Hospitality Industry

The American Heritage Dictionary defines the word ?hospitality? as a ?cordial and generous reception of or disposition toward guests? and as ?an instance of cordial and generous treatment of guests.? A derivation of Middle English rooted in Anglo-French, ?hospitality? is the natural kin to other quotidian nouns, such as hospital, hospice, hostel, hotel and host. In laymen?s terms, then, hospitality is a service, a need, a solitary act and a personal standard.

In the United States, hospitality is also a multibillion-dollar industry?inclusive of hotels, resorts, restaurants, meeting and conference services, as well as fitness centers?whose rapid growth shows no sign of abating. According to the U.S. Department of Commerce, ?The industry is one of our nation?s largest employers [that] directly supports the jobs of more than 7 million working men and women.? Accommodation alone saw revenues of $130.3 billion in 2002, according to the most current figures available from the U.S. Census Bureau, and reported 1.8 million employees on the payroll. Tourism is another key component of the industry. A September 2004 analysis of the sector by the Commerce Department?s Bureau of Economic Analysis found that by the second quarter of the year, direct tourism sales had increased by 5.6 percent, which translated into $7.4 billion in additional revenue and 7,000 more jobs. It is important to note that while the bureau?s analysis accounts for formally categorized hospitality workers, there are throngs more who work in kitchens, as waitstaff, busboys, drivers and bellhops. Many of these wages are undeclared, and the turnover rate can be staggering, but it is a viable economy supported solely by direct cash transactions.

Undeniably, the hospitality industry is a risky venture, but with the right support from the social and economic community across all levels, the payoffs can be huge. Nevertheless, hospitality is a no-brainer of sorts. Its purpose is to satisfy the most basic human requirements, namely food, shelter and entertainment. As a result, many leading African-American entrepreneurs are starting to take notice and claim a bit of that pie for themselves. The nibbling has been slow going, and in the overall share of the potential bounty in the hospitality industry, minority ownership, especially among African-Americans, is minimal.

Hangover Syndrome

Gerry Fernandez of the National Society of African Americans in Hospitality suggests that this deficit is due, in part, to long-held perceptions about the hospitality industry. Some African-Americans, he says, ?Equate service with servitude, [which] works against the industry.?

In terms of perspective, just a generation ago Blacks in many states were not allowed to use the same water fountains or sit at the same lunch counters, let alone sleep in the same hotels or expect a modicum of the service that was awarded to whites. Fernandez calls this ?a hangover effect,? which does little else than lock Blacks out of the myriad of lucrative opportunities in the industry. He also blames the exodus of successful Black professionals from many of the communities that could benefit from their visibility the most. ?They don?t always see success,? Fernandez says, referring to what could be the next generation of hospitality entrepreneurs, i.e., Black teenagers.

However, Fernandez believes that the biggest obstacle to minority ownership is the industry itself. ?We really need to reach out,? he says. ?We think that?s where the disconnect is.?

That is not to say that many of the nation?s leading franchise brands do not have outreach programs. On the contrary, many do. Hotels especially are beginning to up the ante to encourage Black entrepreneurship. Marriott, Hilton, Choice and Starwood all offer incentives and training programs for African-Americans wanting to join the ranks. It is just a matter of accessing the right information, proponents of these programs say.

Cash Challenge

Access to capital is a real challenge for Black would-be hoteliers. James Guillory, a Dallas tax accountant turned hotel developer, stresses that the proof is in the pudding, and in the world of development, that pudding is cash. In the world of financing, ?[that cash] is ruled by a very small group of large banks.?

For many business owners like Guillory, breaking into the New York market, for example, is nothing short of a pipe dream. Not only is it saturated, it is also expensive at best, ghastly unaffordable at worst. ?Limited access,? he says, is ?no good to me as an African-American business owner.? In terms of localized entrepreneurship in smaller communities, banks further compound the problem by not offering the same services that they normally would offer in upmarket locations. Guillory cited one major U.S. bank, saying that in his community, ?They don?t [grant] local construction loans at local branches.? Moreover, African-Americans tend to have a limited history of borrowing, which begs the question about loan disbursement criteria relied upon by major U.S. banking institutions.

Andy Ingraham, president of the National Association of Black Hotel Owners, Operators and Developers, agrees that in terms of Black entrepreneurship in the hospitality industry, ?the biggest access is access to capital, but that is also the biggest obstacle.? This adds to the sorry statistic that out of 48,000 hotels in this county, fewer than 100 are Black owned and operated. Asian Americans, on the other hand, fare much better, with 18,000 hotels and access to $40 billion in assets.

Information + Capital = Power

Ingraham argues that it is essential for Blacks to jump on the bandwagon of hotel ownership. He is optimistic that the Black presence in the industry will increase. Not only does he champion forward-thinking corporations such as Hilton, but his own organization also works extensively to connect would-be investors with profitable opportunities by ?creating awareness that this is an industry.? The Annual International Multicultural Tourism and Hotel Ownership Summit is one such awareness venture. Additionally, NABHOOD sponsors seminars in 25 states on how to find locations, financing and branding.

In a recent conversation with TNJ, Ingraham cited several success stories, including the story of Kirk Sykes, an entrepreneur who opened the first Black-owned hotel in Boston. At Sykes?s Hampton Inn and Suites, 92 percent of the employees are African-Americans and five out of the seven executives are minorities, a feat Ingraham says is unheard of in Boston. Brothers Mike and Steve Roberts operate a $460 million company, including an unprecedented Mayfair-Wyndam Hotel in St. Louis. Multimillionaire R. Donahue Peebles, too, broke down barriers when he became the first Black to penetrate the overwhelmingly white owned and operated market of South Beach in Miami. His firm, Peebles Atlantic Development Corp., is the developer and owner of the Royal Palm Crowne Plaza Resort.

Guillory, the former accountant, is president of Houston-based Centerpointe Hotels, which owns and operates a 65-room, three-story Hampton Inn. He currently is making plans to work with Marriott International and the Intercontinental Group.

The list is impressive, but the true impact of these successes will be realized when ownership in hospitality becomes part of the general business model for minority entrepreneurs rather than an exceptions to the rule. African-Americans are ?not as strong in hospitality as they should be,? Guillory says. He posits that the solution is threefold. First, it is up to entrepreneurs to increase the comfort and accessibility level to the offerings of the industry. Second, he says, franchisers and entrepreneurs need to ?work together to get more African-Americans in as investors.? And finally, more information needs to be disseminated about ownership opportunities for Blacks.

Information plus capital equal power, he says.