How Gujaratis Own Over 42% Hotel Business in USA?

This Article is contributed by community member Twinkle Solanki.

What happened when hundreds of Gujarati Patels were vexed by the post independence chaos in our country?
They set up the roots for present day $40 billion hospitality business in the US – With journalists labeling it as “The Patel phenomenon” and the urban dictionary calling it Potels (Patel owned motels). This has been romanticized as the hardworking immigrant saga by many authors and economists.

What the present day budding Indian entrepreneurs can learn from the Patel phenomenon?

Family* first, banks later.

*Family = All aunts and uncles and their aunts and uncles and their aunts and uncles- Basically everybody you are slightly related to.

The P(o)tel phenomenon

Today, over 42% of the US hotel business is owned by Gujaratis and 70% have the last name Patel. This percentage traces its roots back to the diaspora migrating from India in 1940s.

At the point when India got autonomy from the British in 1947, the recently discovered flexibility and agitation inside the nation influenced the Patels to evaluate choices abroad. Also, America’s Nationality Act of 1940 had updated laws with respect to American citizenship and naturalization, opening up more conceivable outcomes.

Source: Stanford University Press

Pawan Dhingra is the author of Life Behind the Lobby: Indian American Motel Owners and the American Dream, a book about the Patel’s’ legacy and history in the industry. As per in interview given by him to The Observer, the reason Patels made the migration was because they were a farming class, and always worked for themselves and not anyone else. This was their drive towards running autonomous and seeking self employment opportunities in nations they thought were more ‘greener’ for a business.

Starting up- The Kanjibhai Desai story

Settling in a new country wasn’t a smooth ride. When they first arrived in the states, they had zero experience in the hospitality industry.

The first Indian motel owner in the USA is said to have been an illegal immigrant named Kanjibhai Desai, who managed to buy the Goldfield Hotel in San Francisco in the early 1940. By the end of that decade, there were still only a handful of Indian-owned motels. One of them was owned by Bhulabhai Vanmalibhai Patel. His grandson Pramod Patel is today in hotel business in the USA. His company’s portfolio includes Holiday Inns, Ramadas and Comfort Inns.

Homewood Suites NJ, owned by Binita Patel and family

An article from 2000 in the Chicago Reader followed the source of the Patel motel marvel to California. A lady of Japanese descent had endeavored to go around laws that prohibited Asians from owning land by renting a low-cost inn in Sacramento, California.

When she was interned with other Japanese-Americans after Pearl Harbor, her rent was taken  by Kanjibhai Patel who happened to be a guest there—and that became first of the motel Patels. Kanjibhai was a gujju migrant who entered into the United States via Mexico, travelling from West Indies. Never would he have imagined that he was laying the foundation for what would be a trade phenomena in the upcoming decades.

Business Growth- Doing what the others termed UN-glamorous

The 1940s were a period when local hoteliers were hoping to escape their motel business since they were either spending excessively, making it impossible to run the everyday operations, or their youngsters weren’t occupied with it. The Patels couldn’t manage the cost of running hotels, however little motels—more often than not financed through their investment funds or credits from their more distant family—were inside their financial plan.

In the 1970s, more Patels moved to the United States, this time from East Africa (following Idi Amin’s ejection of Asians from Uganda in 1972) and Britain. Since they had a built up motel family, the lodging business had turned out to be all the more effortlessly available to them, and more individuals got into the business.

Owning a motel in those days was lumpy, unglamorous work, including extended work hours, something that the Patels were ready to do. Whoever said hard work doesn’t pay was wrong it seems. These Patel families would live and work in the motel with their close relatives and later began supporting visas for a greater amount of their family back home to enable them to run their motels.

Today, the noteworthy thing is the manner by which Patels have declined to retreat from the hotel scene, or simply pass their property on to the people to come. New floods of Patel moteliers are as yet advancing toward United States, sponsored by the security of their broad familial system.

The bank wars that they won

Like they say, summer is preceded by winter, this story has a murky past as well.

In the 1970s, banks had dispossessed more established, smaller, roadside ‘economy’ properties that were not profitable. In the banking business, negative, depressed resources negatively affect banks, and they needed such resources off their books.

HawkEye Hotels Owned By Ravi Patel and Family

These banks instead swung to who they saw as “unsophisticated purchasers.” For them, the Patels, who had no experience in hospitality, fit the bill.
Some banks gave easy loans in conditions where if, the Patels fizzled out on the business, the bank would get the property back in a much better condition. In Fact the banks were betting on it to happen.

What happened however was something the banks had not seen coming.With hard working Patel families working day and night, they were able to run profitable motels soon, repaying the loans as well. They figured out how to do this by living and working in their motel with their more distant family overseeing it. They even utilized rivalry among themselves to fortify their system. Existing moteliers helped their relatives find reasonable properties that were frequently near them. This expanded rivalry however helped them accomplish what has now grown to be a $40 Bn hospitality industry- All owned by the Patel diaspora.

2017-When Mariott and Hilton want tie-ups

It’s been three and a half decades since then. The success of patel hoteliers has left economists and other followers of business trends, in awe. When research is done and history is traced back, one finds it to be all about a tale of grit and determination. In short, every patel hotelier has a typical rags to riches story.

The initial hiccup in all this was that the Americans were slightly apprehensive of staying in hotels run by immigrants, often questioning their safety, the legitimacy of the business and hygiene.

Most Gujarati hoteliers say present day circumstances are different and top US chains are recognizing their achievement. Asian American Hotel Owners Association (AAHOA), which has 9,000 individuals and 90% of whom are Gujaratis, says Indian-American hoteliers pay $700 million in charges each year and make a million occupations. Renowned chains like Marriott, Hilton and Starwood are presently looking for franchising their hotels to Gujaratis, all because of the collective familial hard and smart work that led to the Potel Phenomenon.

Cover Image Source

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