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Indians run 20,000 hotels in US |
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Friday, April 30, 2004 |
 Dallas, April 29: Today's great American hotel owner is more likely to be named Patel and have roots that extend to Gujarat, than to be named Trump and lay claim to premier properties in the New York area.
Immigrants from India, almost all with ties to Gujarat, have become a dominant force in the US hotel industry.
They own about half of the US economy lodging facilities and almost 37 per cent of all hotel properties here, according to the Asian American Hotel Owners Association (AAHOA), based in Atlanta.
This means that if a traveller stops at a Days Inn along Interstate 95 on the way to Washington, a Best Western in rural Montana, or a Holiday Inn Express near Dallas, there is about a 50 per cent chance the hotel is owned by an individual or the family of an immigrant from India.
"The first group found opportunities in the lodgings industry, more by accident than by design," said Hitesh Bhakta, chairman of the AAHOA at the group's convention held in late April at a suburban Dallas hotel.
Indians from Gujarat started to buy into lower-end US hotels in the 1960s and 1970s, when US immigration laws granted residency for new arrivals who invested about $10,000 to run a business. The ethnic group now owns about 20,000 hotels -- about 1 million rooms -- in 50 states.
The first hotels purchased were in run-down areas and typically at the bottom end of the industry, but they did provide the new immigrants with a place to live on the premises. All that was required was for a family to be on call 24 hours a day and be ready to work to keep the hotel operating smoothly.
INVESTING IN VACANCIES
As with many ethnic groups that find a niche in the marketplace, word spread about the opportunities in US hotels.
Most of the immigrants working in the lodgings industry are named Patel, a common surname in Gujarat, said to mean "village chief."
The immigrants also proved themselves to be an extremely low credit risk, making it possible for thousands to invest $10,000 or $20,000 or so as a down payment in a hotel property worth about $100,000 to $120,000.
"The network gave them a business plan," said Bhakta.
"They didn't need consultants. All a potential investor had to do was call up his uncle and ask, 'How much should I pay and is this a good market?'," he said.
In the 1970s, the number of Indians in US lodging expanded greatly. The gasoline crisis in the mid 1970s led to a drop in domestic travel, which increased the investment opportunities in roadside hotels. Indian investors could afford to acquire more properties because they were cheaper.
Immigration laws have changed over the years, making it much more difficult and expensive for new arrivals to gain US residency status by investing in a business, but Indian-Americans had already established a strong presence in the market.
BUYING THE RITZ
The industry group AAHOA was formed in 1989 partly in response to some hotel owners trying to take business away from hotels owned by Indian immigrants by placing an "American owned" sign outside their establishments.
Now, because of the strong presence of Indian immigrants in the industry and tougher rules from hotel franchise operators, the practice of playing on ethnic differences has largely disappeared.
The children of the first generation of hotel owners have taken the path followed by many other second-generation immigrants. Some have shied away from the industry because of the demanding work, while others have gained entree to running more upscale lodging facilities by enrolling in renowned hotel schools at Cornell or New York University or earning advanced degrees in business administration.
"We are turning out a lot of second-generation hotel owners," said Chekitan Dev, a professor of marketing at Cornell's School of Hotel Administration. "They are using their education to take their business to the next level."
One of the many success stories is H.P. Rama, who started with a small investment and took over a 37-room hotel in Pomona, California. He is now the head of JHM Hotels, which runs 32 properties, with 5,000 rooms, in nine states. A founding chairman of AAHOA, he has also served as chairman of the American Hotel & Lodging Association (AHLA).
Rama said he sees an ever-growing presence of Indian Americans at all levels of the US hotel business in the years ahead.
"I have no doubt that the second generation will dominate the lodging industry in this country in all segments of the market," Rama said.
Source: expressindia.com |
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