Bloomberg Businessweek - USA (2020-05-18)

◼ ECONOMICS Bloomberg Businessweek May 18, 2020

28

● Indian American motel owners wonder whether an industry

that was a ticket into the middle class is now a dead end

Too Much R o o m

At the Inn

Davin Patel’s parents ran a 20-room Holiday

Motel in rural Georgia when he was growing up.

The years he spent shadowing them as they went

about their daily business, from checking in guests

to tidying rooms, became the foundation for his

own career as a motel manager. But none of this

on-the-job training, nor any of his college classes,

prepared Patel for a pandemic.

The phone at his Country Inn & Suites in

Fairburn, Ga., began ringing almost nonstop in

mid-March as guests rushed to cancel reservations.

When nightly occupancy dipped to 40%, he shut

down the top floor of the 74-room property and

reduced staffing, while he and his wife, Nidhi, took

turns doing laundry and manning the front desk

behind a newly installed sneeze guard. “I can’t sit

here and panic,” says Patel, 36, who’s also a part-

ner in two properties in Alabama: a Red Roof Inn in

Birmingham and a new Best Western in Brewton.

“If the time was to panic, it was a month ago. Now

we have to find a solution.”

The hospitality industry has become collateral

damage in the war on the coronavirus. In the U.S.,

eight of 10 rooms sit empty and almost 4 million

employees have lost their jobs, says the American

Hotel and Lodging Association. Cecil Stanton,

presidentandchiefexecutiveofficeroftheAsian

AmericanHotelOwnersAssociation(AAHOA),says

manyofhis20,000membersarestruggling:“Some

haveclosedtemporarily.Othersremainopenbut

haveclosedoffa certainnumberofroomsorfloors.”

A lotofthepainisfallingontheshouldersof

peoplelikePatel.AlthoughAsianAmericansmake

upalmost7%ofthepopulation,theyownabout

halfofthecountry’s54,000motelandhotelprop-

erties,accordingtotheAAHOA.

Fordecades,ownershipofmotelsandbudget

hotelswasa reliablespringboardforIndianimmi-

grantslookingtopropelthemselvesintoAmerica’s

middleclass.Buta prolongedshutdownintravel

couldcap,andevenreverse,decadesofsocioeco-

nomicgains.“Weshouldbeworriedforourlocal

motelowner,”saysAmherstUniversitysociologist

lost restaurant jobs in March. The Meyers agreed

to drop the rent by $400, hoping they can keep up.

“I don’t want to imply that if our tenant doesn’t pay

rent, we’re going to miss a meal,” she says. “There’s a

very challenging balance around what is our respon-

sibility in the unjust class system we’re in.”

The pandemic has magnified the inequality of

the housing market, which is sparking a new era

of tenant activism. In cities where rents have been

rising year after year, such as Los Angeles and New

York, activists are organizing rent strikes.

Shane Riggins, 31, joined the Philadelphia

movement after losing his temp job at a law firm in

March. Enhanced unemployment benefits kicked

in, and he was able to pay rent in April and May.

But now he’s talking to the other tenants about

what to do next. “It’s not like we want to stick it

to this landlord, who is only trying to make ends

meet and pay bills, but we all lost our jobs,” Riggins

says. “Every time I pay rent, it’s taken immediately

and given to a bank. Is that really, in this crisis, the

best use of money?”

Renters were cash-strapped before Covid-19. It

won’t take much to push many of them over the

edge, says Barry Zigas, senior fellow at the Consumer

Federation of America. Tenants who pay what they

can are indirectly helping themselves: They’ll help

keep their homes out of foreclosure and give the

landlord money to keep up with repairs, he says.

Small investors own much of the naturally

occurring affordable housing in the U.S. If they’re

forced to sell or abandon properties, more of the

market might wind up in the hands of Wall Street

firms, some of which have built up large portfo-

lios of rental properties over the last decade or

so. New owners with deeper pockets might opt

to reposition low-income units to target wealthier

occupants. “Landlords are not a popular class of

businesspeople,forvalidreasonsandnot,”Zigas

says.“Butthatobscureswhat’snowtheverysym-

bioticrelationshipofrentersandowners.”

Shields’smortgagelendershaveallowedher

topostponepayments,whichshefearsmayonly

delaytheinevitableforeclosureonherloans.For

her—orherlenders—itmayalsomeanevictingten-

antswhodidn’tpayassoonasthemoratoriumis

lifted.Rentersarelesslikelytohaveenoughsav-

ingstomakeupformonthsoflostincome,and

theyalsolacktheincentiveofhomeownerstotryto

keepup.“Theywon’tcatchup,”Shieldssaysofher

tenants.“We’renevergoingtorecoverfromthis.”

�PrashantGopalandOshratCarmiel

THE BOTTOM LINE About half of the 43 million rental units in the

country are owned by small investors who have nowhere to turn if

tenants stop paying.

▼ People of Indian

ancestry’sshare of U.S.

workforce

Overall

Lodging managers

2003 2018

8%

4

0

“We should

be worried

for our local

motel owner”