The Economics of Hotel Franchises - Keni Patel

Keni’s story begins in 1982, when his family immigrated to the U.S. with nothing but visas and a network of distant relatives.

Like many Patels from Gujarat, his family moved directly into a relative’s motel—18 people living on-site while working every role from housekeeping to front desk to maintenance. Over time, Keni watched his parents acquire and expand their own motel using a mix of friends-and-family financing, 12% interest bank loans, and extreme frugality. That model—a family living in the back unit, doing every job, and saving every dollar—became the backbone of how Patels came to own 40% of hotels in the U.

Today, Keni owns hotels himself and works as a data scientist at Driftwood Capital, a $5B hospitality investment firm that develops and operates Hilton and Marriott properties. He has a deep understanding of the hotel industry, including the economics behind it. Some key topics in the hotel industry include:

• Why Patels dominate the motel industry
• How friends-and-family lending works in Gujarati communities
• What margins look like for economy vs luxury hotels
• Why a single family can run a 17-room motel with 60% margins
• When owner-operator models stop working
• The full economics behind ADR, RevPAR, NOI, and cap rates
• Why Hilton, Marriott & others keep inventing new sub-brands
• How COVID impacted economy hotels vs upscale hotels
• Why management companies exist (and why they don’t buy hotels themselves)

Keni's experience and expertise provide a unique perspective on the hotel industry, including the challenges and opportunities that come with it. He has a thorough understanding of the business side of hotels, from financing and operations to management and valuation. His insights offer a detailed walkthrough of the actual business of hotels, covering topics such as hotel performance evaluation, revenue per key, and cap rates.