Room at the inn for diverse owners

Hotels: Silver Spring-based Choice Hotels joins chains that offer incentives to attract minority operators.

July 25, 2002|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Choice Hotels International, the parent company of Comfort Inn and Econo Lodge, has joined a string of hospitality companies that are trying to woo black, Hispanic and Native American franchise owners with financial perks or aggressive marketing.

The Silver Spring-based company has begun a program offering up to $200,0000 to minority individuals or companies with at least a 51 percent minority ownership that want to open hotels.

Prompted by criticism from civil rights and business groups, more hotel companies are hiring diversity managers or creating incentive programs to attract minority owners.

FOR THE RECORD - An article in the July 25 Business section incorrectly reported the headquarters location of the hotel group of Cendant Corp. It is Parsippany, N.J. The Sun regrets the error.

Six Continent Hotels, the owners of Holiday Inn, created a vice president of diversity position last year. Atlanta-based Cendant Corp., parent company of Howard Johnson, Days Inn and Travelodge, created an incentive program four years ago. Bethesda-based Marriott International Inc., which operates luxury hotels under the Marriott and Ritz-Carlton flags, also has a diversity initiative.

The National Association for the Advancement of Colored People put pressure on the industry in the late 1990s by issuing report cards that evaluated how hotels treated minorities.

Though the hotel executives said they've heard the message and made improvements, critics question whether they're doing enough.

The Choice program provides financial incentives of $1,500 a room for mid-scale hotels and $750 a room for economy hotels. The company, which has more than 5,000 properties in 46 countries, wants to use the program as an expansion tool.

"We see an opportunity to grow," said Choice spokeswoman Anne Papa Curtis. "We're always looking for new ways to do that, and we see a market that is relatively untapped."

While Asian-Americans have been successful at hotel ownership, other minorities have lagged far behind. The Asian American Hotel Owners Association in Atlanta represents 6,000 members who own more than 17,000 hotels with 1 million rooms.

The organization says it represents 50 percent of the country's economy lodging properties and 35 percent of the hotels in the United States. Choice officials said 42 percent of their hotels are minority-owned, mostly by Asian Indians.

In comparison, African-Americans own 57 of the nation's estimated 80,000 full-service and limited-service hotels, and fewer than 100 work as hotel executives, according to the National Association of Black Hotel Owners, Operators and Developers Inc., started last year.

Nobody tracks the number of minority-owned hotels in Maryland, but industry experts said it's low.

Baltimore has at least one. The Courtyard by Marriott-Inner Harbor is owned by RLJ Development LLC, the Bethesda-based company led by Robert L. Johnson, founder and chief executive of Black Entertainment Television.

Financing difficulties are among a range of reasons industry experts blame for low minority ownership. They say limited knowledge of how to get into the hotel business also can pose a problem.

"I don't think in many instances people understand the opportunities that are available in the lodging industry as owners," said Solomon Herbert, publisher of Black Meetings & Tourism magazine.

Others said minorities might not have the experience needed to open a hotel.

"There aren't a lot of minorities in management in the industry, which can be a steppingstone to ownership," said Tia Gordon, a spokeswoman for the American Hotel & Lodging Association.

Ernest Murphy knows firsthand how difficult it is to open a hotel. The former international business consultant decided to go into the lodging business when he thought his company might lose contracting business with the federal government because of cutbacks.

He had hefty savings, but not nearly enough to build a hotel. Through a friend, he was introduced to the franchise program at Marriott International. Marriott guaranteed a large portion of Murphy's loan, so he and three partners had to put up only 20 percent equity. Marriott also gave Murphy a short-term loan.

Today, Murphy is the majority owner of a TownePlace Suites by Marriott in Annapolis Junction and has plans to open a second hotel, in Bowie, next year.

"Financing is very difficult," Murphy said of his experience. "It's a large loan and just meeting the due diligence is hard. We're talking about multimillion-dollar hotels. I don't think we could have gotten the financing if Marriott hadn't made the arrangements beforehand."

Some industry experts said success stories are too few. Andy Ingraham, president of the National Association of Black Hotel Owners and Developers, said the low number shows the hotel industry's efforts haven't worked.

"They're paying a lot of lip service and not actually doing anything," Ingraham said. "One of the things that we're looking for is for hotels to do some real deals."

Herbert also said more needs to be done.

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