Noble's Adi Bhoopathy Speaks to Hospitality Design Magazine
Adi Bhoopathy is managing principal and head of capital markets for Noble Investment Group, an institutional real estate investment manager which specializes in the travel and hospitality sector. The firm has invested over $5 billion throughout the U.S., and Bhoopathy and his team lead debt relationships, asset dispositions, transaction management, and contract documentation for all investments and fund commitments.
What are you seeing in the select-service and extended stay segments?
Total RevPAR declined by more than 50 percent in 2020, forcing owners to deplete their replacement reserves for operating liquidity. Property reinvestment has dropped more than 70 percent over the past three years, nearly double the reduction during the [2008 financial crisis]. Hotel brands accommodated owner-operators’ needs to delay brand-required PIPs; however, brands are now vigorously mandating owners reinvest in their hotels and complete renovations, which average several million dollars per asset. Between 2017 and 2019, $236 billion in lodging loans were originated. Seventy-five percent of CMBS loans maturing in 2023 and 2024 are select-service and extended-stay hotels. These loans, made at or near-peak EBITDA and values, are coming due amid rising interest rates and an impaired credit market. The combination of capital required for brand-mandated renovations and material principal pay downs is creating the most significant liquidity crisis this fragmented community of owner-operators has ever faced, creating a generational buying opportunity for Noble.
How does Noble navigate financial uncertainty?
Noble has a 30-year, default-free borrowing track record and maintains a conservative approach to debt. We keep a diversified and well-balanced portfolio, and we are always evaluating any current or potential future interest rate risk.
Can you talk about Noble’s commitment to Environment, Social, and Governance (ESG) investing?
The name, Noble, was born out of the ethos of the firm’s commitment to ESG standards of operating and investing. Noble has a dedicated ESG and DEI steering committee comprising eight senior leaders across the organization who meet monthly to discuss progress on ESG initiatives, review energy usage reports, monitor new and emerging ESG issues and best practices, develop strategies for responding, and govern responsible investment matters within the firm. ESG factors are analyzed from ‘cradle to grave’ in the lifecycle of an investment. Through the design, development, and redevelopment of our assets, the Noble team ensures that each project is executed with a focus on sustainability.
What trends are you watching?
One of the most notable trends is the increasing demand for technology-enabled experiences. Many consumers now expect seamless digital experiences, from booking to check-in and beyond. Another trend is sustainability. Consumers are becoming more aware of the impact of their travel choices on the environment and are increasingly seeking out hotels that prioritize sustainable practices. In the extended-stay market, we are also seeing a shift toward more flexible and personalized offerings such as fully equipped kitchens, laundry facilities, and pet-friendly options. Hotels that can stay ahead of these trends are likely to thrive in the years to come.