Inside NewcrestImage’s latest acquisition in Texas

PLANO, Texas — After buying and selling nearly 300 hotels for more than $3 billion since 2014, NewcrestImage is building up its portfolio again, this time with an acquisition of the 176-key NYLO Dallas Plano in Dallas-Fort Worth.

The acquisition on Monday was from an undisclosed seller for an undisclosed amount. Patel, managing partner of Grapevine, Texas-based NewcrestImage, spoke exclusively to Hotel Investment Today after the deal was announced and said the asset’s location, price and the ability to reposition it in its current soft brand (The Tapestry Collection by Hilton) were key to making the deal happen.

Mehul Patel

“Our company has a very deliberate, systematic and thorough process for evaluating deals, and that process includes seeing a hotel not just as it is, but as it can be,” he said, noting NewcrestImage had previously owned five hotels in the area and was familiar with its attractive metrics for both short and long-term returns. “Based on our analysis and business plan for this hotel, we’re very confident of increasing market share and incremental revenues.”

The NYLO Dallas Plano joined Hilton’s Tapestry soft brand in 2018, along with two other NYLO hotels: the 200-key NYLO Irving/Las Colinas, also in DFW, and the 162-key NYLO Providence/Warwick in Rhode Island. At the time, all three of those hotels were managed by Dallas-based Prism Hotels & Resorts. In August 2020, Prism announced that the NYLO Dallas Plano hotel had completed extensive renovations that began earlier in that year.

NewcrestImage is planning another renovation for the hotel. Last year, it acquired the NYLO Providence/Warwick asset and rebranded it as The Loom Hotel within the Tapestry Collection.

The company currently owns more than 45 hotels and has been involved in transactions totaling more than $3 billion involving nearly 300 hotels and close to 32,000 rooms.

When asked what he is seeing in the hotel transaction market right now, Patel said every M&A transaction is a complex balance of obstacles and opportunities. So, the company’s goal is to find the right balance.

“Different companies have different ways of measuring a winning deal,” he said. “Right now, M&A activity is being impacted by marketplace uncertainty and volatility. Typical fundamentals are in flux, such as travel trends, financing options, and interest rates. Margins are tight and returns are unclear.” 

Patel said he expects the M&A log jam to clear up eventually as economic factors are resolved but said NewcrestImage will remain aggressive.

“It’s worth remembering that there are always more deals available than there are people who want to make them,” he said. “NewcrestImage has a strong balance sheet and a rich inventory of financing options so that we can be aggressive even in a stagnant or down cycle. Our style is to think big, then act big to reach our vision.”

Loving the art of the deal

In March, Patel spoke to Hotel Investment Today as part of its “On the Money” video interview series and talked about loving the art of the deal, managing through the current volatility that has taught him cycles come and go. He also talked about his formula and approach to M&A, which often leads to him buying and fixing undervalued assets.

“I think lodging is really bullish for the next three to five years because we’re really resetting the bar of what’s next to happen in this industry,” he said. “The meeting businesses continue to grow year after year, and I think we have seen a unique, different travel perspective from staycation to adventurous to outdoor glamping. We didn’t have any of that prior to 2019. So, we’ve seen a great deal of consumers who are looking to experience something different for their travel needs, whether going for work and trying to add one or two extra days for their staycation.

“So, things have really looked different and NewcrestImage has an opportunity to invest in those segments that really cater to the next three to five years. So, we’ve been really fortunate to be able to take a ride in those investments as well.”

When asked if NewcrestImage was a net buyer or seller right now, Patel said it depends on the day.

“We’re net buyer and seller every day. We have enough inventory in the hopper. So, any given day, we’re buyers and any given day sellers,” he said. “I think, in the last 24 months, we roughly bought about 100 hotels and sold probably 70 of them. So, we’re continuing to be buyers. Last year, we bought four hotels and we probably sold 15. So, we’ll continue to buy. We’re always a buyer and always a seller and we really like that space. But any given time, we own 40 to 50 hotels.”