Jay Shah, Senior Advisor, Hersha Hotels & Resorts, interviewed by Lan Elliott

Jay describes the important distinction between managing and leading, and he shares his approach to taking risks.  He also explains why the easiest approach to networking is thinking of it as developing friendships, and why hospitality is a great connector.  He shares a quote that helps overcome self-doubt, and why slowing down for big decisions can be advantageous.

Transcript

Lan Elliott: 0:00

Hello and welcome to DEI Advisors. My name is Lan Elliott on behalf of DEI Advisors and today I'm really thrilled to have my friend Jay Shaw, Senior Advisor of Hersha Hotels and Resorts on our podcast today. So welcome Jay.

Jay Shah: 0:18

Thank you Lan. It's great to be here. Great to have you interview me. Yeah, it's

Lan Elliott: 0:24

kind of fun, right? And I wanted to have you on for a while now, so I'm really thrilled that we could make this happen. And if anyone who's listening or watching isn't familiar with Jay's many accomplishments, I hope you'll go to the DEI Advisor's website to read more about him. And I'll share a little bit about how we know each other. In fact, Jay and I believe met during orientation of college, our very first week on campus for hotel school. And so I've had the great fortune to follow his career since I would say almost the beginning, if not pre beginning. And. I would love, Jay, if you would share your career journey with our audience and perhaps also some of the key points that you think were important in your success. I could share that as well.

Jay Shah: 1:13

Sure. Sure. Let me first start, Len. And in all seriousness I'm really delighted to be a part of the podcast today and thanks for taking the time to interview me. I am looking forward to our conversation and I did want to thank DEI advisors for all the work that you do. Very important. And, uh, it's it's nice to know the folks That are making a difference in these important areas. So thank you for that.

Lan Elliott: 1:39

Thank you.

Jay Shah: 1:40

So you're going to ask me my journey to leadership, and I will tell you that story is a long one, but there are some interesting parts of it. And I imagine that's really what will be interesting to chat about. But as you talked about, we started. Hotel school together. Big dreams about the hotel industry. And I got to the end of the four year program and felt that I needed to do a little more investigating and actually and you may remember, but I my first job wasn't in the hotel industry. I actually had decided that I wanted to spend some more time figuring out what I wanted to do and had always had a bit of a interest in government and the law. And so I left Cornell and went to work in Washington, D. C. for Senator John Hines as a legislative assistant. And I was there for a couple of years until the Senator passed away in a tragic plane crash. But in that two years, after having been at Cornell and such a tight knit community with such focus around where professional goals were going to go, leaving and doing something completely different, as interesting as it was it was a little bit of. Getting untethered from one shore and heading out into an area that I didn't know a lot about to be quite candid. But what I did find, and I do consider that first job a big inflection point. I think most people's first jobs are right, because you go into the world with a lot of expectations, a lot of questions about what's going to become of you. And then all and all of a sudden it starts happening. And so the first job I think for everyone is very impactful for me, because when you're working on the personal staff of a senator, there's always plenty to do. And so it gave me my 1st taste of being able to make a difference because I worked on a small team, and a lot of the, a lot of the things I was researching, or things that I was drafting were making their way onto the floor of the Senate, or in the pieces of legislation. And. That felt very thrilling as a person, in their young twenties and then also a small team. I think a lot of times what you learn is how to be a problem solver, because you don't have the resources you would have in a very large scaled enterprise. And so I think getting a taste for having, being able to get in there and make a difference, even as a young person that had a lot of questions about what was going to, about what they were going to do combined with the opportunities to solve problems and, with every problem you solve, it peaks a little more curiosity and that leads to another problem to solve. And actually what you find out, they're not problems at all. Everything's. just an opportunity. And so I think that first job, it was such a stark difference from what I had been trained in. But you learned also with that first inflection point is that so much is applicable across so many different disciplines. And so I think that gave me a bit of a self assuredness and a little bit of confidence at that tender young age of 22 or whatever that might have been, 22, 23. So I think having stepped out of the industry for a brief period, and then I went off to law school and, uh, worked at a firm as a tax consultant, and then I had my own law firm for a few years, but I think that little detour for me, when I came back to the industry, it made me so much more my engagement was just very high because I felt like I was coming back to something that was somewhat familiar and I felt that, I had learned some new things about myself that was gonna make me better at it. So that's was my, those are my probably main inflection points. After leaving after I practice law for a little while, I'll get back into my hotel journey, because I think that's probably the most, interesting, thing to do. I was practicing for a couple of years and had a mid scale practice working primarily with small and medium sized businesses. And we were a general corporate practice specializing in real estate and construction and about 78 lawyers. And I represented I represented several hotel companies, including my father and his partnerships. And so as we were practicing law, it was exciting. I enjoyed it. There was this great sense of autonomy. It was something entrepreneurial about having your own firm. And so that was exciting. And then what I started to notice was that the growth at my firm, I was trying to think further out long term and finding that Likely my growth here was going to be somewhat arithmetic. It's not going to be as scaled because everything is based on, what new associate can you hire and you're leveraging the hours one person can produce. And I started noticing with my clients, you start, you start thinking back to finance and you start thinking back to investment theories and you start seeing your clients. putting that into action on a daily basis. And just the scaled results they were able to have and the ability they were able to mobilize capital and professionals and make things happen, caught my interest. I had noticed that with with The then Hersha, which at the time was four limited service hotels in central Pennsylvania, even there, that little journey of six years had been very interesting to go from close to nothing in a new portfolio of hotels to having four hotels in such a short period of time. And so as I started looking into it, I decided that, this is something I really wanted to try. And so I. I approached my father and his partners and explained to them about what we'd be able to do with new capital. My brother was still in school at the time, but he was involved in this conversation as well. He was at the, he was he was doing his, he was at undergrad at Penn and was a part of the Wharton Small Business Center there. And I remember we, it's a part of our plan on how to explain a new capital structure. To the partners, which was just an entrepreneurial group of partners. We did an engagement with the Wharton small business center, and we talked about how infusing new capital could allow us to scale this performance record that we've had and make it bigger. And I came back to the industry. And as I mentioned, I had been practicing law for a while and I was a little bit new and hadn't been around for a while. So my relationships. and network within the lodging sector at that point had gone through a three, four year hiatus, certainly kept in touch with people, but hadn't been in touch with people in a professional way. In a professional regard in many years. But so actually then coming at it and still having some entrepreneurial sensibility at that time after the law firm experience, I just started looking for capital. At the time there weren't even a lot of intermediaries and maybe there were, but the amount of capital I was looking for at the time wasn't a lot and was poking around and at that time come across a series of smaller REITs. And, we're talking at this point, this is like 80 yeah 80s 97 or so, and a series of smaller rates that come out, they, a lot of them were brought public by Legg Mason, KBR, they were these small mid sized investment banks. And at the time, and there's a whole host of reasons that I didn't go in the private equity route at that time and instead chose the public capital route, and that in itself was another big inflection, because clearly, as we all know, from this business, the kind of capital that you're the steward of. Will have an impact on the kind of investing that you do, right? Because all capital is seeking different profiles of investments and so so we became a public read at the time But the interesting part was we still had this private side that was doing a lot of developing and the whole point was That there was a huge pipeline there and it needed to be capitalized and when it was going to be very valuable And so we were able to do that with public capital. And then as the assets opened and became cash flowing, we were able to move them into The REIT at the time, while also growing the REIT with third party acquisitions. And so I think, that capital then, led us to need to have, in order to be, in order to access the public capital, there's several things you need in order to have the cost of capital you want, which is the whole reason you're there. And first of all is full transparency, right? So you can check the box on that. That's just, that's very that's just a matter of having disciplined governance. And I think you know that it's a great training that you know that we got in our undergraduate programs. And I think getting to transparency and good governance was something that was relatively intuitive, and that's not always intuitive and entrepreneurial organizations. And so I think, kudos to Cordell for teaching both entrepreneurism as well as good governance, because I think the combination can lead to great outcomes. And so we were able to be an entrepreneurial public markets company. And so at that time, to differentiate what we were doing, we decided to pursue a strategy of urban select service assets. And those early urban select service assets were true mid scale assets. We opened the first series of Hampton Inns in Manhattan. And at the time, there was no other mid scale brand, but that was all done through the public markets which is something that's pretty opportunistic in some ways, but, in other ways, when you look at it, it was, those were very strong investments, and if you did the work, they weren't as risky as they might seem in a headline. And so it gave us a great discipline around how to steward capital and how to allocate and invest public capital. So then that probably has led to the rest of the journey, which has allowed us to get to scale across multiple different strategic sleeves, so we developed this urban select service portfolio to start, by the time we transacted with KSL in November. We had divested of all of our urban select service hotels other than Manhattan. And at this point, the portfolio is primarily luxury and lifestyle with a focus on educational and tech corridors within large. gateway markets and some select resort destination markets. And so I think the journey is one that kind of one part of it leads to the next part. And I think with, as you're going through any new strategy, I think this industry is small and the intelligence and that is, the intelligence is rather perfected. So you're not going to have an information arbitrage or a strategic advantage for long, and that's okay. Cause I think it makes us better as an industry. On the other hand, I think if you want to keep delivering. outsize returns and outperform, you have to remain very innovative, which fortunately in the consumer facing side of our business, we have the opportunity to do that. And so, you can always look at a market or an industry and kind of see where there might be white space and where there's a need. And having the access to the capital allowed our journey to develop because we could make strategic decisions and then put capital behind it once we had conviction and and build out the strategy sooner than later. And then. And then we'll move on to the next one.

Lan Elliott: 13:48

Yeah, I love so much of what you talked about in your journey and the themes that come again and again, like curiosity, learning new things that striving to always develop new mindsets, new experiences, but also taking risks developing a network. Just being entrepreneurial. So many great themes and what you were talking about. I wanted to dive a little bit more into curiosity because you mentioned that a couple times and sometimes we find as we go through our career that you might need to develop new skills as you move or as your company continues to grow. Is there a leadership skill you wish you would have learned earlier? And if so, how did you develop it?

Jay Shah: 14:44

Yeah, I think, leadership, the leadership. Yeah, I, it's a great question. And I was just recently talking about this somewhere else. And, I think when I came out of school and because there was just so much to do and I was a working entrepreneur and, for a large part of my career, when you're in that role you're both leading and you're managing. And the managing is rather immediate. It's very day to day. And, when we're in our managing mindset, we're typically prone to get to an answer quick, to resolve an issue quickly in order to keep the process moving because we're managing for order and consistency. On the other hand, we lead for innovation and change. And when you lead you generally, you generally want to have a bit more of a tolerance for uncertainty and for perhaps a slower and more thoughtful cadence so that you can fully understand the facts and, think through, long term implications of what you're talking about and really study it and do the work. And I think when I was first getting into the business, I didn't understand the distinction and, they really are two different jobs, for any person, not two different jobs, but they are qualitatively different activities for anybody. And I think I, it would have been better for me to learn that sooner than later. It might have slowed down some of the decision making. I don't think it needs to slow down all of the decision making because some things are, really somewhat more, you can be quicker about it. But I think if I would have taken time to study a few more things, I might have grabbed onto a couple more really terrific strategies throughout my career that maybe I moved by because I didn't take the time to truly. understand, commit, engage, and see if there was conviction or not. So I think that's one skill.

Lan Elliott: 16:49

That's really an incredible idea because you think a lot about, it's one jump earlier in your career when you go from being an individual contributor to leading a team, being a manager. And But then that next leap of, okay, now you're managing people, but then how do you become a leader of people, which is a different thing than just managing them. And it's a different mindset. So I do want, I am going to want to talk about that in a little bit. Let's switch over to taking risks because When you left your law firm and came back to the family business with your brother, that was a bit of a leap to take that big risk and start and transform your family business and in a different way based on the things you had seen and what you had experienced. How do you handle that? How do you think about taking risk? How do you set up your decision making in order to approach it? Yeah.

Jay Shah: 17:52

Yeah, it's a. It's the million dollar question and I'm sure everybody does it differently. I think the way that I got comfortable with risks is, I was taught from a young, having a father who has an entrepreneurial mindset and, he was a professional for many years before he himself became a full time entrepreneur. But, he was, he always was. Very constructive on taking risks. I think what I did watch him do was he was, he did it very painstakingly. So I think you got to do a lot of work before you take a risk. And I think what we're, in all of that work, what you're trying to do is, I believe, understand quantitatively, qualitatively, the risk, narrow down. You know where the truest uncertainty and the highest impact uncertainty is and then make a decision and so I think for me taking risk is obviously, as you mentioned, we, in, in my journey, it's been a, it's been a very regular, exercise. And I think it's almost one of those. It's just inherent, I think, in business, right? That's, that's the there might be the fundamental point of it. And so I think we can always at least narrow the conversation around risk by doing a lot more work and you got to study it. And I think some and taking risks, maybe more of a leadership exercise. Then it is a managerial exercise. We'd be very disruptive, for a good manager to do.

Lan Elliott: 19:26

Absolutely. And your recent, the recent transaction with KSL, I'm sure was a big change for your company and for you personally. And that was a big risk to take and to move the company in a very different direction and your life as well. Right.

Jay Shah: 19:41

Yeah, no, absolutely. Yeah, the, and the implications of the transaction, yeah, they reach personally, professionally and, and, the implications are many years long. And I think there too, it's these deals, they seem like they're long. On the other hand, they feel like they're short, they get done in a year, right? It's a company that we built over a better part of three decades, and you can transact on it in a year the, and I think there's something that, there's something terrific about that, that it tells you that we were able to narrow the amount of work down, because if you can transact on a company that's been around for 28 years in a matter of months then, some of the risks clearly are addressed or smart capital wouldn't move that fast. On the other hand, we have to think about it. We were thinking about the transaction, as much from a risk standpoint, as we were, was it addressing all of our constituencies and our responsibilities to each of them? And, I, I say about that deal, first things first, we, we, it was a terrific premium for our shareholders, a 60 percent premium to the trading price. And I think. Those shareholders did, where we are in the cycle. I think returning capital of them gave them an opportunity to earn better returns than we were going to be able to deliver over the next 12 to 18 months, maybe longer. And just for the uncertainty in the market and in capital markets. And secondly, we were able to, have the team all land. And that was very important to us. They're the ones that we built the whole shebang with. And so that was important. And, thirdly, for all of the. Equity holders that were part of management and all, uh, there, it turned out to be a very efficient transaction in many ways. And by it being a go private and it remaining as a portfolio and the team being in place. Yeah. It's given everyone a whole new, it's just a whole new experience, going from being a public markets company to being a private equity company, uh, and a terrific and a terrific one at that. So it's been, I think overall just a very positive experience. The, the risk in getting, it's like, there's so many boxes to tick off to get it done. And the risk is if you don't get it done, and if you're not right, and you haven't done the work then it's just so disruptive, right? And it can be very negatively value even as a going concern. And so, yeah, it was, but I think, as I say, I think the more work you do. You can make better decisions around risk.

Lan Elliott: 22:22

Absolutely. I love the idea that you can be prepared. You can do the work in advance in order to prepare yourself and to think about it in lots of different ways. But I also love the part that you talked about. A big part of your decision making was how it impacted the people, your investors, your equity, your team, and that was all a really important part of your decision making. And one of the things that I find so interesting about hospitality is this idea of developing networks and how people stay in this industry for a long time, like the two of us, even though you left and you came back and the network that you develop can become friendships that last decades for a long time. And I wonder if you could share a bit how you develop your network in a way that's comfortable for you.

Jay Shah: 23:14

Yeah, no it's a great question because, networking, developing a network is a somewhat hackneyed term, right? But, and the only reason that you care about that is you don't, sometimes hackneyed things get overlooked. But the reality is it makes such a big difference not only in a career, but for an industry, when an industry is well networked. I think you get such great efficiency and collectively as an industry, it does, it has more impact and and I think we're lucky to be in one that is like that. And so that's all good news, but I think, for folks that are developing in that work, from the get go. My way at it was really interesting because I guess when we were younger, you would go to events and things, but networking wasn't a term, right? It was, you just went and met folks that, went before you. And had at had been at it longer than you and we're just therefore wiser than you and and it was very helpful to get to know them and, you would develop your, your network with your peers also just almost socially. So I guess if I take lessons from that, because I'm actually, I love my network because they are, many of them are my dear friends. And I've known many of them for a very long time, despite my hiatus in the industry. And so when I think about networking today, I think the easiest way is to just think about it very organically, it's, I think about it as, These are friendships, right? And it doesn't mean that the first person we meet and the first time we meet them, they're one of our deepest friendships, but they're friendships because we have more in common with them. If we're in the same industry, even if one's a, in the construction side of and someone else's and branding, you're in the same industry. And there is, you have some relatability, which is more than we can say for folks that aren't in the same industry. And so you have a natural reason to connect to some degree. And yeah. Yeah. I think when you do it organically, then, it allows for the real sort of strengths of their attribute, their character and their skills to best be appreciated, right? When you're not in such sort of a transactional mode. And I liked it. I think it's very important that we focus on networking. As an industry, as professionals, as young professionals, but in some ways, I feel like we need to take the pressure off of it a little bit and, allow people to meet whether it be through activities or group projects or what, or collaboration on a not for profit idea. Something that's interesting. And then of course, there's always the social side of it. And our industry is just. Blessed with that. And I'm sure the most social industries I've ever seen. And I think that's always a great format. The friends of friends is is just an amazing chain. It's worked for our school so well over the years.

Lan Elliott: 26:07

It has. And the network is just incredible. And I love that. I've met so many people working on deals on transactions, even if they're on the other side of the transaction, you do become friends as a result of working through projects together and being in the trenches together. So there's lots of ways to develop relationships. It doesn't have to be what I think of as the super scary cocktail party of a thousand people that you don't know at the industry conferences, many different ways to develop the network.

Jay Shah: 26:35

Yeah, no, that's absolutely, that's so true. I think, that's absolutely true. I think working side by side with folks, that's just a given. That is, that's a network that just exists. And all you need to do is plug in and be a contributing member of it. And it will be there to support you when you need it. And it's it's and it's certainly very enjoyable.

Lan Elliott: 26:57

One of the things I've heard you talk about in the past has to do with, sometimes we are our own. Biggest critics and you have those voices in your head that might create some self doubt and maybe Have you doubt your experience and your skills? How do you handle that? How do you overcome that and stay positive?

Jay Shah: 27:19

Yeah in it's a very real thing, and you can't really ignore those voices because they're there. Whether they're right or wrong, they do pop up from time to time for all of us. And I think what, generally what I tend to do is instead of trying to wrestle the voices down and try to resolve it right away when it does come up for me, I just try to turn the volume down. And the, and what I mean by that is to just think about, whether or not the voices make any sense. And I'm going to go back to doing the work. I'm going to sound like an old codger, but I think when you do the work and you're very well prepared then all you can be is wrong, right? And that's, and I think that's okay. As long as you're well reasoned, and wrong, and that's okay. But if you've done the work, you wouldn't put something forward that wasn't reasoned, right? And so I think doing the work is one big way that I assuage some of. The, the anxiousness we might feel when things are new to us, or we don't feel that we have our arms around them 100 percent yet. So I think doing the work is important. And then, secondly, I always I talk about, doing things with a clear conscience and I've talked about this this saying, it's most simply put, And it's a hospitality reference because it's at, I know it's at a couple of the Ruth's Chris bars. I think it's at a lot of them, but it's an engraving above the bar that says do right and fear no man. And I'm pretty certain that is referring to living with a clear conscience. And earlier we were talking about our constituents, as leaders right in this industry and everyone's a leader, right? The minute you're working with someone, Sometimes you're leading, sometimes you're following. So I think as long as we stay very mindful of our constituents and understand that we're really all, we're all there to serve an organization or mission or a purpose, and I think if you keep in mind that you're there to serve constituents, then you're generally going to operate with a pretty clear conscience. And, as woo as it sounds, I think it's really just, it's just a simplicity. And, we can go in and have classes on ethics and, classes on, fairness versus justice. But at the end of the day, if we think about ourselves as communities and different constituencies come together to be a Community to build a company and as leaders, if we think about serving them and you do the work, I think it, it does go along in turning the volume down on the voices.

Lan Elliott: 29:56

Absolutely. I love that. And I love the quote as well. So thank you very much for sharing that. One of our favorite questions on DEI advisors is what advice would you give to your younger self? So if, Think about Jay at 22 when we were both leaving the hotel school, what advice would you give to your younger self?

Jay Shah: 30:19

I would tell my younger self to spend a little more time with my decision making. I think, I think I got started, you start making decisions the minute you graduate from high school in some cases, yes, high school but, when you graduate from college and, and, those decisions, they are monumental at the time. They're very important decisions. And so sometimes things that are real big. Or relatively big, they feel, you assign an urgency to them, and I'm, I'm sure many of those decisions were just fine, but I am, I recall the anxiety that some of them cause, I recall the lack of certainty, not in the outcome, but the certainty in my conviction behind the decision I was making, I I recall I recall, uh, that delaying making the decision wouldn't have changed the outcome at all and may have made it better. And so I think I would become a bit more as I was talking about earlier, a bit more of those. I would be a bit more tolerant of Uncertainty to more fully understand facts and circumstances like a good leader should. And I think when I graduated, I probably charged into management, solving problems, moving things along, making progress. But I think even as a young person thinking more broadly and more deeply about things, it never goes to waste, right? We, there's very little that we think about professionally that isn't developing us in some way. And so I think I would have told myself to just slow down a bit in decision making.

Lan Elliott: 32:12

That's such a great advice, especially as you mentioned, when you're younger, because you want to just do everything fast and you're able to do so many things so quickly, but sometimes slowing down, you'll actually pick up some nuances and pick up things that you don't get when you're going so fast.

Jay Shah: 32:27

Exactly.

Lan Elliott: 32:29

As I expected, I could speak with you for a really long time and we haven't really had much time to catch up over the last 30 years, but I am running out of time in our interviews. So you've given us so much great advice. Jay, keeping in mind that the mission of DEI advisors is around empowering personal success. Do you have one final nugget of advice? That you have for people who are striving to advance their careers. What advice might you offer them?

Jay Shah: 33:01

I would tell them they're in a very, for particularly folks that are in the hospitality or service industries, I think it is. You couldn't be in a better sector or types of industry when you're trying to empower your, where you're trying to empower your own success and fuel your own progress. Because, these kinds of businesses are by nature, bringing people together. They're very, they're people intensive. And so there's a lot of thoughtfulness generally around people and how to how to manage, develop and have the talent grow and feel satisfied while accomplishing the mission of the organization. So I think, as just general advice, I think in many ways, the, the corporate America is Pursuing a track with such earnestness that it hasn't. In the past, and I think it creates a great opportunity for those that are aware about concepts of empowerment, inclusion, how to, today if we're not drawing From our best and most diverse human resources and our human talent, it's going to be very difficult to remain competitive, so the time couldn't be any better. And I think we all just have to be as accountable to ourselves as we can and make sure we're really putting ourselves in the way of opportunities. So really asserting ourselves into, into the streams that we want to impact. And I think so. I think the environment's terrific, but it is incumbent on all of us to lean into those specific areas where we want to have some impact on. And I think It might take a little repetitiveness. It might take a little resiliency, but I, I'm very confident that we're in a time when those kinds of efforts will give way to the outcomes I think we're all seeking.

Lan Elliott: 35:14

That is a very optimistic and wonderful way to end this interview. Jay, thank you so much for your time today. It's been so great talking with you and for our audience. If you'd like to see other great interviews with hospitality industry leaders, I hope you'll go to our website, DEI advisors. org to find many more interviews.