone financing and C-PACE. Don't be afraid to get creative with the financing structure, she added.
"We've seen a lot of borrowers come to [Stonehill] saying, 'My bank's at 65% of costs, can I use C-PACE to bridge the gap and get me back up to that 80% that I used to be," she said.