NewcrestImage Hotel CEO Mehul Patel Is Ready To Step In Where Other Hoteliers Want Out
NewcrestImage CEO and Chairman Mahul Patel was not your average teenager when growing up in Garland, Texas, decades ago.
At the tender age of 17, Patel purchased his first lodging asset, an independent hotel near Dallas' Love Field, in partnership with his brother Sanjay. His parents worked at the same hotel before he purchased it.
Fast-forward to today, and Patel is still going strong in the hospitality world, with his hotel development, investment and operations brand NewcrestImage now boasting 31 hotel assets under its umbrella. Even the coronavirus pandemic didn't slow him down — Patel continued to open and buy new assets over the last year and just launched a $100M fund to purchase properties.
Newcrest's acquisition fund doesn't necessarily anticipate distress in the hotel market as much as it predicts owners and investors will want to get out of the lodging space rather quickly.
"We see there will be opportunities when people may want to liquidate," Patel said. "One way we can expand the business is to help someone who wants to sell. [The fund] will allow people to exit. And if you have the capital to buy it, somebody's problem could be somebody's solution."
In the past two decades, Patel has survived several major market upheavals, but nothing prepared him for the coronavirus pandemic, which forced hotels to close their doors for weeks on end to prevent infectious disease outbreaks and then to deal with limited to zero customer demand.
"Activity [levels] between March 18 and May 25 were detrimental because nobody knew what to do and the entire world stopped," Patel told Bisnow. "We were in the same boat, but every business had to learn and figure it out."
For a few weeks, NewcrestImage had to close a substantial number of hotels temporarily. When those assets reopened in the late spring, guest attendance was at historic lows before slowly recovering over the summer.
Revenue per available room in Dallas and Fort Worth-Arlington declined by more than 75% year-over-year during the week ending April 18, 2020, landing it at less than $20, STR data shows.
Patel says his hotel occupancy levels rebounded to the 25% to 30% range in early summer, and by August, NewcrestImage was recording 50% occupancy again. It has maintained 50% to 60% occupancy across its portfolio since, but things are starting to accelerate further.
In March of this year, NewcrestImage reached 74% occupancy — its highest recorded rate in a year.
Despite rough odds, Patel insisted on playing the role of the eternal optimist in 2020.
Having a slew of assets branded with high-quality, well-known leisure brands like Hilton and Marriott paid off in spades last year when leisure travelers dipped their toes back into the vacation space during the summer months. Patel is still waiting for the anticipated return of the business traveler, a trend he expects to take off after Labor Day.
Development and investment sales also continued at NewcrestImage this past year despite temporary disruptions to the capital markets in early 2020.
The firm opened its 150-room Canopy by Hilton Hotel in Frisco Station in June and continued development of the 199-room AC Hotel by Marriott at Arizona Center in Phoenix and the 152-room Hilton Garden Inn at the SilverLake Crossings mixed-use development in Grapevine, Texas.
Despite pressures from the pandemic and rising construction costs, Patel opened both the Arizona and Grapevine hotel assets in early 2021.
The hotel operator also sold its 132-suite, six-floor Hyatt House hotel in Frisco earlier this year after holding the asset for more than four years.
At the onset of the lodging crisis in 2020, investors predicted a slew of distressed hotel assets would hit the market, but Patel sees those distressed opportunities representing only a small slice of future sales.
"I think people had the perception that when the world fell apart during the pandemic that the world would stop and this would be the worst we see," Patel said. "But I think we are thankful to the government for providing financial relief that helped all of the businesses that have been saved."
That doesn't mean Patel is not scouring the market looking for opportunities. He is particularly proud that his firm launched a $100M investment fund this year — it has raised roughly $30M so far — and in March made its first acquisition out of it, the century-old Magnolia Hotel in Downtown Dallas. NewcrestImage will redevelop the Magnolia and is in trying to bring a luxury name brand onto the project.
NewcrestImage is working on the fund's second and third purchases.
The company is also looking to resume development. Patel is patiently holding onto another piece of quality land that sits across from Plano's Legacy West.
"We are thinking of doing another luxury hotel," Patel said of the Plano land site. "We acquired the site before the pandemic, and then the pandemic put a pause on it. But we are hoping to resume that plan pretty quickly."