GUJARATI / ENTREPRENEUR SPECIAL....................... Beyond the Patel Motel Phenomenon

GUJARATI ENTREPRENEUR SPECIAL Beyond the Patel Motel Phenomenon





A clutch of next-gen Gujarati entrepreneurs in the US whose parents immigrated in the '60s and '70s and changed the face of the American hospitality industry are now doing their own thing

Last month, a community in the US that on most occasions relishes staying beneath the radar became the focus of some unlikely attention. The Chalak Mitra group -founded by next-gen Gujarati entrepreneurs Al (Akash) Bhakta, 36, Chet (Chetan) Bhakta, 39, Nik (Ni kunj) Bhakta, 38, and Ron (Ronak) Parikh, 36 -found itself in the crosshairs of controversy courtesy of a biker gang shootout at the Twin Peaks Restaurant in Waco, Texas, of which they were the owner franchisees. While the shootout that left nine dead turned the spot light on the group, with Twin Peaks cancelling the franchise agreement, most Indian-Ameri can hospitality entrepreneurs have supported Chalak Mitra -which has a typical Gujarati entrepreneurial story of four college buddies in Dallas, Texas, getting together and founding a company in 1997.

They started with a billiards parlour and in 2001 signed the first franchise deal for an Asian stir fry concept restaurant called Geng his Grill. Today they run 100 such restaurants across the southern states of the US, with 100% of the franchise rights. In 2010, the group acquired 33 Yum! brand restaurants.

Within the community of Gujarati hospitality entrepreneurs -whose enterprises are popularly known as the Patel motels for their dominance in the US motel industry -the endeavours of the next-gen may not come as a sur prise. To be sure, the second generation of Patels are making forays into sectors beyond motels and, even when they are not, they're changing the way their parents ran the mom and-pop businesses.

“The younger generation of Patels are moving into various businesses. Their entrepreneurial spirit is unique to our culture; we are seeing them move into food businesses in a big way,“ says Mike Patel, a prominent hotelier from Atlanta, Georgia.

Now meet Danny Patel, founder and CEO of Peach State Hospitality, a family-run hotel development and management company, which he set up 30 years back when he moved to the US from Gujarat. Danny feels the next generation of hospitality entrepreneurs are in most cases taking the business to the next level. “My son Ricky Raman, 24, is an example. He's an MBA and has worked with a big hotel chain before he joined the family business,“ Danny says.

One major shift is getting into franchisee arrangements with big hotel chains. Others like the Chalak Mitra group are running full-service restaurants and bars, whilst yet others are setting up shopping plazas. “Many of the younger members of the community have gone to business schools; some of them are diversifying because of the economic downturn,“ says Alkesh Patel, former chairman of the Asian American Hotel Owners Association and president of family-owned Trupadi Inc.

So whether it's business exigencies or the sheer adrenaline rush of diversifying into sectors where their parents never dared to tread, the younger Patels are definitely going places.Here are four such stories of the next-gen Patels and their enterprises:

Room for More

Pranav Patel was part of the family business for eight years. Then the startup bug hit him

Pranav Patel is upbeat about the trend of second-generation of Gujarati hotel entrepreneurs exploring new verticals not only within the hospitality sector but also in other industries. He considers himself an example of this new age entrepreneurial spirit. A former principal and VP, operations, at his family's TNJ Group, which he cofounded, Pranav holds management degrees (MBA and BBA) from the University of New Mexico. At TNJ, he was responsible for managing portfolio assets worth more than $100 million, including a dozen limited and full-service hotels and marque brands such as Hilton and Marriott.

“After growing my family's hotel portfolio for eight years, I launched HotelUpgrade, a mobile app, last year to help address the issue of rising guest acquisition costs in the hotel industry. This is the No. 1 issue we face as an industry, outside of legislative problems,“ says Pranav. His portfolio also extends to Great Clips hair salons, a prominent salon brand, and he is the cofounder of SafelyStay, a venture-backed company that helps online travel agencies and vacation rental marketplaces decrease vacation rental reservation time. Pranav believes that hospitality businesses helped create a strong foundation for Indian American entrepreneurs like himself. “We are an entrepreneurial community, and hospitality was a great start for us when the first generation of immigrants landed here in the 1960s and 1970s,“ he says.

Not a Preserve of Men

Binita Patel has driven the diversification of the family-run business

In 2009, Binita Patel decided to chase a masters degree in hospitality management. She had joined the family business three years ago but felt it was time to take a break. It wasn't a hard decision. The hospitality industry in the US at that time was under the grip of a wrenching recession. So she joined Cornell's school of hotel administration. The degree in hand, she pursued an internship in south east Asia and went on to work for four years in Manhattan in sectors such as finance and asset management. Richer in experience, she was back at HMB last year.

Her stints outside the family business were about to prove useful. “I came back to our family hospitality business to work with my parents and brother as the company portfolio has been diversified,“ she says. The generational divide between management styles is evident in her company, according to Binita. Her parents hardly had experience in managing people. “They tended to be much more lenient with employees,“ she says. Not her. Having been an employee and having received a university education in management, personal relationships are far less important than efficient business practices, according to Binita. Binita now handles the asset management and investment operations of the company. She thinks that family-run hospitality businesses are typically managed more efficiently, giving stakeholders more time to explore other business opportunities which “our parents may have missed“.

That explains, she says, why many newgeneration hoteliers are investing in food and beverages and restaurants. That's not the only change. A growing number of women are ensconced in operational roles in the Gujarati-run hospitality companies. “Ours was a male-dominated industry earlier,“ says Binita. “That is changing.“

Risk is Generation-constant

Devesh Patel moved from the motel industry to create a LED lighting firm. That doesn't mean he is not tone deaf to the needs of his family business

The story of Devesh Patel's par ents was no different from many Gujarati families in the 1960s. They moved to the US from Gujarat and started a motel. For sometime it looked like Devesh himself would follow the script. To be sure, he did join the family business. But soon he decided to move away and set up Infinilux, a company that designs and manufactures commercial LED lighting. “My parents have been in the hospitality business for many years. But my decision to move away was inspired by an uncle, who branched off into manufacturing,“ says Devesh. He set up Infinilux in 2008 and went full throttle in 2010. The company manufactures in Asia and sells primarily in the North American market. And though the family doesn't own any as sets in the hospitality sector at present, Devesh, who still takes an interest in the family business, doesn't rule out acquisitions. “The current economic situation in the US is not very favourable for the hospitality sector,“ he says. For now, he is happy that he has built a company that is firmly on the growth path. “On the hospitality front, we are still keeping ourselves agile for any changes in the market,“ he says.

Devesh looks at LED lighting as a revolutionary technology of the future. He sees risk as an essential part of any business and something that second generation IndianAmerican businessmen like himself are always prepared for. “It's something like our parents, who moved here to the US from India, experienced as owners of motels and liquor stores,“ he says.

Freedom to Dream

Ravi Patel is grateful to his parents for enabling him to venture out of the family business

Ravi Patel thanks his parents who set up businesses through their perseverance. That has enabled the second generation to foray into an array of new industries. “Many of the younger members of the community now have the freedom to either work in the hotel industry or pursue other career paths,“ says Ravi. He is now a Democratic Party candidate for Iowa's first Congressional district and if elected will be the first IndianAmerican in the US Congress from Iowa.

“Younger members of the community are pursuing disciplines outside of hospitality or studying the more technical aspects of the hotel industry. We are innovating in an industry that historically has operated in a pretty traditional way,“ says Ravi. He himself is a shining example of this growing trend. Besides making the family business HawkeyeHotels one of the fastest growing hotel companies in the US, Ravi is also an angel investor in his home state Iowa as cofounder and managing partner of Built By Iowa, an early and midstage business incubator through which he has invested in over 20 startups.

Ishani Duttagupta

ETM14JUN15