Today’s Hotelier speaks candidly with the new AAHOA chairman about the organization, his leadership style and pressing industry issues.
New AAHOA Chairman Bharat (Bruce) Patel has plans to ratchet up the 27-year-old organization’s political clout and business services as well as its vigilance in identifying and targeting legislative, regulatory and spurious lawsuit threats.
As part of the second generation of AAHOA hoteliers, he grew up in the lodging business and has witnessed both his family enterprises grow and the trade group mature. Now he feels it is time to take it to another level by increasing lobbying and more cooperation with like-minded organizations.
Patel, 42, was born in California but moved to the Dallas area when he was four years old after his father bought a motel there and made it profitable using the tried-true business model of a family staff and the motel doubling as family-living quarters.
“All of my young life, up to college, I lived in a small motel with my parents and two siblings,” he said.
He earned his bachelor’s degree in hotel and restaurant management from the University of Houston and later earned his master’s degree in business administration at the University of Texas at Dallas.
But his hands-on education came with running family hotels after graduating from college, “learning everything from housekeeping to maintenance to getting out there and conducting sales calls,” he said.
Meanwhile his father, A.V. Patel, and his uncle, D.V. Patel, had become heavily involved in AAHOA as it was growing in the 1990s. His father was the treasurer in 1999, and Bruce, his siblings and cousins found themselves volunteering for AAHOA events. Bruce was elected a director at large in 2011 and secretary in 2013.
Now he and his brother, Danny, run the Dallas-based Dabu Hotels, which oversees more than a dozen properties spread among five major franchise brands. The family has owned and developed more hotels in the past, mostly in the Texas market, from Dallas to Austin to Houston, but Patel says that they are focusing more on quality than quantity in what he considers uncertain economic times.
Patel agreed to a Q&A with Today’s Hotelier to outline his background, leadership style and vision for the industry. What follows is an edited account of the conversation.
How do you feel AAHOA can best serve this industry and its members?
The biggest way is advocacy. We are today’s voice for hotel owners in the industry and in the political arena. In that regard, AAHOA is part of a coalition-building effort to build the industry by working with other groups, such as the American Hotel and Lodging Association (AH&LA) and state associations like the Texas Hotel and Lodging Association, the Tennessee Hospitality and Tourism Association and other small business groups such as the Job Creators Network.
So while AAHOA will continue to grow our leadership presence in hospitality, we will also be increasing professional development for our members. As AAHOA members grow their portfolio, their need for education grows as well. We will host cutting-edge workshops with industry experts that focus new project development, creation of management companies and access to alternative sources of funding.
What is the biggest challenge facing the industry?
There are several. Legislative and regulatory efforts continue to creep in with potential negative effects for the hotel industry. The recent joint-employer ruling from the National Labor Relations Board (NLRB) is a prime example and could have a devastating impact on all franchised businesses.
Meanwhile, companies like Airbnb are fully engaged in direct competition with hoteliers by facilitating the daily rental of apartment buildings and condos, which have become pseudo hotels. The hotel-like businesses operate without facing the same taxation and regulations. There are also efforts to erase capital-gains deferment tax strategies (1031 “like-kind” exchanges) and the continuing need to educate lawmakers on their economic value for small business. Organized labor is pushing for job-killing extreme wages that hurt employees and employers alike. Simply put, the overall economic condition of our industry is under threat, and we must defend our members.
What’s your biggest initiative as chairman of AAHOA?
This year we are going to be even more aggressive in our approach to political advocacy to deal with legislative issues, and we’re going to raise more Political action committee (PAC) dollars than we have ever previously. Our voice needs to be louder in Washington, D.C., and at state and local government levels.
We’re also going to expand our franchise-relations department to ensure a good two-way relationship with franchisors. We are going to expand our professional development programs in the form of workshops on various business growth topics, such as creating a management company and hotel development. We are working with Smith Travel Research to supply Smith Travel Accommodations Reports (STAR) to members that provide expanded industry metrics by targeting narrower geographical regions. In addition, we plan to grow our Certified Hotel Owner (CHO) program as well as increase the amount of webinars for training.
Moreover, we are going to better brand AAHOA – the new AAHOA magazine is an example of that – along with increasing our presence at lodging industry events and panels. And as mentioned earlier, we are going to expand our coalition building. This month (May 17–18) we are partnering in hosting the largest Legislative Action Summit to date with AH&LA at the Marriott Marquis in Washington, D.C.
Finally, we are going to engage our members like never before. AAHOA already hosts more than 170 events a year including 20 regional conferences across the United States. We expect these numbers to grow.
How concerned are you about the movement toward minimum-wage hikes around the country and how do you think hoteliers should respond to them?
First we need to make sure the extreme-wage initiatives, such as those Seattle and now in California, are not being discriminatory against the hospitality industry. But even more important than the initial minimum wage increases themselves is the issue of the laws building in inflation adjustors that automatically raise the minimum wage annually, which to me is more dangerous than the minimum wage increase itself.
The lawmakers in some cities and states may feel their living standards are higher, and that may be true. That also may be the catalyst for minimum wage increases, but they need to be fair. There is only so much the market will bear. You can increase minimum wage all you want, but if a small business goes out of business because of it, what good is the minimum wage increase? It is also important to remember that a minimum wage of $15 per hour equates to more than $20 per hour in costs to the employer when we consider the additional taxes employers must pay on top of the wage the employee receives.
Ultimately, our goal as an industry and a nation should be less about the minimum wage and more about how we can create opportunity by helping people earn $50,000 or more per year through growing our economy.
What are “drive-by” lawsuits and what is being done in Congress to combat them?
The proposed ADA Education and Reform Act is to stop systematic lawsuit abuse that is piggybacking on the Americans with Disabilities Act, which we follow precisely when developing hotels. We support the Americans with Disabilities Act itself. The issue is unscrupulous attorneys conspiring with serial plaintiffs whose intent is not to increase access and decrease barriers. Their intent is monetary gain by abusing a very good law.
For instance, there have been more than 100 lawsuits dropped by one plaintiff and one attorney on Phoenix area hotels in 45 days or less. As an example, a plaintiff may call a desk clerk at 2 a.m. and ask if the pool lift is operating. It may not be because of the season or time of day. A lawyer then will send a letter citing the alleged denial of access and demand a monetary settlement that is below the cost of defending the lawsuit.
What is being done to make Airbnb play by industry rules?
We are going to take a state-by-state, city-by-city approach because every locality has a unique political atmosphere and they often have different political systems.
What are the dangers of attempts by the NLRB to redefine the traditional franchisor-franchisee relationship?
The NLRB has been trying to change the definition of a joint employer, and that redefining has huge implications (such as making franchises more susceptible to unionization) because it essentially is trying to misinterpret what franchising is in this country and it could really demolish the franchise model. We don’t know how it is going to be interpreted, but I don’t want to be a management company working for the franchisor. This is an example of where franchisors and franchisees are united against a bad policy. Only organized labor wants this and it is bad for everyone.
What is being done to preserve Section 1031 of the Internal Revenue Code?
Our coalition persuaded Congress to preserve sec. 1031 again in 2015. This allows property owners to grow their businesses by reinvesting all capital gains into equal or greater value properties of “like kind.” Now we need to keep educating lawmakers and the executive branch that this tax provision spurs economic growth by creating jobs. For almost 100 years, the program has a track record of actually bringing more money into government coffers over the long term.
What’s the hardest business decision you’ve ever had to make?
You make hard decisions all the time, because you are always playing the timing game in an industry that it is so cyclical by nature. My brother and I have made a lot of decisions not to invest in certain hotel development projects through a more conservative approach.
What is the biggest business challenge in your career?
I would say the biggest challenge was following the September 11 terrorist attacks. They caused the biggest shock to our industry in my lifetime, because it really halted corporate travel, especially in airport markets (such as Dallas-Fort Worth). My wife, Millie, and I, along with our partners, had to make a lot of hard decisions in cutting costs without sacrificing the guest experience to make it through that business cycle.
What do you think is the hotel industry’s greatest challenge currently, and how do you suggest we overcome it?
It is a combination of so many anti-small business regulations that creep into our business. When you put them all together, it becomes more difficult to operate a profitable business. That may to lead to more and more people starting to wonder if this industry is worth the risk. We need to make sure that legislators, Democrat and Republican, understand they have to be pro small business because small business is the engine that drives the economy. A recent statement from a Federal Reserve official showed that a number of countries have surpassed the United States in income mobility for its citizens, sometimes known as the American Dream. Lawmakers have no one to blame except themselves for this problem.
What is our industry’s greatest opportunity as we head into the latter half of 2016?
Unify and speak with one voice because that can effect positive change. From an AAHOA perspective only, we have a great opportunity to increase political reach by increasing the PAC fund this year to help get pro small business folks elected. We hope they can get past the Washington gridlock of partisan politics, at least where small business legislation is concerned. We would like to coalesce and actually start working together. That is the part we are most frustrated about.
How can this generation of hoteliers best serve the industry and AAHOA as an organization?
Membership is the key. If we don’t have member engagement and participation, we are nothing. Contribute to the AAHOA PAC fund, participate in the legislative summit, respond with call-to-action emails to politicians and, most of all, attend regional AAHOA meetings and town halls where members can get the most relevant information.
What leader (inside or outside of hospitality) do you most admire and why?
My father. He really taught my siblings and me how to lead and to be hands-on in our businesses, learning everything from the ground up and to always be a student of the industry and of life in general.
What’s your leadership style?
I set high expectations and try to lead by example. You cannot be so distant from the day-to-day operations that you don’t understand what is going on but, with that said, you have to empower the folks who are in charge of departments to do their jobs. That is how you bring growth. Mastering this balance is a critical element.
There are two quotes that drive me daily and I have on my desk as a reminder: “A genuine leader is not a searcher for consensus but a molder of consensus,” by Martin Luther King Jr., and “It is amazing what you can accomplish if you do not care who gets the credit,” by Harry S. Truman.
How do you identify and develop talent?
It is tough, but you look for people who are thinking above and beyond the norm. You want people to not be satisfied with the status quo. It is not always the folks who speak the loudest. Sometimes it takes time to really identify the people who have real talent. And those folks you will treasure for a very long time.
Tell us about an accomplishment that you consider to be the most significant in your career.
It is not my nature to give self-accolades. I’m proud of the person I am becoming and who I am from a family perspective: a good husband, a good son, a good brother, a good relative and a good friend. I take family very seriously. It is a priority in my life. My father always taught us to understand that this life is not always about the material accomplishments, or even the accolades and titles that people honor you with, but rather your relationships with the world and your individual purpose in it.
Where do you see AAHOA in 10 years?
I see us continuing to be the leading voice for hotel owners. Our footprint will be larger than ever, and our voice in Washington, D.C., will be stronger in 10 years. We will be very proud that we are a major voice in the industry and seen by lawmakers as the go-to folks. If we consider our growth over just the last four years, we recognize that AAHOA is becoming something very special. Since 2012 our total membership has grown by 50 percent and the number of members who have willingly joined us as “lifetime” members has almost tripled. Hotel owners see great value in AAHOA and that will only increase over the next decade. ■