Magazine Online    The Authority On African-American Conventions, Incentives, & Leisure Travel
Issue: December 2009/ January 2010
Black-Owned Hotels a Growing Phenomenon
By: Solomon J. Herbert II

It is nearly 2010 and more and more African-Americans are learning how to put their money to work for them rather than just go through life as consumers. Between investments in stocks, bonds and real estate, Blacks are slowly delving into these arenas in growing numbers. One of the main areas of investment thatAfrican-Americans are starting to recognize the potential for huge profit margins, lies in hotel ownership. In some cases, the very same hotels where African-Americans weren’t even allowed to patronize little more than a generation ago due to restrictive Jim Crow laws of the era.

Although African-Americans are just now in the 21st century starting to own hotels under the umbrella of major brands, small Black-owned motels and boarding houses were available pre segregation due to the fact that we couldn’t stay in the same hotels as White travelers. So, in reality African-Americans did own mom- and pop-style hotels in the days of segregation. In key Black centers of commerce like New York, Los Angeles and San Diego, they also owned several major properties, such as Harlem’s famous Hotel Theresa. These had to exist since there were no other places Black travelers could lodge. 

A couple of the first Black-owned hotels during times of segregation were The Brown Hotel on Miami Beach and The Eureka Hotel in Memphis, Tennessee. The Brown Hotel, built in 1912, was the first Black-owned hotel on Miami Beach. Unfortunately, as integration took effect in the U.S., a lot of these small hotels started going out of business. Quite frankly, the reason for the decline was a positive for African-Americans as a whole. Integration brought in a new era, which allowed Blacks to stay wherever they wanted. And this was great. After all, this freedom is what our forefathers/black heroes fought so diligently to acquire. 

In 1998 individuals started noticing that there were no Black-owned hotels in the United States. This brought a spark of interest in getting investors to purchase hotels. By 2001, The National Association of Black Hotel Owners, Operators & Developers (NABHOOD) was formed. “This organizations purpose was to help African-Americans to get into the hotel purchasing industry,” notes Andy Ingraham, president of NABHOOD. They accomplished this by finding a way to create partnerships and working with various franchise companies. This group of professionals wasted no time bringing this so called fairytale to a reality. In 2001 a Days Inn property, located in Memphis, Tennessee, became one of the first examples of a modern day franchise hotel that was Black owned. Then, in 2002, Don Peebles purchased the Royal Palm Hotel in Miami. NABHOOD was doing its part in influencing African-Americans to invest their money in such a lucrative business. The process, which was just beginning, today has led to many more African-Americans seeing the value of ownership in the lodging industry. 

“There are now 523 hotels owned and operated by African-Americans,” Ingraham says. Former Black Entertainment Television owner Robert Johnson owns 120 properties while Michael and Steve Roberts have 12. Don Barden, former owner of Barden Cablevision in Detroit, owns Fitzgerald Hotels & Casinos and Don Peebles, the first African-American to own a luxury hotel with the Royal Palm, also has a Courtyard in Washington, DC. “Seven years ago, African-Americans weren’t even in the hotel ownership game,” Ingraham says. Today Kirk Sykes, James Guil-lory and Michael Roberts, who owns the Mayfair in St. Louis, are all new hotel owners, and they are contemplating developing hotel empires. 

Hank Thomas, CEO of Victoria Hospitality Properties LLC, began as an investor in a single Marriott branded hotel (Towneplace Suites Hotel, Columbia, S.C.). Opportunity arose four years later to purchase controlling interest in this property along with two others (all Marriott branded limited service hotels). Thomas currently owns four Marriott branded properties (two Fairfield Inn’s and two Towneplace suites in N.C., S.C., and GA). Thomas is currently considering future development but has nothing under contract at the present time. During these financially tough times Thomas notes that two of the four hotels are doing quite well and are not adversely affected by the current economic climate however the other two took a slight hit. Of the two affected one is down 30% in occupancy from last year and the other is at break-even. 

“I believe that the major chains are making creditable efforts to do business with African-American investors. Hotel purchases require a tremendous amount of capital and bank credit. African-Americans do not come to the table as well financed as our White, Asian and Indian counterparts. If one does not have the financial resources the barriers are very high to enter into this business,” Thomas mentions. 
Kenneth H. Fearn is a founder and the managing partner of Integrat-ed Capital LLC. Prior to founding Integrated Capital LLC, Fearn was managing director and chief financial officer of Maritz, Wolff & Co., where he was directly involved in nearly $1.5 billion of hospitality acquisitions. Integrated Capitol as a whole currently owns Marriott Ventura Beach, California, Marriott Overland Park, Kansas, Marriott Ft. Collins, Colorado, Marriott Residence Inn Ft. Collins, Colorado, Marriott Courtyard Ft. Collins, Colorado, Marriott Residence Inn Silver Spring, Maryland, Marriott Residence Inn Columbia, Maryland, Marriott Residence Inn at National Harbor, Maryland and The DoubleTree Hotel Bakersfield, California. 
The current economic environment has been devastating to the hospitality industry,” Fearn reports. “Business travel has been reduced significantly and transient leisure travel has dropped sharply as consumers adjust their spending habits.” This whole ordeal has been further complicated by the administration and Congress. First, the press overreacted to AIG’s lapse in judgment. Then the administration and Congress made corporate business events the “cause celeb” for the moment and targeted any companies holding meetings at resorts. The reaction from the business community was to simply eliminate all such meetings for fear of negative publicity. The reality is the meetings which were cancelled had largely been paid for in advance, which means that companies walked away from significant spent capital and did not get the benefit of the training or sales programs planned, and the hotels sat vacant wondering how they would survive. 
“We need the administration and Congress to focus on stimulative measures to get the economy moving more quickly so that both business travel and transient leisure travel return,” notes Fearn. “In the meantime, we have focused on completing renovations to our assets while occupancies are down, we have focused on controlling expenses as tightly as possible and we have made every effort to make sure our guests know that we appreciate their patronage.” 
The hotel chains that Integrated Capitol does business with have committed resources to educate minorities and women on the industry. The workshops held by major chains provide valuable insight on the development process and operations, and provide ongoing resources. 
Donahue Peebles is a real estate entrepreneur and top selling author who currently is chairman and CEO of The Peebles Corporation. Considered to be the country’s largest African-American real estate firm, boasting a $4 billion development portfolio, The Peebles Corp  owns a slew of luxury hotels, high-rise residential and Class A commercial properties in Washington D.C., San Francisco, Las Vegas and Miami Beach. 
In 1990 Peebles founded RDP Assessment and Appeals Services, a Washington D.C.  based commercial tax assessment appeals firm, which within two years became one of the largest and most successful in the city. “Through my experience in assessment and appeals, I gained a firm command and understanding of how to create, define, predict and estimate commercial values,” states Peebles.  During the early to mid ‘90s Peebles capitalized on the nationwide economic downturn and acquired approximately one million sq. ft. of commercial buildings as well as development sites which would accommodate several million more sq. ft. of development. All of his properties were in Washington D.C.  
Over the course of the last few years, as the economic downturn loomed, Peebles’ focus has been to acquire and assemble parcels in urban areas with the greatest amount of potential such as Las Vegas, New York, California and South Florida. As many experts urge caution and discourage commercial investments Donahue is actively seeking real estate opportunities as he personally profited from the downturn in the early 1990s. 
As a hotel owner the changes Peebles has made have been hotel specific. For instance, the Marriott Courtyard in Washington D.C. is doing extremely well. At the Royal Palm in South Beach the focus has been driven by ways to keep occupancy high, especially during the week. “About 60 days out we advertise a favorable daily rate. Not only does this help us with forecasting revenue, it provides our repeat and core customers with a well-deserved advantage for booking early,” Peebles mentions “About 30 days out we begin increasing the rate with the rate reaching a maximum about 24 hours before check-in to capture the walk-in guests and any last minute travelers. This has been incredibly effective and our occupancy rate is one of the highest in South Beach.” 
Peebles notes that many of the major hotel chains have realized the strong potential of the African-American market and have established programs that provide incentives for minority involvement in the hospitality industry. Marriott, Hilton and Starwood for example all do annual workshops, which focus primarily on three major areas; education, technical assistance and minority investment. Peebles says, “While I think most of the major players are following the overarching trend of offering minority-focused training, Marriott seems to be at the head of the pack. Each quarter they host a two-day conference at their corporate headquarters focusing on “The Deal” and what specifically is needed to actually close one. 
In spite of how gloomy the economy is at the moment, many African-Americans have an opportunity to create real wealth. This actually is the best time for individuals to come together and buy up hotels. In this industry it’s all about timing and while property is cheaper than usual due to a slow economy it would be wise to capitalize on this downturn as Peebles did during the ‘90s. Aside from the fact that property is cheaper, as a hotel owner you now have the opportunity to create jobs. By so doing, African-Americans can grab their “piece of the pie” as well as give back by providing work for other people, including people of color. It’s a win-win situation. This would show a sign of progress in the fight to open the eyes of many able individuals who can play a role in establishing this real wealth of which Ingraham speaks.