Latest immigrant wave: Indian hotel developers
February, 01, 2007
Your average New Yorker can probably tell you about her Korean grocer, Albanian building super or Vietnamese manicurist. But there's another group of immigrants hard at work in the city that's mostly noticed by tourists: Indian hotel owners.
Along the highways and in the small towns of America, the hotel industry has nurtured an entire generation of newly arrived Indian immigrants. Indian-Americans own an astounding 37 percent of all hotels in the U.S. -- and more than 50 percent of low-budget stock, according to the Asian American Hotel Owners Association, which is mostly Indian.
"Hospitality," explains Dinesh Patel, New York regional director of AAHOA, "is in our blood."
While the trend nationwide is long established, it's only recently made itself evident in New York. That's because until recently, budget hotels -- Indian-Americans' specialty -- weren't seen as financially viable in urban settings. And Indian-Americans largely didn't have the capital to open high-end establishments. Both these factors are changing.
Large economy and mid-scale limited chains like La Quinta and Super 8 have worked hard to transform the urban hospitality business paradigm, identifying city developments as areas of key growth in the last five years. The list of local low- to moderately priced hotels -- and thus hotels with Indian investors and owners -- has grown dramatically.
Taiwanese developer Sam Chang, who is building around 3,000 of the city's 5,000 hotel rooms now under construction, often finds partners and investors for his projects in the Indian community. "They're crazy," says Chang. "They just love the hotel business!"
Others in the Indian community are growing their own portfolios. Amit Gandhi of M & R Hotels owns three hotels in the JFK Airport area, including a Holiday Inn Express, and has four more in development in Manhattan.
Apple Core, part-owned by Indian Vijay Dandapani, has five budget hotels in Midtown and on the East Side, including a Ramada, a Red Roof and a La Quinta.
Ashok Dhabuwala of SAI Hospitality has his hand in numerous hotels across the city. His properties include Comfort Inns, Howard Johnsons, a Doubletree and a Super 8.
A number of second-generation Indians who grew up in the budget hotel industry are using degrees from top U.S. business schools to move into the boutique and upscale market (see below).
Their number includes Vikram Chatwal, who has opened five boutique hotels since 1999 and has five more in development, and the Shah brothers of Hersha Hospitality, who took their family company public and are planning to open a boutique hotel in Tribeca this March.
The Indian tradition of hospitality has it roots in Gujarat, a 755-square-mile state on India's west coast that includes the city of Mumbai (formally Bombay). By some estimates more than three-quarters of Indian hotel owners in the United States come from that province. Many have the last name "Patel." A reporter tracking the Gujarati dominance of the industry in a 1999 New York Times Magazine article asked "Is there a Patel motel cartel?"
The AAHOA traces the American trend back to an illegal immigrant named Kanjibhai Desai, who bough the Goldfield Hotel in downtown San Francisco in the 1940s. From there, the network grew.
"There was a large Indian diaspora decades ago," says Teresa Lyle, spokeswoman for AAHOA. "Most pooled their resources and would have an immediate cash flow and living space."
"It's like the Jewish community, with Indians holding one end of the chain and pulling each other up," says Patel.
The network lent itself to growth, providing an irresistible lure to even those able to practice other trades. Ashok Dhabuwala came to America as a gynecologist, and used to practice at New York Methodist Hospital in Brooklyn. He got into the real estate business when a friend needed a loan and then asked him to invest. Now he's juggling scores of hotel projects.
Dinesh Patel trained as a civil engineer in India, but his brother-in-law was in the hotel business and helped him open his first 28-room motel along the freeway in Springfield, Mass. He now owns six hotels. Amit Gandhi went to school to be a pharmacist, fulfilling his father's dream. But the lure of hotels proved too strong, and he returned to the family industry.
"The hotel industry has always fascinated Indians," Dhabuwala explains. "When somebody gets rich, they want to open a hotel. It's not just the money, it's the pride and prestige. It's about bringing people to your place and treating them well. Everybody works in the same direction. It's a piece of land in the land of opportunity."
With the growth of Indian hoteliers has come newfound political clout. AAHOA has a political action committee. And in excess of 3,000 attendees are expected for their trade show on March 7-10 in Charlotte, N.C.
For these small and not-so-small hoteliers, previous speakers at their conventions have included luminaries like former President Bill Clinton, former Speaker of the House Newt Gingrich, Secretary of State Condoleezza Rice and former Senator Bob Dole.
From budget to boutique
A generation of Indian immigrants used elbow grease and extended family networks to make it in the hotel business. Now their children are using high finance, advanced marketing tools and haute style to take their businesses to the next level.
In the coming months, second-generation Indian Americans are slated to open several high-end boutique hotels in New York City likely to generate buzz in Midtown and Downtown.
Credit the American educational system.
With a degree from the Wharton School of Business, Vikram Chatwal added onto what he learned in his childhood around the family business, Hampshire Hotels, to launch his own brand of high-end boutique properties in 1999.
"I concentrated in marketing and management," says Chatwal. "Wharton helped me understand how finance works in relation to statistics and theory."
The result is VC Hospitality, which opened Time, near Times Square, in 1999; Dream, on West 55th Street in 2004; and several others. The privately held company now owns five boutique hotels, has five more in development, and is worth $350 million today and will be worth close to $500 million this summer, Chatwal says.
Other high-profile second-generation Indian-American hoteliers include the Shah brothers, Neil and Jay, whose Hersha Hospitality group will open the Duane Street Hotel in Tribeca next month, according to company spokeswoman Emily Bowland.
The tony urban focus represents the financial maturation of the Indian-American hotel community, their representatives say. For years, budget hotels were the name of the game. But now many Indian business owners are financially secure and looking to diversify.
"The last 10 years have really seen the move into upscale hotels," says Teresa Lyle, spokeswoman for AAHOA. "The movement at this point is to expand the portfolio."
Indians like the Shahs and Chatwal -- who attended the best schools and have the drive to branch out from budget properties -- are also the players who can raise the money necessary to do the deals.
Neil Shah attended Wharton as an undergrad and got an MBA from Harvard University. His brother Jay took the group's 10 hotels public in 1999. He attended Cornell University, and got advanced degrees in business and law at Temple University.
Now the company uses its REIT division to raise money. Hersha Hospitality Trust, a REIT with 66 properties, is one of five companies under the umbrella of the Hersha Group.
Amit Gandhi, 32, also started out at Pennsylvania-based Hersha Group, where his father was a principal. He trained, managing a couple hotels, then attended Temple's business school.
"Nowadays, mid-scale and hip hotels are a better investment depending on the market," says Gandhi. "You can make more money on budget hotels as a percentage of your investment, but you can make a lot more money on high-end hotels."
Along the highways and in the small towns of America, the hotel industry has nurtured an entire generation of newly arrived Indian immigrants. Indian-Americans own an astounding 37 percent of all hotels in the U.S. -- and more than 50 percent of low-budget stock, according to the Asian American Hotel Owners Association, which is mostly Indian.
"Hospitality," explains Dinesh Patel, New York regional director of AAHOA, "is in our blood."
While the trend nationwide is long established, it's only recently made itself evident in New York. That's because until recently, budget hotels -- Indian-Americans' specialty -- weren't seen as financially viable in urban settings. And Indian-Americans largely didn't have the capital to open high-end establishments. Both these factors are changing.
Large economy and mid-scale limited chains like La Quinta and Super 8 have worked hard to transform the urban hospitality business paradigm, identifying city developments as areas of key growth in the last five years. The list of local low- to moderately priced hotels -- and thus hotels with Indian investors and owners -- has grown dramatically.
Taiwanese developer Sam Chang, who is building around 3,000 of the city's 5,000 hotel rooms now under construction, often finds partners and investors for his projects in the Indian community. "They're crazy," says Chang. "They just love the hotel business!"
Others in the Indian community are growing their own portfolios. Amit Gandhi of M & R Hotels owns three hotels in the JFK Airport area, including a Holiday Inn Express, and has four more in development in Manhattan.
Apple Core, part-owned by Indian Vijay Dandapani, has five budget hotels in Midtown and on the East Side, including a Ramada, a Red Roof and a La Quinta.
Ashok Dhabuwala of SAI Hospitality has his hand in numerous hotels across the city. His properties include Comfort Inns, Howard Johnsons, a Doubletree and a Super 8.
A number of second-generation Indians who grew up in the budget hotel industry are using degrees from top U.S. business schools to move into the boutique and upscale market (see below).
Their number includes Vikram Chatwal, who has opened five boutique hotels since 1999 and has five more in development, and the Shah brothers of Hersha Hospitality, who took their family company public and are planning to open a boutique hotel in Tribeca this March.
The Indian tradition of hospitality has it roots in Gujarat, a 755-square-mile state on India's west coast that includes the city of Mumbai (formally Bombay). By some estimates more than three-quarters of Indian hotel owners in the United States come from that province. Many have the last name "Patel." A reporter tracking the Gujarati dominance of the industry in a 1999 New York Times Magazine article asked "Is there a Patel motel cartel?"
The AAHOA traces the American trend back to an illegal immigrant named Kanjibhai Desai, who bough the Goldfield Hotel in downtown San Francisco in the 1940s. From there, the network grew.
"There was a large Indian diaspora decades ago," says Teresa Lyle, spokeswoman for AAHOA. "Most pooled their resources and would have an immediate cash flow and living space."
"It's like the Jewish community, with Indians holding one end of the chain and pulling each other up," says Patel.
The network lent itself to growth, providing an irresistible lure to even those able to practice other trades. Ashok Dhabuwala came to America as a gynecologist, and used to practice at New York Methodist Hospital in Brooklyn. He got into the real estate business when a friend needed a loan and then asked him to invest. Now he's juggling scores of hotel projects.
Dinesh Patel trained as a civil engineer in India, but his brother-in-law was in the hotel business and helped him open his first 28-room motel along the freeway in Springfield, Mass. He now owns six hotels. Amit Gandhi went to school to be a pharmacist, fulfilling his father's dream. But the lure of hotels proved too strong, and he returned to the family industry.
"The hotel industry has always fascinated Indians," Dhabuwala explains. "When somebody gets rich, they want to open a hotel. It's not just the money, it's the pride and prestige. It's about bringing people to your place and treating them well. Everybody works in the same direction. It's a piece of land in the land of opportunity."
With the growth of Indian hoteliers has come newfound political clout. AAHOA has a political action committee. And in excess of 3,000 attendees are expected for their trade show on March 7-10 in Charlotte, N.C.
For these small and not-so-small hoteliers, previous speakers at their conventions have included luminaries like former President Bill Clinton, former Speaker of the House Newt Gingrich, Secretary of State Condoleezza Rice and former Senator Bob Dole.
From budget to boutique
A generation of Indian immigrants used elbow grease and extended family networks to make it in the hotel business. Now their children are using high finance, advanced marketing tools and haute style to take their businesses to the next level.
In the coming months, second-generation Indian Americans are slated to open several high-end boutique hotels in New York City likely to generate buzz in Midtown and Downtown.
Credit the American educational system.
With a degree from the Wharton School of Business, Vikram Chatwal added onto what he learned in his childhood around the family business, Hampshire Hotels, to launch his own brand of high-end boutique properties in 1999.
"I concentrated in marketing and management," says Chatwal. "Wharton helped me understand how finance works in relation to statistics and theory."
The result is VC Hospitality, which opened Time, near Times Square, in 1999; Dream, on West 55th Street in 2004; and several others. The privately held company now owns five boutique hotels, has five more in development, and is worth $350 million today and will be worth close to $500 million this summer, Chatwal says.
Other high-profile second-generation Indian-American hoteliers include the Shah brothers, Neil and Jay, whose Hersha Hospitality group will open the Duane Street Hotel in Tribeca next month, according to company spokeswoman Emily Bowland.
The tony urban focus represents the financial maturation of the Indian-American hotel community, their representatives say. For years, budget hotels were the name of the game. But now many Indian business owners are financially secure and looking to diversify.
"The last 10 years have really seen the move into upscale hotels," says Teresa Lyle, spokeswoman for AAHOA. "The movement at this point is to expand the portfolio."
Indians like the Shahs and Chatwal -- who attended the best schools and have the drive to branch out from budget properties -- are also the players who can raise the money necessary to do the deals.
Neil Shah attended Wharton as an undergrad and got an MBA from Harvard University. His brother Jay took the group's 10 hotels public in 1999. He attended Cornell University, and got advanced degrees in business and law at Temple University.
Now the company uses its REIT division to raise money. Hersha Hospitality Trust, a REIT with 66 properties, is one of five companies under the umbrella of the Hersha Group.
Amit Gandhi, 32, also started out at Pennsylvania-based Hersha Group, where his father was a principal. He trained, managing a couple hotels, then attended Temple's business school.
"Nowadays, mid-scale and hip hotels are a better investment depending on the market," says Gandhi. "You can make more money on budget hotels as a percentage of your investment, but you can make a lot more money on high-end hotels."