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September 2005
Room To Grow
By Heather Head

SREE Hotels President and CEO Ravi Patel came to the United States from India in 1966 with only a degree in chemistry. And although his mother culture promotes the idea of hospitality, nothing else in his experience prepared him for the future he would find here in the hotel industry.

After completing a B.S. in chemical engineering at Auburn University in Alabama, Ravi took an engineering position at National Tire Company (Goodyear). But in the late 1970s, he watched a friend go into the real estate business, and what he saw piqued his interest. His friend owned a restaurant and a hotel, and Ravi liked the management aspect of the hotel ownership.

So Ravi and a group of friends, including his current partner Chandra Patel who is the CFO of SREE, looked for an opportunity to enter the industry – and found one in 1980, where others saw only a wreck. It was a run-down, half-finished motel backed up to Interstate 95 in Florence, South Carolina.

The landowner had repossessed the property, and the city planned to shut down the operation. There was no sewer system and only 60 of its 100 rooms were even useable.

The owner offered the Patel group an excellent price, and owner financing. Ravi and the rest of the Patel family pooled money to provide the $75,000 down payment and another $75,000 for refurbishment and converted it to an Econo Lodge franchised hotel.

“We worked hard,” Ravi recalls. “We were roofer, we were carpet installer, we were wallpaper guy – we did lots of things ourselves.”

And the hard work paid off. The refurbished hotel saw a 90 percent occupancy rate in the first year, turning a decent profit for the Patel family and partners. Fortuitously, the returns continued at that rate for several years in a row, providing the family with capital to expand.

Immediately the Patels turned their eyes to Charlotte’s burgeoning market, buying their first hotel in 1981 in similar condition to their original hotel in Florence. In 1982, Ravi moved here and joined the North Carolina Hotel/Motel Association. In 1984, using cash flow from the existing hotels, SREE began constructing hotels at the pace of one per year.

 

Building a family and as a family

To date, the Patel family has purchased or constructed roughly one hotel each year, for a total of 27 hotels, mostly in Charlotte with a few in South Carolina and Sacramento, Cal. They also added hotels in Virginia and Maryland where Ravi has partners managing the properties.

Company headquarters are currently moving to a 30,000-square-foot property across from Stonecrest Shopping Center on Rea Road in south Charlotte, where 26 of the company’s 540 employees will work. SREE will work out of 10,000 square feet and the balance will be sold as office condos. The company’s revenues reach nearly $50 million each year, and are growing.

Vinay Patel, Ravi’s nephew and senior vice president of operations and sales, says he expects the company’s revenue to double easily in the next five years. “The market is rich right now,” he explains. “We have to take advantage of the opportunities.”

Ravi and Vinay credit the company’s and family’s success to several factors, but most of all to the Asian Indian culture of hospitality. “We take care of guests,” Ravi states simply. “Every Asian has that feeling, that gene. Anybody that comes, you go out of your way to treat them better in your house.” He points out that 35 percent of all hotels in the country are owned by Asian Indians.

But he also cites hard work, community activism, political involvement, and ownership format as elements of success for SREE Hotels. Every hotel owned by SREE Hotels is a franchise and as such is owner-managed. “There is a big difference between manager and owner,” says Ravi. “Manager interest is in that hotel only, while owner interest is in how government affects your business, and marketing, and how to grow business.”

Because all SREE Hotels are owner-managed, Ravi believes they receive a level of service and care and leadership that most hotels can’t compete with. Part of that care includes political involvement.

“Government affects your business at the local, state and federal levels,” points out Ravi. “I never really liked politics before, but in the past eight or nine years we’ve begun lobbying certain issues that affect the business.”

At the local level, SREE Hotels has supported past hotel taxes and also the two percent hotel tax to improve various amenities in the city. Football stadiums, a good convention center, and the NASCAR museum, in particular, says Ravi, have a positive impact on their bottom line, bringing overnight guests to the city in large numbers.

At the state and federal levels, the issues become broader, spanning everything from immigration and visa regulations, to OSHA and ADA policies.

Of course, success like the Patels have seen doesn’t happen without a heavy dose of old-fashioned hard work. “I worked 16 hours a day, seven days a week,” Ravi laments of his early days: “I didn’t get a chance to see my children young. One was four years old, one was only one year old. It was hard.”

But, Ravi is also quick to point out, “There is a reward that keeps calling. Everything is a joint venture, and the rewards are joint rewards, including benefits to the entire Patel family.”

“Not every family member is accessible to do everything,” he says, mentioning that his own son has no interest in pursuing the family business. “But what we do is help each one in their different business, help them start, give any financial backing they need.”

And for those who continue in the business, such as his daughter Nisha, who is a corporate director of marketing and sales for the company, nephew Vinay, who is in charge of operations and sales for the company, and his partner’s nephew, Parag, who handles all the accounting for the business, SREE Hotels provides the backing, environment, training, and support to become the next generation of hospitality leaders – a transition that is nearly complete.

But Ravi has no intention of retiring entirely: “I don’t think I’m ready to retire! This is what I’ve been doing for the last 25-plus years. I like the challenge – it keeps the brain working.”

 

Overcoming hurdles

SREE Hotels has proven an unmitigated success story for the Patel family, but that doesn’t mean it has come without challenges. One of the largest difficulties the family faced early on was discrimination.

Says Ravi, Asian Indians experienced discrimination on every level – banks were reluctant to lend money, insurers were hesitant to issue policies, franchisors resisted signing contracts. Ungrounded, perhaps, but real discrimination that made doing business in the U.S. an uphill battle.

To combat it, Ravi and partners, along with other Asian Indians in the business, founded the Asian America Hotel Owners Association (AAHOA), which has since become a national powerhouse for information and political action. The association gathered data about Asian Indian hotel owners, regarding their reliability in making loan and insurance payments, their customer satisfaction ratings, and several other measures of business success.

The results? On every objective measure, Asian Indian owners came in above average in the United States.

In the years since the AAHOA was founded, discrimination has never gone away entirely, but thanks to AAHOA’s education campaigns, the climate has improved and continues to become more friendly.

The aftermath of the 9-11 attacks proved another challenge to the entire hotel industry, as tourism and business travel plummeted. Fortunately for the Patel family, SREE Hotels owned several hotels in the Washington, D.C., and Norfolk, Va., areas, where business boomed so well that it offset the downturn in other markets. The company has since sold some of those properties for a significant profit, and turned the money into new business in other markets.

An ongoing challenge faced by the entire hotel industry is the environment created by opportunistic harassment based on otherwise well-meant government regulations. Ravi offers the example of certain attorneys who make a career of filing ADA and OSHA suits based on petty infractions. Recently, his company was fined $250 under OSHA regulations that require labeling of workplace chemicals. In this case, the infraction amounted to a bottle of liquid paper used behind the reception desk, lacking the requisite warning labels. More expensive but equally nit-picky suits are common.

 

Lifts for looks

Throughout the years, SREE Hotels has continued to improve its offerings and to target a higher end market. While moving into franchises such as Hilton, Marriott and Hampton, SREE Hotels has been moving away from the budget motels that formed their start. Although the exact market varies from one hotel to the next, SREE hotels cater primarily to business travelers, training and conventions, weddings and luxury-seeking vacationers.

As such, SREE Hotels acquisitions generally receive a makeover up front. The Hilton Charlotte Executive Park on Tyvola Road, for instance, directly off I-77, has been under renovation since its purchase last year.

Every room in the hotel is receiving a facelift, from tired and dated carpets and basic-level amenities, to granite countertops, Asian-influenced hardwood furniture, carefully chosen artwork, and stylish carpets and draperies.

Large portions of the main floor are currently partitioned off, under construction. Once renovations are complete, guests will be greeted into a gracious foyer by a large, colorfully translucent water feature, behind which will be housed the restaurant, a conference room, and banquet and ballroom areas, all carefully appointed.

The company’s success is backed and underscored by its newly redefined mission statement. “We are going to operate, develop, and manage upscale, mid-market, and full service hotels,” elaborates Vinay, “that will provide fair returns on investments for our investors through ethical business practices.”

Underlying the commitment to investors, he elaborates, is a commitment to guests, employees, and the community. “Charlotte has been very good to us and our families. We want to be a civic partner of the city, not just a business partner.”

But the commitment to service and quality is “driven all the way down through the line level of associates,” says Ravi. That means that the company’s leadership is constantly seeking ways to improve conditions for all of its employees through lobbing efforts, employee surveys, incentive programs, and a policy of promoting internally.

The future looks bright for SREE Hotels, which is on the move again, looking for opportunities not only in Charlotte and the Carolinas, but nationally as well. Ravi concludes, “As we celebrate our 25 years in business, I look forward into the future to see what promises it has to offer and how we can continue our success as a family and a company.”

 

Heather Head is a Charlotte-based freelance writer.
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