The couple has worked hard for their success. Sima literally “married into the motel business” when she came to the United States in the 1970s as a newly married 17-year-old. Her in-laws owned and operated the Rio Motel, a small establishment in Oakland. Here she got a quick immersion course on how to run a lodge, and that too with a skeletal staff of one.
In 1985, Sima and Pravin developed their first franchise: the Regency Inn in Fortuna, a small town south of Eureka, Calif. It was a different era then, she remembers. In predominantly white Fortuna, Calif., customers would walk in, ask for the rates, take one look at the Indian face behind the counter, and walk out. One day, someone tore down the American flag in front of the motel. “Being a first-generation immigrant, I stood out and was personally discriminated against many times—even by the California Highway Patrol—in Fortuna,” she recalls.
Just 14 years later, it was a completely different story when Sima and Pravin bought the Holiday Inn Express near Oakland Airport in 1999. The city extended a warm welcome and gave them all the support they needed. “You see, nowadays Indians have gained a lot of respect in the industry,” states Sima with pride.
It is the ultimate immigrant dream come true. Sima and Pravin’s story exemplifies the almost legendary success of Indian Americans, predominantly from the Gujarati Patel community, in the hospitality industry. The phenomenon has been well documented. Even so, one cannot but be impressed by the sheer scope of their achievements.
According to the Asian American Hotel Owners Association (AAHOA), the largest Asian advocacy organization in the United States, Indian Americans own over 20,000 of the 53,000 hotels in the country, with a combined worth of $38 billion. This totals up to one million rooms, representing more than 37 percent of all hotel properties in the United States. In the economy lodging, mid-market range, that number rises to 50 percent of all properties. Between them, Indian-American hoteliers pay $700 million in taxes every year and create more than one million jobs.
STARTING AT THE BOTTOM RUNG
Historically, Gujaratis, particularly from the Leva and Patel communities, have been hardworking and successful businessmen. Their search for viable business opportunities led them to immigrate to countries like South Africa, Uganda, and England. In the late 1940s, after India’s Independence, many decided to try their luck in the United States. The hospitality industry was a natural choice. It did not require specialized knowledge or skills, offered a living space for the family, and appealed to the hospitable nature of the Gujarati. Relying on informal support networks (a simple handshake was often enough to seal a deal) and family connections, more and more Gujarati immigrants entered the business, choosing to start at the bottom by buying and refurbishing undervalued properties and running low-budget operations.
As late as the 1980s, stories like Sima and Pravin’s were being lived out by hundreds if not thousands of their fellow Gujaratis all over the United States. Running motels with names like Shady Grove or Desert Palms or Flamingo Inn, often in run-down areas of town, they were the butt of many a “Patel-Motel” joke and relegated to what was metaphorically the “back of the bus” in the hospitality industry. Indian Americans found it difficult to get bank loans. Insurance companies refused to cover them. Franchises made them feel less than welcome, accusing Indian-owned motels of being poorly run. Underlying it all was mainstream America’s uneasiness in supporting a new immigrant group with its unfamiliar culture and traditions.
A UNIFIED VOICE
In order to overcome these discriminatory business practices, industry pioneers such as H.P. Rama of Greenville, S.C., and Shankarbhai Patel of Nashville, Tenn., decided to band together and speak out. AAHOA and the Indo-American Hospitality Association (IAHA) were formed in 1989 to address these issues. IAHA managed to provide insurance coverage for many a small motel owner while AAHOA fought the bureaucracy to establish that advertising by race was an “infringement of standards.” In 1994, IAHA folded into the AAHOA.
Pledging to “promote professionalism and excellence through education and community involvement,” AAHOA has become a powerful presence in the hotel industry. Between 2003 and 2005 it witnessed a phenomenal growth of 45 percent in its membership. “We started in 1989 with a membership of 140,” states Fred Schwartz, president of AAHOA. “Today we have 8,700 members nationwide, making us the largest member-based Indian business organization in the country.” Its activities include sponsoring educational conferences, organizing trade shows, and providing resources, both legal and professional, for its members.
Voicing their concerns as a unified and professional community through organizations like AAHOA and CLIA, the California-based trade association for the betterment of the lodging industry, Indian hoteliers today are viewed with respect and favor. “They don’t default on loans, they manage their risks very well, and franchisers know they run good hotels,” explains Schwartz. Banks, insurance agencies, major franchise chains and a variety of service providers are actively looking for ways to market to them. Each year, in conjunction with AAHOA, CLIA organizes the California Lodging Expo and Conference in Santa Clara, Calif., where suppliers promote a wide range of products, from furniture and coffee to credit-card processing and insurance, to a predominantly Indian-American gathering.
Mahendra Patel, owner and operator of Menlo Park Inn in Menlo Park, Calif., puts it in perspective. “There is increasing professionalism in the way we Indians run our properties,” he observes. “The early mom-and-pop days are over. We use the latest technology and hands-on marketing techniques.” He adds that professionalism has leveled the playing field and people don’t really care much about the “new faces behind the desk” as long as they are satisfied with the service.
“Technology has changed the way we run our businesses,” states Sima Patel. “From the management system (the system used for front-desk operations, check-in, check-out, movies, phones, and locks) to marketing, you need to be computer savvy. Do you know that over 70 percent of all travel bookings are done over the internet?”
MOVING UP
As the Patels continue to better their circumstances, the shift from owning independent properties to franchise hotels continues. “Patels now own a vast majority of limited-service franchise properties, like Days Inns, Travelodge, and Holiday Inn Express,” remarks Rick Lawrance, president of CLIA. Approximately 11,700 hotels owned by AAHOA members are franchises, while only 6,300 are independent. Many members are also moving “up.” Having gained experience from operating economy or budget hotels, they have their eyes set on the upmarket, full-service franchises like the Hilton and Marriot. Some have gone further to own multiple properties and real-estate brokerages, and build hotel corporations.
There’s yet another trend in the industry. While most Indian hoteliers have gone the franchise and full-service hotel route, there are a few like Pina Patel who have dedicated their efforts to develop “boutique” hotels. These are usually heritage buildings, lovingly refurbished for a unique look and style. Pina owns and operates the historic Clyde Hotel in downtown Portland, Ore., a 36-room facility that dates back to circa 1912. “I think boutique hotels are going to be popular in the coming years,” she predicts. “People are looking for something more personal these days. They love it when you recognize them and address them by name when they check in.” She also admits that there are very few Patels in this segment of the industry. Running a boutique hotel is riskier and one can’t use “cookie-cutter marketing techniques.”
Mahendra Patel epitomizes the Indian hotelier of today. He emigrated from Zambia in the 1960s to study electrical engineering but ended up in the family business very soon. Apart from the Menlo Park Inn, he also owns (but does not want to name) five mid-sized properties in and around San Francisco. He buys and sells hotels and is now diversifying into shopping complexes and other property development.
THE NEXT GENERATION
Mahendra is the third generation in his family to enter the hospitality industry. His son Bimal, a business major from Cornell University, is the fourth. There is a 2-year-old grandson and Mahendra jokes that he too will enter the business one day.
With their strong emphasis on family ties, it is not unusual to see Patel families with several generations in the hotel business. A new, more acculturated generation is building on the successes and victories of the old.
Sima Patel is happy to have her 19-year-old son join the business. “I want to see our children achieve much more than we did. Where we limited ourselves … I want to see our children own bigger full-service, convention hotels,” she says enthusiastically.
In recognition of the need to groom future generations, AAHOA offers a young-adult conference every year. It offers networking opportunities and interactive events to future hoteliers. An ambitious scholarship is also awarded annually to a qualified student pursuing a degree in hospitality.
WOMEN AS INDUSTRY LEADERS
The new decade has also seen the emergence of Indian women to leadership positions in the industry. AAHOA has three women directors on its current board and convenes a woman’s conference every year to motivate and groom women “to grow in their roles from being the strength behind an industry to its leaders.”
Sima Patel feels there is still a lot to be done. “My No. 1 goal when I was CLIA president was to motivate women to assume leadership. There are thousands of women in our industry and they all work hard, but they are all pretty much in the background. I think it is in our nature as Indian women not to put ourselves forward in any way.” She admits it took tremendous self-motivation and the support of her family to feel comfortable in a leadership position.
According to Schwartz, the hotel industry as a whole is rebounding strongly after the Sept. 11 attacks and the economic downturn. Demand for hotel rooms is rising but the supply is not keeping up. In this robust future he sees “an increased presence of Gujaratis in the upper-tier market.”
It has been a long and arduous road for the Patels. But in just a few short decades, with sheer determination and by acting together as a community, they have managed to smash stereotypes and overcome business barriers to become some of the most successful hoteliers in the United States. One in every five motels in this country today is owned by a Patel.
Schwartz talks about the traditional warmth of the Gujaratis. He recounts a recent trip to Gujarat, where the entire village came to bid him farewell when he was leaving, complete with tilak and garlands. “They are a very hospitable community; it is just a natural extension for them to get into the hotel business.”
Shobha Hiatt is a freelance writer and marketing and PR professional. She is co-founder of Narika, a domestic violence agency for South Asian women.
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MOUNTING SUCCESS
Indian Americans own over 20,000 of the 53,000 hotels in the country, with a combined worth of $38 billion. This totals up to one million rooms, representing more than 37 percent of all hotel properties in the United States. In the economy lodging, mid-market range, that number rises to 50 percent of all properties. Between them, Indian-American hoteliers pay $700 million in taxes every year and create more than one million jobs.
Source: AAHOA