Making the '12 points'
Mike and R.C Patel go from \'zee to \'zor to prove fairness is a two-way street
When Mike Patel was pushing for fairness in the hotel industry, along with respect for Asian-American
operators, he received a phone call from President Clinton. “Bill said, ‘I’ve read about you. I’m going to India and would like to have you go with me,’” Patel says. His response to the former President was to question his validity: “I asked him,
are you sure you’re who you say you are, because I have some guys in England who like to wind me up.” Once he was reassured that it was indeed Clinton on the line, his next question was, “Are you doing this to raise money for your campaign?” To which Clinton replied: “I’m not running anymore.”
The two went to India together and became friends. Clinton appointed
him to the Clinton Global Initiative, “a non-partisan catalyst for action,
bringing together a community of global leaders to devise and implement innovative solutions to some of the world’s most pressing
challenges,” according to its Web site. The pair made a second trip to
India after the 2005 earthquake that devastated the part of the country
Patel is from.
Mukesh “Mike” Patel’s office building in Atlanta offers a clue to the business that goes on behind open doors there. The build-out of a former warehouse has taken on the distinctive look of a hotel, one of the businesses Patel and his brother R.C. run together.
Patel is a busy man. If that fact wasn’t obvious from the well-lived in office with its stacks of folders and blueprints littering the desk, the never-ending buzz of his cell phone would be a tip off. Once Patel became aware of how often his phone—ringing with the promise of possible business deals—was stopping the flow of conversation, he mused, “How did Howard Hughes become the richest man without a cell phone?”
The muted floral-wallpapered walls are covered with photos of Patel and President Clinton in India and at the White House; pictures of him playing professional soccer, pictures of the family and a variety of Indian art. Across the room through glass doors is R.C.’s office, and guarding the entryway to the two offices is an unexpected sight: a giant, stuffed black bear holding an American flag. The bear was given to the brothers by the owner of the first hotel they bought. The owner had shot the bear when his plane made an emergency landing in the woods. “I don’t know if the bear was attacking or he just wanted to shoot something—he was from Alabama,” Patel says. The trophy bear was a fixture in the hotel lobby and over the years, despite being declawed by drunks, it became a good omen—first for the hotel owner and now for the Diplomat hotel magnates.
Patel has the same natural charm for which his friend, Bill Clinton is known. He’s handsome at 46, with a demeanor that is both earnest and amiable. And, even though he’s on the treadmill’s highest setting, he won’t let you see him sweat.
Here’s just the main course on his plate: He’s president of the Diplomat Hotel Company, which operates 18 properties in four states; chairman of the board of Haven Trust Bank, a community bank with about $280 million in assets that he helped found; and he just brought the Budgetel brand out of retirement, thus becoming the first Asian-American franchisor. Side dishes include related businesses in travel, commercial insurance, real estate and hotel software.
After years of being franchisees of hotel brands that sometimes fell short of expectations, the two Patel brothers are putting their reputations on the line to prove that the 12 points of fair franchising that Patel unveiled as chairman of the Asian American Hotel Owners Association (AAHOA) in 1998-99 are not only viable, but desirable.
Introducing AAHOA’s 12 points during his tenure as chairman was a chaotic time for both the Patels and the association, and Patel became the first chairman to serve 18 months rather than the traditional year. That was the year he decided the association—which was formed in 1989 to take on prejudice in the hotel industry against Asian Americans—needed to call out Cendant, one of the largest, most powerful hoteliers in the country.
“I had 12 Cendant hotels,” he says. “Going up against Cendant was scary as hell, but I couldn’t show it.”
Mike Patel, standing, and brother, R.C. Patel
He needed to make a point to ensure the membership understood what was at stake. So at the convention, he aired a clip from the movie “Gandhi,” about the legendary Indian lawyer who fought British rule with nonviolent means. In the film clip, Gandhi told the English, “I hope you have enough bullets” to stop the entire population from rebelling.
By casting franchisors in the role of British imperialists in India, Patel created a rallying point for members. That short film clip became symbolic of the Asian-American hoteliers standing up for themselves against a larger force. And AAHOA became a stronger association, attracting more members and amassing some bargaining power in the process.
“Mike did an excellent job of pushing it (fairness) to the front burner of everyone’s agenda,” says Fred Schwartz, president of AAHOA. “It was a pivotal point in AAHOA’s history; we got franchisors thinking more seriously about our 12 points.”
It wasn’t an easy time for the family, however. “When Mike was challenging (Cendant), we took a lot of personal grief as a company,” R.C. Patel says. “We had done business on handshakes and a couple of phone calls, but I had a couple of lawsuits land on my table. We outlasted it, (but) it cost me some time and some legal fees.”
Cendant pulled its support of the association, but later returned.
“Mike is a good cheerleader as well as a leader,” Schwartz says. “He sets high expectations for himself and everyone else. He leads by example.”
Schwartz, who has headed the Atlanta-based association for the past 10 years, says the group has stayed strong because its volunteerism is strong. The association has 8,000 members who own one-third of all hotels in the U.S. Of the more than 20,000 hotels owned by members, two-thirds are franchised locations, Schwartz says.
Putting their money where their ideals are
It’s one thing to tell a franchisor where they should be going when you’re a franchisee, but quite another when you’re in the driver’s seat. But the Patels don’t think being a franchisor will change their vantage point.
“We’re not doing Budgetel for our health,” says R.C. Patel. “It’s needed, it’s wanted by the Asian-American community, but also by the larger (hotelier) community. We’re going to have franchisees have a say; franchisees police the system.”
Budgetel went dark in 1999 when the owners reflagged the hotels as Baymont Inns & Suites, according to the Atlanta Business Chronicle. The Blackstone Group bought the Butgetel name when it purchased La Quinta Management in 2005, which included the Baymont brand. The Patels bought the rights for the name from Blackstone.
Patel believes the name has value and that it addresses a specific niche in the market. “It was a renowned name at one time,” he says, “people have respect for the name.” As the moniker suggests, the brand is considered an economy brand. There will be new construction, along with reflagging existing hotels, but Patel says Budgetel will not become “a dumping ground for old, tired properties.”
The Patels are positioning Budgetel as a chain the Asian-American community can own, not only as franchisees, but also as stockholders. Among the promises are: annual renewable contracts, no liquidated damages—“If you want to leave, you can leave. If you don’t perform, you can leave,” Patel says—a flexible fee structure, franchisee input on brand development and fair and honest sales practices.
“We want to demonstrate that the 12 points are livable,” Patel points out. (At the time of this interview, the Uniform Franchise Offering Circular was still being crafted, but Patel already had interest from 28 people.)
How it all started
If it seems like everyone in AAHOA is named “Patel,” you’re not imagining things. When Indians began immigrating to the U.S. after India’s independence in 1947, they were attracted to the hospitality industry because it offered not only housing for their families, but also cash flow.
Many were from the same region of India, where the name Patel—which was given to the record keeper of the annual crops of the “pat” or parcel of land—was common. In the U.S., Patel became synonymous with the hotel business, according to the AAHOA Web site.
Mike Patel’s family immigrated from India to Uganda and then to England, after the dictator Idi Amin deported anyone of Indian decent. (When Patel helped the African-American hoteliers form the National Association of Black Hotel Owners, he jokingly told them, “I’m more African than you guys, I was born in Uganda.”)
Patel excelled at soccer and came to the United States to play the sport professionally. Being good at soccer was one way to overcome the prejudice of his English schoolmates, he said.
As an adult, Patel applied the principles of soccer to business. In an interview that ran in Franchise Times in April 2005, Patel said soccer taught him that even when “you’re down 1-0, you never give up.” “You have to know where the ball’s going before you get it,” he said. Once the ball reaches your foot, it’s too late to decide where to pass it, the advantage is lost.
Another lesson from soccer is preparation—don’t take the shortcuts and put in the time necessary to perfect the skill.
Preparation is how the two brothers are able to juggle so many balls. They divide the responsibilities, with Patel as the one in the limelight and R.C. content to take the supporting role. “There’s great chemistry between me and Mike,” R.C. says.
In addition to his responsibilities at their ancillary companies, R.C. is the chairman of Diplomat Cos., and handles the day-to-day operations and strategic planning for the companies. The two work efficiently together so they don’t duplicate efforts and therefore are able to get more done, says Peter Mathon, who handles their marketing.
Although Patel will always consider himself an Asian American, he’s assimilated. The exact moment he started to think of himself as an American may not be something he can pinpoint, but as he’s told groups of new citizens: “You’ll become an American when you see how fast you can do well here; and you’re an American when you become a philanthropist in this country.”
Family and community are extremely important to the Indian culture. Patel says that feeling of never wanting to let the other members down has also led to generosity. For instance, if a family member or friend borrows money, they will always pay it back. “Not paying back, a man may have trouble getting his children married,” Patel explains, because he will be perceived as having less-than-ethical genes to pass on.
Families also work together. R.C.’s son, Jay, has already joined the company after “paying his dues” working for some high-powered companies in the finance field. As children, Jay and his siblings accompanied their father on his rounds when he filled the Coke machines at the hotels and helped strip linens from beds. “I wanted to show them that nothing is beneath them,” R.C. says.
Mike Patel’s children, most likely, will follow him into the hotel business, also. “I told my son, ‘Why don’t you become a doctor like the other Indian kids?’” Patel says, grinning. “He says in hotels, you can take extra vacation.”
Vacations are something both Patels try to schedule for their extended families. “Something you can’t buy is time,” Patel says. “God does not take bribes, when you die, you die.