Wednesday, February 04, 2004

From an article in the New York Times about Indians dominating the hotel business in America:

"That's the sacrifice they're prepared to make," said Hitesh Bhakta, chairman of the Asian American Hotel Owners Association. "If you want to improve your lot in life, educate your children, then maybe you have to go to Minnesota where no one else will go."

full article:


February 3, 2004
For a New Generation, Rooms to Succeed

inu Patel realized his immigrant dreams by working 100 hours a week to turn a profit on a struggling motel. He wanted something better for his children.

Morning and night, Mr. Patel, an immigrant from the Indian state of Gujarat, manned the front desk and did repairs on a 60-room Econo Lodge in Bordentown, N.J., while his wife, Indu, and two children hauled suitcases, made up beds and vacuumed rooms. And the work paid off. At age 57, Mr. Patel owns not only the Econo Lodge but, with relatives, four other hotels.

As with thousands of other Indian hotel owners, Mr. Patel hoped his children would choose to stay in the hotel business, but he wanted them to work with bankers and brokers rather than as bellhops. So, with an immigrant's classic trust in education but a novel Indian twist, he helped put his son, Montu, and daughter, Payal, through hotel school, in their case the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University.

Immigrants from India - mostly from the state of Gujarat and many bearing the name Patel, which is common in the region - have, during the last three decades, quietly acquired more than one-third of the 53,000 hotels in the United States, most of them budget and mid-priced franchises, hotel industry officials say. But this strike-it-rich story has more recently taken a compelling though not entirely surprising turn.

At hotel schools like those at Cornell University, New York University and San Diego State University, as well as more general business schools, the children are studying how to manage chains of hotels, work in corporate offices of name-brand franchisers and acquire more upscale properties like Marriott and Hilton. Call them the Cornell hotel Patels.

"What we did we did the practical way," said Vinu Patel, reflecting on the generational change. "With their educational background, the children can work for corporate America. They understand what corporations are looking for in the hotel industry - how to market and acquire the product better than we do." Montu, who received his master's degree in May, is advising his father on acquiring new hotels while working full time as director of sales and account development for American Express's travel agency network. Payal, who attended N.Y.U.'s undergraduate hospitality program, evaluates hotels and other real estate for Standard & Poor's.

The children are not only pursuing bigger and better hotels but also, apparently, hipper hotels.

Jay and Neil Shah's parents started with a run-down hotel in downtown Harrisburg, Pa., in 1984, but the sons, armed with degrees from Cornell and Harvard, took the business public in 1999 as Hersha Hospitality Trust. Their $275-million-plus company, named for their mother, operates 27 hotels, and among them is the recently built 24-story Hampton Inn in Chelsea, which Neil Shah describes with the kind of business argot that reflects a newly minted generation.

"Our strategy is to try to bring mid-priced hotels into the Manhattan urban market, but to do so with a bit of flair," he said. "We work with top designers and fit our hotels out with a contemporary fresh look that people identify with New York, with cutting-edge design, but for which they don't have to pay $300 a night." (Rooms at his Hampton Inn start at $149.)

Sociologists call businesses dominated by a single ethnic group, like the diners owned by Greeks, fruit stores owned by Koreans and a nursing profession with an abundance of West Indians and Filipinos, "ethnic niche businesses." They say the children of the Gujarati immigrants illustrate what sometimes happens with the second generation

Sometimes, as with Korean grocers, the parents want the children to become doctors and scientists, far outside their own line of work. At other times, as happened among many Jews in the garment industry and Italians in construction, the children raise their parents' livelihood to new levels, working as designers and dress manufacturers rather than cutters and sewing-machine operators, becoming the construction contractors on skyscrapers rather than toiling as stonemasons.

Philip Kasinitz, a professor of sociology at the City University of New York's Graduate Center, said that certain immigrant groups often concentrated in certain businesses because of a particular characteristic of the American labor market at the time they arrived.

When Indians came here in large numbers after the loosening of immigration laws in the 1960's, the hotel business was at a watershed. With the growth of interstate highways, American travelers were shunning tumbledown roadside motels and welcoming sleek new franchises like Holiday Inn. The gas crisis of the 1970's and the savings and loan crisis of the 1980's meant that a lot of these hotels could be picked up cheaply enough for immigrants to afford, said Dr. Chekitan Dev, a professor of marketing at the Cornell University School of Hotel Administration.

But running a hotel is a 24-hour, 365-day-a-year business, often operated with the loneliness and dislocation pictured in the movie "Mississippi Masala." "That's the sacrifice they're prepared to make," said Hitesh Bhakta, chairman of the Asian American Hotel Owners Association. "If you want to improve your lot in life, educate your children, then maybe you have to go to Minnesota where no one else will go."

The Indians' knowledge of English and a commercial savvy prized by their culture gave them a distinct leg up on other immigrants, and they had a network of relatives and close friends to help out. Like much of India, Gujarat, on the west coast just north of Bombay, has a deeply rooted ethic of hospitality.

"There's actually a phrase in Hindi: 'A guest is like God,' " Professor Dev said.

Mr. Bhakta (formerly Patel - he changed his name to make it distinct) said that his 8,400 members own 20,000 hotels worth $37 billion, including half the nation's Days Inns, half its Ramadas, 40 percent of its Holiday Inns. The group has become such a presence that it is negotiating with insurance carriers to lower steeply rising rates for its members. Not surprisingly, the negotiations are being led by Tarun Vig, a 27-year-old Indian-American and Harvard M.B.A. from a hotel-owning clan.

At Cornell's hotel school, 13 percent of the graduate students are of Indian origin.

"I don't want to stay as a mom-and-pop operation," said Vikas Patel, a second-year student. "I want to make it on a bigger scale."

Students are studying finance, property development and labor negotiations, learning such things as how to evaluate the profitability of a hotel and how to cut costs by pooling laundry services and airport transportation for different hotel brands. Most hotel chains allow owners to manage competing brands as long as chain standards are maintained.

This semester, the "executive-in-residence" at Cornell will be H.P. Rama, who as a young immigrant worked as a waiter at a Howard Johnson's restaurant in Manhattan and is now chief executive of JHM Hotels, a family business that owns 33 hotels with 5,000 rooms in the Southeast. In 1999, he became the first Indian chairman of the American Hotel and Lodging Association. His nephew, Vinay M. Rama, is a senior at Cornell hotel school's undergraduate division.

Vikas Patel's father, Ramesh Patel, the son of Gujarati sugar cane farmers, came here in 1970 to complete his studies in civil engineering. While working as an engineer, he also invested in a 30-room hotel in Tempe, Ariz. Now, with three brothers-in-law and a friend, he owns three Days Inns and a Best Western in Arizona and New Mexico., and he is delighted that his son is being formally educated in the hotel business.

"He will learn more marketing skills, the business skills that I didn't learn directly," the elder Mr. Patel said. "He will do a lot of networking and come into contact with lots of people in the hotel business."

Vikas Patel actually started medical school, but the siren song of the hotel business proved too seductive.

"I want to expand our family business, maybe increase the level of the brands we own, like Hampton Inn or Hilton Garden Inn or Courtyard by Marriott, possibly even some full-service properties like a Marriott or Holiday Inn," he said.

There are more than a few cultural twists to Indian hotel ownership. Some Hindus have spurned the larger hotels because the restaurants they include require them to serve alcohol and cook meat. Professor Dev says that sometimes there is tension between the generations, as parents resent their children's foisting new commercial ideas on them. "They're questioning the business model that enabled the parents to send their kids to Cornell in the first place," Dr. Dev said.

But even those parents do not begrudge their children's education.

"We don't want it to be a crapshoot like it was for us," is the way Dr. Dev phrased the parents' attitude. "We were lucky; you may not be so lucky."

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