by Stanley Turkel, CMHS
Hotel History: The Asian American Hotel Owners Association (AAHOA)
The Asian American Hotel Owners Association is a trade association that represents hotel owners. As of 2022, AAHOA has approximately 20,000 members who own 60% of the hotels in the United States and are responsible for 1.7% of the nation’s GDP. More than one million employees work at AAHOA member-owned hotels, earning $47 billion annually and provide 4.2 million U.S. jobs across all sectors of the hospitality industry.
Indian Americans in the hotel and motel industry early on faced discrimination, both from the insurance industry and from competitors placing “American owned” signs outside their properties to take business from them. Another group of Indian hoteliers was created in Atlanta in 1989 to address discrimination issues and increase awareness of Asian Americans working in the hospitality industry under the name Asian American Hotel Owners Association.
The Asian American Hotel Owners Association was originally founded to fight racism. As early as the mid-1970’s, Indian Americans hoteliers faced discrimination from banks and insurance carriers. Around that time, after delegates to a regional fire marshal’s convention reported that Patels had set fire to their motels and submitted phony claims, insurance brokers refused to sell insurance to Indian owners.
To fight this problem and other forms of discrimination, the Mid-South Indemnity Association was formed in Tennessee. It grew nationwide and eventually changed its name to the INDO American Hospitality Association. Another group of Indian hoteliers came together in Atlanta in 1989 also to address discrimination issues and to increase awareness of Asian Americans in the hospitality industry. With the help of Michael Leven, then president of Days Inn of America, they formed the Asian American Hotel Owners Association. By the end of 1994, these two groups merged with the following mission:
AAHOA provides an active forum in which Asian American hotel owners through an exchange of ideas with a unified voice, can communicate, interact, and secure their proper position within the hospitality industry, and be a source of inspiration by promoting professionalism and excellence through education and community involvement.
The new owners brought their business expertise and their families to operate these motels. They instituted modern accounting techniques to monitor the all-important cash flow. Four times cash flow became the mantra of the Patels. If the distressed motel produced $10,000 per year in revenues and could be acquired for $40,000, it was profitable to a hard-working family.
They renovated and upgraded rundown motels to improve cash flow, sold the properties and traded up to better motels. This was not without difficulties. Conventional insurance companies wouldn’t provide coverage because they believed these immigrant owners would burn down their motels. In those days banks were unlikely to provide mortgages either. The Patels had to finance each other and self insure their properties.
In a July 4, 1999 New York Times article, reporter Tunku Vardarajan wrote, “The first owners, in a manner consistent with many an emergent immigrant group, scrimped, went without, darned old socks and never took a holiday. They did this not merely to save money but also because thrift is part of a larger moral framework, one that regards all nonessential expenditure as wasteful and unattractive. It’s an attitude buttressed by a puritanical aversion to frills and frivolities, one that has its roots as much in the kind of Hinduism that the Patels practice as in their historical tradition as commercial perfectionists.”
Author Joel Millman writes in The Other Americans Viking, 1997, New York:
Patels took a sleepy, mature industry and turned it upside down- offering consumers more choices while making the properties themselves more profitable. Motels that attracted billions in immigrant savings turned into real estate equity worth many billions more. That equity, managed by a new generation, is being leveraged into new businesses. Some are related to lodging (manufacturing motel supplies); some related to real estate (reclaiming derelict housing); some simply cash seeking an opportunity. The Patel-motel model is an example, like New York’s West Indian jitneys, of the way immigrant initiative expands the pie. And there is another lesson: as the economy shifts from manufacturing to services, the Patel-motel phenomenon demonstrates how franchising can turn an outsider into a mainstream player. The Gujarati model for motels might be copied by Latinos in landscaping, West Indians in homecare or Asians in clerical services. By operating a turnkey franchise as a family business, immigrants will help an endless stream of service providers grow.
As investment and ownership expanded, the Patels were accused of a wide variety of crimes: arson, laundering stolen travel checks, circumventing immigration laws. In an unpleasant burst of xenophobia, Frequent Flyer magazine (Summer 1981) declared, “Foreign investment has come to the motel industry…..causing grave problems for American buyers and brokers. Those Americans in turn are grumbling about unfair, perhaps illegal business practices: there is even talk of conspiracy.” The magazine complained that the Patels had artificially boosted motel prices to induce a buying frenzy. The article concluded with an unmistakable racist remark, “Comments are passed about motels smelling like curry and dark hints about immigrants who hire Caucasians to work the front desk.” The article concluded, “The facts are that immigrants are playing hardball in the motel industry and maybe not strictly by the rule book.” The worst visible manifestation of such racism was a rash of “American Owned” banners displayed in certain hotels across the country. This hateful display was repeated in post- Sept 11 America.
In my article, “How American-Owned Can You Get”, (Lodging Hospitality, August 2002), I wrote,
“In post-Sept. 11 America, signs of patriotism are everywhere: flags, slogans, God Bless America and United We Stand posters. Unfortunately, this outpouring sometimes oversteps the boundaries of democracy and decent behavior. After all, true patriotism encompasses the best features of our founding documents, and the very best of America is reflected in its diversity. Conversely, the worst if reflected when any one group attempts to define “American” in their own image. Unfortunately, a few hotel owners have attempted to describe their own peculiar version of “American.” When at the end of 2002 the Hotel Pennsylvania in New York City installed an entrance banner saying “an American-owned hotel,” the owners attempted to deflect criticism by explaining, “The issue of American-owned is basically not disparaging toward other hotels. We want to provide our guests with an American experience. We want people to know they are going to get an American experience. We are not really interested in what the other hotels are or what they are not.”
This explanation is as wrongheaded as it gets. What is an “American experience” in a country that prides itself on its cultural diversity? Is it only white bread, hot dogs and cola? Or does it encompass all the arts, music, dance, food, culture and activities that various nationalities and citizens bring to the American experience?
In 1998, AAHOA Chairman Mike Patel announced to the hotel industry that the time had come to identify AAHOA’s 12 Points of Fair Franchising. He said that the major purpose was “to create a franchising environment that promotes equality and is mutually beneficial to all parties.”
AAHOA’s 12 Points of Fair Franchising
Point1: Early Termination and Liquidated Damages
Point 2: Impact/ Encroachment/ Cross Brand Protection
Point 3: Minimum Performance & Quality Guarantees
Point 4: Quality Assurance Inspections/ Guest Surveys
Point 5: Vendor Exclusivity
Point 6: Disclosure and Accountability
Point 7: Maintaining Relationships with Franchisees
Point 8: Dispute Resolution
Point 9: Venue and Choice of Law Clauses
Point 10: Franchise Sales Ethics and Practices
Point 11: Transferability
Point 12: Sale of the Franchise System Hotel Brand
All of my following books can be ordered from AuthorHouse by visiting www.stanleyturkel.com and clicking on the book’s title:
- Great American Hoteliers: Pioneers of the Hotel Industry (2009)
- Built To Last: 100+ Year-Old Hotels in New York (2011)
- Built To Last: 100+ Year-Old Hotels East of the Mississippi (2013)
- Hotel Mavens: Lucius M. Boomer, George C. Boldt, Oscar of the Waldorf (2014)
- Great American Hoteliers Volume 2: Pioneers of the Hotel Industry (2016)
- Built To Last: 100+ Year-Old Hotels West of the Mississippi (2017)
- Hotel Mavens Volume 2: Henry Morrison Flagler, Henry Bradley Plant, Carl Graham Fisher (2018)
- Great American Hotel Architects Volume I (2019)
- Hotel Mavens: Volume 3: Bob and Larry Tisch, Curt Strand, Ralph Hitz, Cesar Ritz, Raymond Orteig (2020)
- Great American Hotel Architects Volume 2 (2020)
If You Need an Expert Witness:
Stanley Turkel has served as an expert witness in more than 42 hotel-related cases. His extensive hotel operating experience is beneficial in cases involving:
- slip and fall accidents
- wrongful deaths
- fire and carbon monoxide injuries
- hotel security issues
- dram shop requirements
- hurricane damage and/or business interruption cases
Feel free to call him at no charge on 917-628-8549 to discuss any hotel-related expert witness assignment.
