November 17, 2025

The Economics of Hotel Franchises - Keni Patel

58 minutes

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Keni’s story begins in 1982, when his family immigrated to the U.S. with nothing but visas and a network of distant relatives. Like many Patels from Gujarat, his family moved directly into a relative’s motel—18 people living on-site while working every role from housekeeping to front desk to maintenance.

Over time, Keni watched his parents acquire and expand their own motel using a mix of friends-and-family financing, 12% interest bank loans, and extreme frugality. That model—a family living in the back unit, doing every job, and saving every dollar—became the backbone of how Patels came to own 40% of hotels in the U.S. and 80–90% of motels.

Today, Keni owns hotels himself and works as a data scientist at Driftwood Capital, a $5B hospitality investment firm that develops and operates Hilton and Marriott properties.

We break down:

What you’ll learn

Why Patels dominate the motel industry

How friends-and-family lending works in Gujarati communities

What margins look like for economy vs luxury hotels

Why a single family can run a 17-room motel with 60% margins

When owner-operator models stop working

The full economics behind ADR, RevPAR, NOI, and cap rates

Why Hilton, Marriott & others keep inventing new sub-brands

How COVID impacted economy hotels vs upscale hotels

Why management companies exist (and why they don’t buy hotels themselves)

This is one of the clearest, most detailed walkthroughs of the actual business of hotels you’ll ever hear.

CHAPTERS / TIMESTAMPS

0:00 – Growing up in a motel with 18 family members

3:15 – How Patels finance their first properties

7:00 – The origins of the Patel motel network

10:20 – The “friends & family” lending system explained

12:45 – Life living in a 17-room motel

15:50 – Zero days off & never sleeping through the night

18:40 – Why the first motel is the hardest

20:30 – The true margins of economy hotels

23:00 – Converting to a Days Inn and what changes

25:30 – Keni’s portfolio today + Driftwood Capital

27:00 – How hotels actually evaluate performance (ADR, RevPAR)

31:50 – Why hotel data is so rich compared to other industries

33:40 – Revenue per key & top-line benchmarks

36:15 – Cap rates and valuation differences by hotel class

38:20 – Why owner-operator models break above ~60 rooms

40:00 – Corporate contracts & sales in economy hotels

41:15 – When you need professional hotel management

44:00 – Why hotel restaurants rarely make money

47:00 – The cap rate arbitrage in economy hotels

51:30 – Why hotel brands have 35+ sub-brands

55:00 – Keni’s long-term plans

56:00 – Where to follow Keni

...more

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By Patrick Buckley

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