JMI Realty

This article draws from a Hospitality Daily conversation with JMI Realty partner Drew Bridges.

“When underperforming real estate gets to a certain bottom-barrel price, eventually the math becomes very attractive.”

Drew Bridges is describing the opportunity JMI Realty sees in hotels that other investors may dismiss as troubled. The price matters, of course. So do the market, the debt, the renovation requirements, and the time an owner can afford to wait.

But Bridges, a partner at JMI Realty, is also trying to answer a more practical question: What, exactly, is broken?

That question shaped JMI's acquisition of the 254-room Hilton Garden Inn Austin Downtown in June 2026. The hotel had a tired physical product and a history of guest complaints. Its previous owner, Ashford Hospitality Trust, sold the property to a JMI affiliate for $26.85 million, according to an SEC filing. JMI plans to invest roughly another $65,000 per room in renovations, Bridges told The Wall Street Journal.

The investment sits at the intersection of several ideas that have shaped Bridges's career: patient capital, a willingness to move across hotel segments and deal types, intense attention to operations, and a belief that the complexity of hospitality creates opportunities for investors who know how to diagnose it.

“Our industry a lot of times forgets that it's not just a passive real estate investment,” Bridges told me. “This is a living, breathing, operating business. And so the guest service scores matter.”

For JMI, those scores have become part of the investment process itself.

A company built to move with market cycles

JMI Realty traces its beginnings to John Moores's investment in the San Diego Padres and the redevelopment surrounding Petco Park. The firm served as master developer of San Diego's Ballpark District, a project that resulted in more than $3 billion of redevelopment, according to JMI's company history. One of its projects was the Omni San Diego Hotel, connected directly to the ballpark by a pedestrian bridge. After completing much of the surrounding development, JMI looked across its investments and found that hotels were among its strongest work.

The firm subsequently concentrated on hospitality development and investment, generally owning five to ten projects at a time and focusing on the Sunbelt. Bridges described JMI as a family office with roughly $500 million to $1 billion in assets under management, depending on where the firm is in its investment cycle.

That capital structure gives JMI room to change its approach as the market changes.

After the global financial crisis, ground-up development made sense. JMI developed the Hotel Van Zandt in downtown Austin during that period, one of the firm's most successful investments. Bridges does not believe the same project would pencil today.

“We have a blank canvas and we can invest in whatever we want,” he said. “It needs to make money. We're economically motivated. But we can ride these different market cycles.”

At one end of the spectrum, JMI can develop a hotel from the ground up. At the other, it can buy a stabilized property. Bridges says neither end currently offers the economics JMI wants in many of its target markets. That leaves the middle: hotels with a problem that can be understood, priced, and fixed.

The timing is important. A large volume of hotel transactions took place in 2021 and 2022, often with short-term, floating-rate debt. As those loans mature, some owners face a combination of higher debt costs, disappointing operating results, and renovation obligations they cannot comfortably fund. Other assets have been struggling since before the pandemic.

“Lenders are finally forcing those buyers to reckon with the reality of, hey, your property is worth a lot less than what it was before,” Bridges said. “Enough's enough. We're not going to extend and pretend anymore.”

The broader transaction market has begun to move. U.S. hotel sales rose 28% in the first half of 2026 compared with the same period in 2025, according to MSCI data reported by The Wall Street Journal. The same report noted that brands have become more assertive in enforcing property improvement requirements, adding pressure on owners already facing large capital needs.

For JMI, distress alone is not the thesis. The opportunity appears when the basis is low enough, the problems are knowable, and the firm has enough time and capital to execute the business plan.

“We luckily have patient capital, so we're willing to wait five to ten years for things to turn around,” Bridges said. “The math is finally starting to work where people that were overleveraged or overbought, or didn't have the funds to complete renovations, are finally being forced to sell at a loss.”

Turning guest complaints into investment diligence

Traditional hotel diligence tells an investor a great deal about an asset. It does not always capture what thousands of guests have experienced over time.

Bridges saw an underused source of information in the written comments attached to guest surveys and public reviews. Owners may receive thousands of surveys each year through a major brand. Before recent advances in AI, he said, much of that text went unread because the volume overwhelmed the people responsible for acting on it.

Earlier text-analysis tools could count recurring words. If “smell” appeared frequently, an owner knew there might be a problem but still had to determine what guests meant, where the problem occurred, and whether the comments described one issue or several.

Large language models can synthesize the comments in context.

“You've got a high-volume genius who can plow through a thousand verbatims and really tell you in a very intelligent way what is wrong and what's right,” Bridges said.

JMI uses AI agents to examine public information, including guest reviews, as it looks for and underwrites deals. Bridges uses Claude Code and has built processes that run continuously. The goal is not to automate the investment decision. It is to surface patterns that deserve further investigation.

At the Hilton Garden Inn in Austin, two complaints rose to the top: elevators and HVAC.

The elevators represented a real physical problem. Identifying it before closing allowed JMI to estimate the work and include the cost in its underwriting.

The HVAC comments told a different story. After examining them more closely, Bridges's team concluded that the equipment itself was not necessarily the issue. The likely cause was inconsistent preventive maintenance and a breakdown in the engineering team's routine.

“This actually isn't a problem,” Bridges recalled realizing. “This was just a matter of not doing preventative maintenance on the HVAC units, and a matter of getting the order of operation on site back in place.”

Both issues could produce negative guest reviews. They required very different capital responses.

That distinction is where the diligence becomes useful for an investor. A recurring complaint may point to a major replacement, a management failure, or a simple process that has stopped happening. The economic consequences are different in each case.

Guest feedback also gives a buyer an independent view of the operation. It is not limited to a seller's presentation, a property tour, or a mystery shop conducted at a single moment. Reviews accumulate across days, shifts, seasons, and thousands of stays. They can show whether a problem is isolated or persistent, physical or operational, and visible enough to influence future demand.

Bridges sees the same data as a possible sourcing tool. If poor scores reveal an asset whose problems appear fixable, JMI can decide whether to spend more time underwriting it or approach the owner before a formal sale process begins.

The management company is part of the underwriting

Finding the problem does not create value by itself. Someone has to run the hotel while the owner renovates it, rebuild service, and deliver the plan.

JMI does not own a hotel management company, and Bridges considers that independence an advantage. A vertically integrated owner may gain control, but it can also face pressure to keep its own platform busy or collect management fees. JMI can select a manager for the particular market, brand, segment, and business plan.

“When we're selecting a brand or a manager, it's very market and deal dependent,” Bridges said. “You'll never find us doing deals with the same manager over and over and over again.”

For the Austin Hilton Garden Inn, JMI ran a broad search before selecting Avion Hospitality. Its criteria included whether a candidate was founder-led, based in Texas, familiar with Hilton Garden Inn, and experienced in select-service hotels. A luxury full-service property would have produced a different field of candidates.

Founder leadership mattered to Bridges because he believes it can shorten the distance between a problem and a decision. He looks for accountability and the ability to act quickly when a property is underperforming.

Then JMI tested the candidates against the issue it already knew it needed to solve.

Bridges built another AI-supported process to gather and compare guest service results associated with the management companies under consideration. Avion ranked at the top.

“We knew we needed to fix that,” he said, “and so we used it to figure out whether the people we were hiring would be able to solve it.”

Avion took over management as JMI prepared a comprehensive renovation. The choice put the operating partner inside the investment thesis: JMI was not simply hiring a manager with the right résumé. It was looking for evidence that the company could improve the part of this particular hotel that was broken.

The approach also reveals a broader principle in Bridges's investing. Brand, manager, capital plan, and service are not separate workstreams assembled after a deal closes. They are connected variables in the underwriting.

Buying right is only one lever for driving performance

The Austin acquisition combined three forms of potential value creation: buying at an attractive basis, repairing the physical product, and improving service. Bridges does not expect every investment to require all three.

JMI's Hotel Indigo in Nashville, which the firm repositioned as The Countrypolitan while retaining the Indigo affiliation, presented a different diagnosis. When JMI acquired it in February 2020, the hotel had strong guest service scores and a team Bridges admired. The physical product needed investment.

“I couldn't ask for more from them,” Bridges said of the team. “But the product quality had suffered.”

The distinction matters because an owner that mistakes a capital problem for a people problem can damage a functioning operation. An owner that treats an operating problem as a renovation project may spend heavily without fixing the guest experience.

“There's a bunch of dimensions that you're weighing and triangulating off one another and trying to make all of them exist cohesively and create something that's better than what it was before,” Bridges said. “It can be buying right, it can be improving it physically, it can be improving the service. And sometimes it's two of those, sometimes it's one of those, sometimes it's all three.”

At the Austin hotel, JMI believes it has all three.

Service remains the operating engine

Bridges is an enthusiastic user of AI. He also believes the enduring value of hotels comes from work the technology is unlikely to replace.

“Service is everything in our industry,” he said. “Our industry is people that are traveling and they want to be taken care of, and you need that human touch.”

His view is informed partly by what did not happen. A decade ago, hotel companies experimented with automated check-in kiosks and predicted a diminished role for the front desk. The format did not become a replacement for human hospitality at the scale many expected.

JMI has instead looked for ways to use AI around the team. Bridges said the firm was an early adopter of an AI phone concierge at its hotels after analyzing calls to the front desk. Many were simple requests: confirming a reservation, asking for directions, or checking hours of operation. JMI experimented with ElevenLabs and Twilio to answer routine questions and take repetitive work off the front desk team's plate.

The purpose was to improve service by giving the team more time for guests who needed them.

The same philosophy connects JMI's use of AI in diligence with its expectations after closing. Technology can read thousands of comments, identify a repeated concern, and help prioritize work. It cannot repair the elevator, restore an engineering routine, coach a team member, or make a tired traveler feel cared for.

For Bridges, that is also part of the case for owning hotels. He expects technology to change many professional roles. He does not expect it to end people's desire to travel, meet in person, and gather in cities.

JMI is expressing that conviction geographically. Bridges remains bullish on urban hotels and skeptical of resort pricing, which he believes has become too expensive. The firm is submitting letters of intent in urban markets across Texas and the wider Sunbelt.

The Hilton Garden Inn is positioned near the Austin Convention Center, which closed in 2025 for a $1.6 billion redevelopment. The new center is expected to reopen for the 2029 spring festival season, with rentable space increasing from 365,000 to 620,000 square feet, according to the Austin Convention Center. That creates near-term dislocation for downtown hotels and a potentially stronger demand generator when the project is complete.

Bridges is willing to wait through that period because his conviction extends beyond one development.

“You can look over millennia and millennia of history and you'll see people have always wanted to convene and get together and live in compact city centers,” he said. “People have been wanting to live in compact areas for social reasons and business reasons and commerce reasons, going back to the times of the Roman Empire.”

That long view does not remove execution risk. It gives JMI a reason to accept a temporary market problem when the firm believes the asset, basis, capital plan, and operator can carry it to the other side.

What JMI is really buying

The Hilton Garden Inn Austin Downtown is an imperfect hotel in a temporarily disrupted market. That is the point.

JMI's opportunity depends on seeing several layers at once: a seller under pressure, a building that needs capital, an operation with recoverable service problems, a management company capable of addressing them, and a market whose demand infrastructure is being rebuilt nearby.

AI has expanded the evidence available to Bridges and his team. It lets them listen to thousands of guests before they own the hotel and compare potential managers using the same outcome they want to improve. The advantage still comes from judgment: knowing which signal matters, determining what caused it, pricing the remedy, and choosing the people who can deliver it.

“We're constantly looking for arbitrage opportunities,” Bridges said. “Right now, we're really looking at broken stories, stories where there's a willing seller and there's something broken in the asset.”

The word “broken” can hide more than it reveals. For Bridges, the work is to make it specific.

This article is written by reviewing public company filings, JMI Realty materials, reporting from The Wall Street Journal, and information published by the Austin Convention Center. It is for informational and educational purposes only and should not be construed as investment advice, financial advice, or a solicitation. Please consult a licensed financial adviser when assessing an investment opportunity.