Indian hotel owners accuse companies behind convenience, Holiday Inns of discrimination
Indian hotel owners have filed lawsuits in federal court against two of the world’s largest hotel chains, accusing companies of discriminating against American Indians in the hotel industry through predatory pricing and additional charges.
Choice Hotels International and Intercontinental Hotels Group, the companies behind Comfort Inn and Holiday Inn respectively, were accused of charging American Indian franchisees additional fees during the coronavirus pandemic, when the hospitality industry saw a sharp decline activity.
Hotel owner Vimal Patel is spearheading the legal fight against businesses, reflecting the growing confidence of American Indians working in the hospitality industry.
âIndians always have that mentality. We’re always afraid to stand up no matter how powerful you are, how comfortable you are,â Patel said. âWhy should we be afraid of these big companies? “
For more Associated Press reporting, see below.
Patel is part of the Indian diaspora, which owns a significant portion of the country’s hotels and motels. Like others in the community, his beginnings in the business were humble. He worked in the reception of a hotel owned by relatives, developing his knowledge before investing with them in several franchises.
The allegations echo those made by franchisees in other industries. But the lawsuits against IHG and Choice also claim that companies discriminate against American Indian owners, and Indian hoteliers have portrayed it as a race struggle. Some, without irony, have compared the fight against UK-based IHG to India’s campaign against British rule.
Patel’s lawsuit filed in May in the U.S. District Court in New Orleans was the first of at least five lawsuits against IHG that are coordinated by two law firms and seek to represent a larger group of franchisees in the part of a class action.
IHG spokesman Jacob Hawkins said in a statement that the company is committed to treating its hotel owners fairly and does not believe the allegations are substantiated.
Choice “has always had a strong commitment to the success of its franchisees,” the company said in a statement.
Entrepreneurs in the West Indian state of Gujarat, especially those with the last name Patel, found their way into the motel business in the 1960s and 1970s. They bought motels in remote locations and often lived on square. Some went on to set up management companies with stakes in multiple properties, including hotels in major cities. The 20,000 members of the Asian American Hotel Owners Association – almost all of whom are of Indian descent – own more than half of the hotels in the country, according to the AAHOA.
“If there weren’t for Patel coming into the industry, taking the risk of improving it and expanding it, then you wouldn’t have an industry as prolific as the one we have today,” said Pawan Dhingra, author of “Life Behind the Lobby: Native American Motel Owners and the American Dream.”
Patel’s introduction to the hospitality industry began immediately after arriving in the United States in 1991. His cousin owned a motel outside of New Orleans and he lived there with him while working in a business. donut shop and McDonald’s. Today, he and two of his relatives have their own business, QHotels Management, which owns nine hotels in Louisiana – including four IHG properties – and manages two other properties in Texas.
âIf we don’t get up, what are we teaching our next generation? He asked in a recent telephone interview.
His lawsuit and the lawsuit against Choice, which was filed by more than 90 franchisees last year, accused companies of receiving bribes from required suppliers who charged franchisees higher prices for linens, utensils and other products.
This claim violates a “cardinal rule” of franchising, said Joel Libava, a franchise consultant who blogs about the industry at thefranchiseking.com. In return for paying royalties and fees for the brand name, franchise owners should expect the franchise company to use its purchasing power to earn them discounts on products and services.
“If that’s not true and you pay about what the freelancer pays, then why are you in a franchise?” Libava asked.
During the pandemic, Rich Gandhi said Choice made him buy his branded hand sanitizer after he had already secured a cheaper supply for his Quality Inn in Middletown, New Jersey. The company penalized him for using another ISP and piled up fees for services like credit card processing and cybersecurity that were not in its original deal, he said. – all after his family spent $ 3.5 million to buy and renovate the property.
“This is extortion, blackmail,” said Gandhi, 39, one of the plaintiffs in the Choice lawsuit. “They basically slice up the hen that lays the golden egg for short-term gain.”
Hawkins said IHG has helped franchisees weather the pandemic by relaxing standards, lowering fees and improving conditions with suppliers. Choice has suspended some fees and allowed owners to defer others, according to an April 2020 press release.
The lawsuits also accuse the executives of Choice and IHG of routinely making disparaging racist comments about American Indian franchisees, although they do not provide examples of the remarks.
The two companies enforce their standards more strictly against American Indians, according to the lawsuits. Choice is providing more funding to white homeowners and has largely spared them from a rule that prohibits two-story properties from wearing the Comfort Inn brand, according to Suit Choice.
Choice said in its statement that it does not tolerate any form of discrimination and that it is “regularly recognized for its long-standing and deep commitment to diversity, equity and inclusion.” Hawkins said IHG values ââthe diversity of its franchisees and does not make decisions based on their ethnic or national origin.
In a victory for Choice, a Pennsylvania judge in March ordered the franchise owners in the case to arbitrate their claims individually with the company.
Gandhi said he would continue to fight.
“There is nothing more to lose now,” he said. âWith COVID, we were in such a bad state, it made us even more emboldened to sue these guys because you’re like, ‘We’ve seen the worst. “”