Indians Fill Niche In American Lodging Industry Immigrants From One State In India Own More Than One Third Of U.S. Motels

The Anaheim Tropic Motel is no garden spot. The beige stucco box rises from a sea of shimmering asphalt along a tretch of Harbor Boulevard frequented by panhandlers and other societal castoffs.

Yet to Jay Patel, the motel represents a foothold to success in America. A live-in manager who moonlights as a milkman, he cleans carpets, paints rooms, hands out keys - although he hasn’t gotten around to replacing the missing aqua-green T in the sign that reads “ropic” out front.

A few miles away, Tushar Patel oversees a growing empire of 12 midpriced hotels in San Francisco, Orange County and San Diego. As president of Tarsadia Hotels, he tools around in a Mercedes-Benz 600SL and commands a staff of 20 from high-rise offices with a sweeping view of Newport Beach.

Jay and Tushar Patel are not related, but they are linked by a common name and heritage that have become as familiar in the lodging industry as Gideon Bibles in night stand drawers.

They are among a wave of immigrants from the Indian western coastal state of Gujarat - most with the surname Patel - who own more than a third of the motels in the United States. Indian immigrants control 12,500 hotels and motels with a market value exceeding $26 billion, according to a trade association.

“In another five years, they will control about 50 percent of all hotel (and motel) assets in the U.S.,” predicted Gregory C. Plank, executive vice president of Forte Hotels Inc. in El Cajon, which operates the Travelodge chain. “It is just incredible how hard they work.”

But for the many Gujaratis who have flocked to Southern California, times couldn’t be tougher. Five years of recession and natural disasters in this tourism Mecca have forced many motel owners to cut costs, shelve expansion plans or go broke.

Adding to their troubles, the nation’s 7,200 Indian immigrant motel owners say they have had to overcome discrimination - from the inability to obtain insurance to customers who become rude when they see a brown face behind the counter.

But they are survivors. Industry experts credit their ability to cut costs or change strategy when they encounter adversity.

In the process, they are being credited with helping to revive roadside America. They entered the business by snatching up dying family-run motels.

They fixed up dilapidated properties and often have turned them into franchised units of large national chains.

“They helped legitimize the economy lodging segment,” said Michael Leven, president of Holiday Inn Worldwide in Atlanta. “The Indian community bought a lot of motels that nobody wanted.”

And Indian immigrants have done it despite representing 0.3 percent of the U.S. population. Their success in the motel industry is an example of how immigrant groups - for instance, Cambodians with doughnut shops and Koreans with grocery stores in Southern California - have clustered into certain corners of the American economy.

Motels are attractive because they can provide stable income. A 40-room building bought for $500,000 in a good location near a city like Tucson, Ariz., could turn $100,000 profit a year, industry sources say. Deducting for depreciation adds more.

It’s a business that allows large families to live together on the premises. For those who speak little English, renting rooms consists of simple transactions such as asking “One bed or two?”

If times turn tough, owners can put their families to work, reducing labor costs to practically nothing.

Indian motel owners make their rise sound like a simple matter of hospitality and hard work. But it also has required contending with discrimination and difficult economic times.

With their dark skin and accented English, some had trouble securing loans or credit for supplies, or insurance.

Forte’s Plank said Indians encountered “real estate people who did not want to sell to them.” Major motel chains, which charge a fee to owners who want to affiliate with them, “might have looked a little askance.” Some owners hired whites to work reception desks in the early days to overcome guest resistance.

Despite strides in the industry, Leven said he believes a few customers still hold biased views against Indian motel owners.