When I come across an Indian at the reception desk of a modestly priced hotel, I routinely ask if she or he comes from Gujarat State.
Indians, primarly from Gujarat, are estimated to own between 80 and 90 percent of the motels in small towns. According to the Asian American Hotel Owners Association. 34,000 hotel are run by Indians (from all states in India), out of about 50,000 hotels in total in the U.S. For instance, 89% of all hotels in Texas are owned by Indians.(Go
here.)
Indians began to buy hotels in the 1940s, mainly in California, But the surge started in 1976 when Chandrakant Patel, working for Braniff airlines in Dallas, and with masters degrees from Stanford and Johns Hopkins, bought a hotel he named the Alamo Plaza Hotel Courts Dallas, part of a chain of
Alamo hotels which eventually went out of business. (
This from a 1999 New York Times article. Also go
here.)
He manned the front desk, his wife did the laundry. The family, with four children had a 2,000 square-feet house to live in rooms behind the motel’s front desk.
“It was a tough life managing both my airline job and the motel at the same time. I had to sacrifice a lot, especially in terms of my family life but I realized soon that I was saving a lot of money in terms of rent, utilities and phone bills because I was staying on my own property and using the motel’s phone and power connections.”
Eventually Indians, especially those from Gujarat, bought and operated many thousands of motels in rural America, often the only Indian family in town.
A formula for purchase, management and further investment evolved. Financing came from family and friends, for a down payment, from an independent American owner who wanted to leave the hotel business – Indian vastly expanded their ownership while the demand for hotel rooms grew and existing owners decided to sell. (Go
here for a recent history of hotels in the U.S.) One did not need fluent English, and the owners lived in the hotel. Extended family members came to live in the hotels. Profits were often used to buy other hotels.
Assume a small budget hotel with 40 rooms, an
60% occupancy rate with average nightly charge of
$75. By providing most of the labor, the owner family can removed some
50% of operating costs. If the profit margin is 30%, income after expenses will be around $200,000.
Patel himself went on purchase 13 hotels by 1987, eventually large big city hotels as well. He founded the State Bank of Texas. His well-educated sons are part of the management team. (This hotel Patel family is different from
Mafat Patel, who immigrated to Chicago and built a chain of grocery stores.)
