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Show Summary
In this conversation, Ashay Mordi discusses his journey into the competitive hospitality market in Manhattan, focusing on the intricacies of managing hotels and restaurants. He emphasizes the importance of identifying opportunities in distressed properties, the critical role of management in ensuring guest satisfaction, and the dynamics of private equity in the hospitality sector. Ashay also highlights the value of real estate in Manhattan, particularly in the luxury hotel market, where occupancy rates remain high despite competition from alternative accommodations.
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Investor Fuel Show Transcript:
Ashay Mordi (00:00)
And that feeling of feeling special, especially at this kind of level, at the luxury level, where you’re looking at an average per night, you’re looking at $500 to $1000 a night. People are happy to pay that if they feel special.You know, People want to feel that an extra mile is going to be made for them because that’s what they’re paying for. That’s what they’re paying for. And so that’s something that has to be done 24 hours a day, seven days a week. And the only way to ensure that that is done, not just in how other people are treating people, but even things like are the door handles polished? Is there dust under the carpet? Is the phone…
Dylan Silver (00:19)
for them.Ashay Mordi (00:36)
Where the little phone is placed? Is it polished? Is the iPad in the room working? Every single thing has to be curated so that each guest feels an individual level of care. They don’t feel like they’re coming off an express line. They don’t feel like part of a whole. They feel like this room, this suite, this space has been tainted to everything I could possibly want.Dylan Silver (02:32)
Hey folks, welcome back to the show. Today’s guest is an investor in the hospitality space in Manhattan, ultra competitive, right? Focusing on hotels, restaurants, specifically in Manhattan. Please welcome Ashay Mordi. Ashay, welcome to the show.Ashay Mordi (02:32)
you ⁓Thank you very much. appreciate you having me. ⁓
Dylan Silver (02:54)
I’m glad to have you on here. And it’s also exciting for me personally, because I like to think that there’s kind of some levels to the real estate game. And being in Manhattan in the hospitality space has got to be one of the most competitive areas and then most competitive asset class you could possibly be involved in. How did you get involved in hospitality in Manhattan?Ashay Mordi (03:21)
Okay, so interesting so first of all, you’re right. It is a very competitive space However, you know as if anything, you know, there are different segments in which what there’s opportunity so for myself personally, you know, background is finance and meeting well in the emerging market fund Stealing with clients generally from the Middle East from Africa and we generally invest in regular financial markets, but also hard assetsAnd for myself, I have always wanted to enter the hospitality space. I have a partnership in a restaurant with a proper downtown restaurant here called Ski-Nuts. So I’ve always liked that next place. When the opportunity came for the hotel called The Washington, downtown, the opportunity came for that to come to South. So thought, OK, this is an opportunity. If we can acquire this asset and run it properly, this is an opportunity to get into the hospitality space.
So, you know, we did our analysis, took a look at the hotel, realized what we can do with the space, consulted with my partners. I mean, I have amazing partners, which I think is the same as any successful business. You’re only as good as your team. You’re only as good as your partners. So, you know, I have many successful, savvy partners who have been in the hospitality space for decades. And this is their, their wheelhouse. The gentleman who we’re buying the property from, Joseph Moinyen.
He is a major New York real estate player. He controls 20 million square feet of real estate in New York. And just for context, that’s like controlling a town the size of his storage in Manhattan. Yeah, so he’s a huge player. So there’s a wealth of experience there. And so then with them, we were able to find out what, if any, issues went with the hotel.
Dylan Silver (04:56)
That’s right.Ashay Mordi (05:08)
and how we can fix them. We’re able to then look at what the strategy is that we want to go with as well and how we want to take it. And this is what from our perspective, when you look at the New York, look at the New York hospitality market.New Yorkers and people who come to New York, they come to New York. New York is not big on space. No one goes to New York because they’re looking for a massive room or a massive space or an expanse. People come to New York for an expanse.
People come to New York for an experience and a feeling that they have been to what some people might argue is the most iconic city in the world. is definitely in the top five most iconic, most legendary cities in the world. And that’s what New York conveys. So what is it that you have to do?
Dylan Silver (06:33)
It’s the monster.I want to ask you about ⁓
these deals. ⁓ So I didn’t tell you this before hopping on here, I don’t believe, but I actually grew up in northern New Jersey, about 28 miles from it was a totally different world though, because as you know, I mean, 20, I’m a Texas licensed realtor, but 28 miles in Texas is not the same as 28 miles in the East Coast. So it was basically, it was like another world.
Ashay Mordi (06:56)
Okay.Yes, that’s another space.
Dylan Silver (07:14)
from where I lived in New Jersey to Manhattan. In Manhattan, when you’re looking at these deals, you mentioned there’s maybe some type of mismanagement or some type of distress. What are some factors to you that would indicate, okay, maybe there’s an area where we can add some value, either by force appreciating it or by creating better systems, processes, and management?Ashay Mordi (07:38)
Well, again, I think you’ve mentioned it there. The first, as you said, first thing identifying the problem of distress. In many cases, what you’re seeing is things like either under-capitalized, underutilized, or just badly run. Right? And so when you have any one of those things within the hospitality industry, you are eventually going to run into problems. Right? So if you have a tenant,who has been mismanaging your assets. A lot of buildings are tenanted. So they’re tenanted out to a married or a beauty franchise. So if those tenants do not run the hotel as should be, after two years, those problems mount up and mount up and mount up. Or if when you run the you do not keep a good percentage, usually about 4 % of all revenues for costs that will come up. For instance,
The elevator stops. Stop working. You have to fix that immediately. That’s a half a million dollar expense. If extract, if you extract and find goes back. Another half a million. And those two things can go on the same day. And if you don’t have a million dollars ready to fix it right then, you enter further problems. And there’s always fixed fittings and furniture. It’s a hotel. People are coming and going, something is broken or destroyed and needs to be replaced every single day. And so…
Dylan Silver (08:37)
That’s right.at any time. I want to ask
you about some of the difficulties involved specifically with hotels. I’m a person who loves to travel. I live in Santa Domingo, the Dominican Republic. I’ve lived in Australia, lived in Texas, lived in New Jersey. Those might as well be two separate countries, honestly. And so one of the things that I’ve noticed is that you can have hotels
Ashay Mordi (08:59)
Hmm?Yeah, yeah, that’s a, that’s a great…
Dylan Silver (09:23)
even under the same banner, but that are managed differently. And so you could have a totally different experience at one location versus another. And so you really have to know like, hey, is this a good location? Is our things working? When you’re going in and when you’re looking at these deals, it’s hard to say from like an X’s and O’s perspective, just looking at it on paper if everything’s working. So I’m imagining it’s very much.boots on the ground that you’re having to go either yourself or one of your partners and literally analyze the hotel space, the management and everything.
Ashay Mordi (09:53)
Hope is.I like to say it’s a contact source. Hospitality is a contact source. It is, as you mentioned, exclusive in the branch. And that’s why we are processing it on the New York area. I have to see every single property. I have to look at it. have to, even once it’s up and running, we have to be there. We have to see how each and everything runs, even within the individual staff members. How staff members fit together matters more in hospitality than most others.
in this business. Because your job, all of our job in this business is, as you’re walking in, our job is to make the customer feel so special. Right? And so all these though, has to be checked at the door.
Dylan Silver (11:00)
Yep.Ashay Mordi (11:10)
And that feeling of feeling special, especially at this kind of level, at the luxury level, where you’re looking at an average per night, you’re looking at $500 to $1000 a night. People are happy to pay that if they feel special.You know, they don’t need to feel, forget even disrespecting people. People want to feel that an extra mile is going to be made for them because that’s what they’re paying for. That’s what they’re paying for. And so that’s something that has to be done 24 hours a day, seven days a week. And the only way to ensure that that is done, not just in how other people are treating people, but even things like are the door handles polished? Is there dust under the carpet? Is the phone…
Dylan Silver (11:35)
for them.Ashay Mordi (11:52)
Where the little phone is placed? Is it polished? Is the iPad in the room working? Every single thing has to be curated so that each guest feels an individual level of care. They don’t feel like they’re coming off an express line. They don’t feel like part of a whole. They feel like this room, this suite, this space has been tainted to everything I could possibly want.And that’s…
Dylan Silver (12:15)
Do you have ado you have a background in? Hospitality that you’re you’re pulling from or are you having to learn a lot of this through connections and through your business partners and people who’ve run You got finance, right?
Ashay Mordi (12:30)
Well, my background is finance, but I did have finance of quite a few hospitality projects. So there’s an area that we’ve always put money. But again, what I cannot, what is invaluable is the information and the knowledge that I get from my partners and people who have actually been operating these assets for years. Their input is what matters. So that is really important. Someone I know, he’s a…He has a hotel on the upper east side, Palo Verde. And I’m not missing things, but I haven’t spoken to him about this yet. But he recently turned down an offer in excess of 10 figures for his hotel. And that was when just last year, he refinanced for lower nine figures. And within a year, he’s turning down an offer in excess of 10. And he’s always…
Dylan Silver (13:17)
Chos.Ashay Mordi (13:18)
And he’s always said, you have to pay attention to every little detail because the smallest of details, the only people who are going to notice are you and your guests. It’s like get good people to manage the day to day. And unlike other businesses, you have to make sure you are looking at the miniature and get people to manage the day to day. But make sure that the miniature, the only people who notice that, little thing, the dust under the carpet.is you and your guests.
Dylan Silver (13:48)
want to ask you about the space in general from a thousand view when you’re looking at hospitality in Manhattan in general, is it a lot of people that have a very much hospitality focused background who are getting involved? Are you seeing private equity come in and formulate teams and acquire some of these properties and then build out their own, you know, hospitality arm?Ashay Mordi (13:51)
Mm-hmm.Yeah.
It’s a combination. It’s a bit of the Wild Wild West because Manhattan’s hospitality is so vast. is arguably on a headcount basis, it is on par with Las Vegas in terms of its debt. It is such a large focus, one, because of the number of visitors that come into Eastern New York, and two, the amount of day-to-day
activities that take place within hospitality, within hospitality establishments that in other cities do not. So it’s such a large area. So private equity, private equity comes in anywhere there’s opportunity, private equity is going to follow. However, what private equity likes, private equity likes proven models. They like things that have been very short time.
Dylan Silver (15:36)
Yeah.Ashay Mordi (15:47)
And when you’re getting to the private space, once something is doing well consistently, you can get much cheaper money, private, which is what people tend to do. So you have a significantly higher number of independent operators in terms of the scope and the space of the money generated. You have a significantly higher percentage of independent or private ownership. Then you work for other industry groups that are…dealing with this volume of money. Because not so much that private equity doesn’t come in, because it does, and institutional players do come in, but institutional players buy them to the very nature of their rules. By the time they are able to invest, often operators and ownerships don’t want their investment. It is, can get cheaper money at higher prices, or enjoy the capital benefits. And this is where the real estate
portion comes in which is so important. Real estate in and of itself, if you own the real estate, that is so valuable. If you own it, it’s not going to be Manhattan. It’s not going to be difficult or unnecessary to sell because you can always refinance it and take out some capital and if that business is doing well, you are paying the data with additional growth proceeds from your business. It’s not actually affecting your bottom line.
Dylan Silver (16:46)
Right.Ashay Mordi (17:07)
And you still have the real estate, which generally for the past 15 years have appreciated at a very steady 6-7 % annual. And there’s no reason why anyone would think that would change. Annualized, simply because Manhattan is so small. Luxury hotels, especially luxury hotels. Across the United States, average occupancy rate is about 60%. Average daily occupancy rate across the hotels for the annual, in ultra-luxury hotels.Dylan Silver (17:17)
Right.Sure.
Ashay Mordi (17:37)
In Manhattan, it’s 90%. And that doesn’t include the fact that people have options in Brooklyn, have options in Queens, have options in Guam, Airbnb’s. And yet, in Manhattan, it’s 90%.Dylan Silver (17:39)
⁓Right.
Ashay, are
coming up on time here though, Ashay Where can folks go if maybe they are in the Manhattan area, they may be looking at deals themselves and maybe have a deal that they’d like you to take a look at, or if they’re in the greater Manhattan area and they’d like to reach out to you, get in contact with you.
Ashay Mordi (18:14)
I can be reached best, but best thing for me, guess, will be to reach through email at that’s at Washington Hotels or just email, which is just my name at HopeWashingtonHotels.com. And obviously anyone can always come into the restaurant. So it’s Ski-Nos, N-Y-C. So that’s S-K-I-N-O-S, N-Y-C. And they can come in at any time for a drink, myself or a partner. Someone’s always there, evenings. And if you’re coming in to talk business.You might not get an investment, but you’ll probably get a free trip. So we can take it from there.
Dylan Silver (18:46)
Ashay thank you so much for coming on the show here today.Ashay Mordi (18:48)
Thank you.Thank you so much. I appreciate the time.
