The Rise of Indian Americans in the U.S. Hotel Industry – An Historical Perspective and Current Market Analysis

By Anish Parikh and Sonia Mann, Attorneys at Parikh Law Group

Accounting for over approximately 34,000 hotels, Indian American owned hotels across the United States account for nearly 60 percent of all hotels located in the U.S., according to a 2021 study conducted by Asian American Hotel Owners Association (AAHOA) in partnership with Oxford Economics, a global leader in quantitative data analysis. 

The study analyzed the share of U.S. hotels and rooms owned by the members of AAHOA, which is predominantly made up of Indian-origin hoteliers, hotel operators and management companies, and capital investors, and analyzed the direct and indirect impacts to the U.S. economy and beyond supported by AAHOA-owned and operated hotels along with other non-AAHOA hotels owned by Indian Americans.

The study provided an eye-opening perspective of how Indian-American owned and operated hotels in the United States have tremendously impacted states’ local economies, sales revenues, jobs, wages and salaries, in addition to contributing significantly to U.S GDP ($368.4 Billion at the time of study in 2021) and another $100 Billion in federal, state and local sales and lodging tax collections. 

The scale, breadth, and remarkable economic impact that Indian American owned hotels have in the United States and beyond is the result of decades of hard work, countless stories of overcoming trials and tribulations and a multitude of other factors unique to the Indian community, primarily of Gujurati origin, which largely contributed to the success of Indian Americans in the U.S. hotel business. 

Some of these historical factors included but are not limited to a multitude of factors unique to the Indian American community. Often times, first generation hotel owners utilized community-based “handshake” loans among close family members and friends which were based primarily in trust and community accountability. Enlistment of family members to help run the daily operations, and sometimes even living at the properties to ensure timely attention to guest-related matters and maintenance issues, was not uncommon. In the 1970s and 1980s, because Indian American hotel owners and their families, in combination with their strong business acumen and ethics, were willing to do much of the work which occurs behind the scenes at hotels in an effort to keep costs low and prioritize profitability to attain their investment goals, they were able to reap the benefits of their own hard work. This meant anything from managing the front desk to helping out with the laundry during their downtime, or stepping in to perform any and all tasks and items if staff was not available.  Rather than paying third parties for several items, such as a maintenance company to remedy a clogged plumbing issue, it was and still is not uncommon for Indian American hotel owners to hire their family members, particularly their adult children, to handle and run the daily operations and management aspects of the properties in exchange for a percentage of ownership in the enterprise. This structure has proven to be highly beneficial to hotel owners as it ultimately leads to a sense of ownership and pride in the business among its employees, which in turn significantly contributes to a property’s success. 

The result of remaining humble and keeping several management tasks and responsibilities “in-house” was in an effort to keep costs lower, retain profits, and stay focused on a path towards long-term benefits. These, among other factors, have allowed hotel owners of Indian American origin to translate their profits over time into long-term wealth, thus allowing for additional investments into multiple hotel properties. Further, many second-generation children of the original Indian American pioneers of hotel investments have now taken their parents’ achieved goals of successful hotel ownership to a whole new level by becoming regular purchasers and sellers in today’s market of highly recognized name brand hotels such as the Comfort Group, Hilton, and Marriott as well as other luxury and boutique resorts. These second-generation entrepreneurs, mostly born and educated in the United States, have not only become seasoned purchasers and remodelers of older existing hotels, but are also involved in structured corporate management of hotels across the U.S.

The current benefits enjoyed by today’s Indian American hotel owners, their family members and others is explained by Sujay Mehta, owner of Bloom Ventures based in Columbus, Ohio and a second-generation owner of multiple brand name hotels across the United States. “Our parents did the initial hard work and basically paved the way for us to now use the amazing groundwork as an opportunity to take their achievements to the next level for the benefit of future generations to come.” Sujay’s father, Supru Mehta, is a first-generation Indian American hotel owner whose efforts and work embodied the “keep it in-house” model described above. Upon achieving successful outcomes after years of hard work, facing many challenges and even some failures over the years, Mehta is proud to be able to pass along his decades-long attainment of skills, experience, business acumen and support to his son.

Another significant challenge faced by the original Indian American hotel investors was racism and xenophobia, which created significant obstacles and barriers to gaining trust and success in the community and industry at large. However, through enduring determination and increased community involvement to earn good-will and trust from their predominantly white communities, Indian American hotel owners were able to overcome these barriers and achieve the American dream. Reinvestment of their profits into the community which created job opportunities and helped the local economy, and through other direct and indirect contributions towards their local education institutions, hospitals, and other community endeavors led not only to increased community involvement, visibility and integration, but ultimately acceptance from their communities which directly benefitted their businesses. 

Present day hotel investors and management company owners of Indian origin are able to enjoy the benefits of the groundwork and capital-based economic opportunities laid by previous generations, and are now openly welcomed into the U.S. hotel investment space. This new generation of hotel industry professionals has elevated the entire framework of Indian Americans doing business in the hotel industry. By leveraging technology, advanced financing options, streamlined management and operations, and by becoming experts in the organizational framework of luxury hotel brands combined with the knowledge and support offered by their first-generation family members, this new group of hotel entrepreneurs has completely changed the landscape in today’s hotel industry. Companies such as Bloom Ventures, aforementioned, offer fresh perspectives and innovative approaches to lead investor-clients towards achieving successful returns from hotel investments, while being managed by young entrepreneurs like Mehta. 

This has created tens of thousands of investment opportunities for entrepreneurs across the country and there is much more room for growth and possibilities ahead. This growth has also created a path for more streamlined and collaborative opportunities for hotel investors, management groups, finance companies and law firms. Over the years, Parikh Law Group’s real estate and corporate law teams have assisted various investors and business owners with hotel purchase and sales transactions from start to finish, and our knowledgeable attorneys have a substantial amount of experience in this field. Whether you are new to the hotel arena or a seasoned investor, our team of legal experts can guide you in the achievement of your hotel investment goals. 

You can reach out to Parikh Law Group at (312)725-3476 or by going to www.plgfirm.com. We appreciate your trust in our legal team for over a decade and are happy to assist you. 

Also, please stay tuned for our next upcoming article which will outline specific factors to take into consideration and pitfalls to avoid when making a hotel investment. 

Sources: https://aahoa.com/resources/oxford-study