Punit Shah knows the difference between a family business and a family-owned company, because his family's Liberty Group hotel development enterprise has been both.
It was a family business when his father, Rexit Shah, founded it as a hotel chain owner along Interstate 80 near Youngstown, Ohio, in the 1980s. Since Punit Shah, 34, took over in the late 2000s after his father divested those hotels, Liberty Group has become a family-owned company, buying and selling hotels around the country, and managing nearly $400 million in investments.
“We have investors and partners, and far more of a corporate structure, but the largest stakeholders are still my family, and that's important,” Shah says. “We have had to change with the times on how we do business, but what this company is at its core will never change.”
Shah grew up in hospitality. As a teenager, he worked in his father's hotels, shadowing the older Shah as he would make his property rounds, during which he knew the names of all of his employees.
“That is a quality that is just very hard to instill,” says Punit Shah, who took over in 2008. “Being able to understand what even your lowest-level employee is going through, and have the ability to share compassion with that person and appreciate their hard work, made a huge impact on me.”
Today, with nearly 600 employees scattered around the country, it's impossible for Shah to know each one by name. But he only buys hotels he knows could use some refreshing or new life, and with that comes people who are proud to work there.
Liberty Group moved to Florida with Rexit Shah after he sold his hotels in 2003 and 2004, with sights on retiring. Punit Shah moved with his family, and joined the many condominium and multifamily developers in Florida, building the St. Petersburg luxury condominium Paradiso. It would be Shah's only project, which he barely completed as the housing market collapsed in 2008.
Although it had no holdings, Shah was attracted by the idea of continuing his father's legacy with Liberty Group. He started by buying distressed hotels, typically paying 60 cents or less on the dollar, and turning each around.
As the economy improved, Shah's strategy changed. Distressed hotels were replaced with full-value hotels, but Shah would send in his management team to streamline operations, and renovation crews to update tired room interiors.
The business model at Liberty is always evolving, a key strategy for Shah. Without a board or corporate investors to answer to, decisions can be made quickly.
“We don't get passed by because we have to stop and discuss every decision,” Shah says. “If I have the opportunity to sell something, and there's a great offer on the table, I can react to that immediately and quickly monetize an investment. That could be the difference between closing a deal, and letting it slip by.”
Last July, Shah showed he can do more than just buy and sell roadside-style hotels like Fairfield Inn. He partnered with Convergent Capital Partners CEO Santosh Govindaraju to transform the old Mercantile Bank building on Kennedy Boulevard into Aloft Tampa Downtown, a 130-room boutique hotel under the Starwood Hotels and Resorts banner.
“It was an opportunity we couldn't pass up,” says Shah, who invested $20 million into renovations of Tampa's Aloft.
Still, Shah has stayed focus on buying and selling. In the past year, Liberty has sold six hotels, and has four more under contract.
“It's brought our family even closer,” Shah says. “We're doing what we love, and we're making communities better. We do it all as a family.”
Who is the unsung hero in your company?
“I'd have to give credit to a combination of Dina Lomagno, my VP of sales and marketing, and (wife) Carla Shah, my corporate revenue manager,” Shah says. “They are literally responsible for the system that allows us to adjust rates by the hour, letting us maximize profits at our hotels.”
Who Is your mentor?
Father and company founder, Raxit Shah. “He has given me not only opportunities to succeed, but also humility, ambition and compassion,” the younger Shah says. “He's someone who could appreciate the hard work of housekeepers while walking through a hotel, and 30 minutes later, have lunch with a CEO of a bank.”
What's the best advice you've ever received, in business or in life?
Shah says Santosh Govindaraju, CEO of Convergent Capital Partners, told him to just stay patient. “As entrepreneurs, we are all very anxious and excited, and always going at 100 mph,” Shah says. “Sometimes you need to sit back and look at something two or three times before you make a decision.”
2012: $28.5 million
2013: $33.7 million
2014: $47.9 million