NEW YORK CITY — The hospitality industry is undergoing a “continuing morphing into other asset classes”, which might even see its major investment firms “follow peers into a living type strategy,” according to Mit Shah, CEO, Noble Investment Group.
The lodgings leader was in conversation with Michael Bluhm, managing director, global head of real estate, gaming and lodging at investment bank Jefferies, during a fireside chat at the NYU International Hospitality Investment Forum.
Bluhm introduced Shah as “a great friend” before describing him as the CEO of “the pre-eminent dedicated private equity fund for lodging in the U.S.”
Hospitality Leader
Shah, who founded Atlanta-based Noble Investment Group 32 years ago, today oversees a multi-billion-dollar investment manager which has risen to become a leader in hospitality real estate.
He told delegates that 2024 had been a sterling year for the industry, and in particular, for Noble’s strategic focus on upscale select service hotels and extended-stay properties. “Leading up to the fourth quarter of 2024, we really felt there were strong secular demand trends emerging in our business,” he said. “We grew rates by three times the pace of inflation in upscale select service properties and extended stay.”
Yet expanding margins soon gave way to the shocks of early 2025. “You ask yourself: what’s the worse that can happen? Then it’s always something else that happens,” he quipped.
However, Shah underlined that “investors don’t worry about the long term, they worry in the moment when tough things take place. The business is still a combination of cashflow and appreciation… which doesn’t rely significantly on market growth.”
Doing Business
A chief aspect of the hospitality industry’s resilient outlook lies in the customer, according to Shah, whom he profiles as “making $120,000 a year, college educated, working in enterprise” and traveling more than ever before. “That customer has now got flexibility about where they can work from,” he added, which, Shah said, is helping propel the industry to new heights.
Accordingly, the firm remains in growth mode. The lodgings giant inked a deal for two hotel portfolios just last week as it expands its focused institutional platform still further. The latest deals, for 16 WoodSpring Suites extended-stay properties, fit into the firm’s evolved strategy. For Noble, the extended stay model lies the intersection between hospitality, mobility, and flexible yet affordable residential solutions.
“Noone likes uncertainty, but we believe that this business is sticky,” he added. “We have found an opportunity in the midscale extended stay space to acquire assets and pivot the operating model into something that is very different from what we have seen historically.”
Housing Challenges
For Shah, these kinds of hospitality solutions will increasingly draw “consumers dealing with housing challenges,” one of the mechanisms which is driving the industry’s shift “into adjacent asset classes”. He noted that extended stay is now “truly an apartment alternative, for stays from thirty days to a year” and said that the success of the model had made the firm think harder about its “core business and what drives performance going forward.”
He added: “We really like the long-term supply trends in this sector as well as the demand picture and also see the potential to follow peers into a living type strategy.” But he noted that investors in hotels still needed to be incredibly selective, “sharp shooting in specific sectors – just like our friends in retail”. He concluded with a prediction: “A year from now, this industry won’t just be lodging and hotels - it will morph into a whole new sector.”