NABHOOD: What the franchise model can do for diversity

MIAMI—Hospitality executives at NABHOOD’s 22nd Annual International African American Hotel Ownership & Investment Summit & Trade Show discussed why the hospitality industry should do more to diversify itself, and how, in some instances, with the right initiatives in place, franchise models can provide the right opportunities to do so.

In a general session panel titled “Diversity in the Lodging Industry—Why is it so Critical to the Growth of theBrand and What is the Value?”  SolomonHerbert, publisher and editor-in-chief of Black Meetings & Tourism magazine, questioned panelists on the challenges and opportunities forAfrican Americans and other minorities interested in hotel ownership.  Out of the gate, the moderator challenged the executives on the panel to answer the following question: “From a purely business perspective, do you think diversity is critical to the growth of your brand, and if so, why?” While the responses from panelist to panelist varied, the overarching theme remained the same: Yes, in order to effectively grow a brand, diversity is essential—and that’s not a debatable issue.

“I think it really starts with education,”said David Wilner, SVP of franchise development at Wyndham Hotels& Resorts. “Why do you want to get in the business? Is this the right business for you? There are a lot of different ways to get in the business… I think one thing that is true in this industry, whoever gets a piece of it, loves it—especially if you’re a people person—and once you get a taste of the hospitality industry—hospitality being the keyword there—it becomes addictive.

”Following up on Wilner’s comments on continued education being a necessity, John Koshivos, VP and managing director of development of SE region a Hilton, recognizing a room filled with hospitality students, pointed out how many of the top hospitality companies don’t actually own the properties within their ever-growing property portfolios. This fact presents on going opportunities for African Americans and other minorities with aspirations of owning properties, especially under one of Hilton’s brands.

“If you look at Hilton, with 14 brands,75% of all of our new development projects are done by existing owners, so 25% are done by ‘newbies’ coming into the business or expanding from other avenues of business that they were in,”he said. “Our goal is to continue to expand that 25%, get it up to 30% or35%. What does that do for you? It’s a value creation mechanism for my company, but it’s also a value mechanism for those that are building these hotels.”

By welcoming in more new owners, Hilton is attempting to further diversify its ownership base. “As you bring more people into the franchise community of what we do—whether we manage it for you or not—the ability to expand the portfolio and expand the diversity within that portfolio allows you to make strides in communities in other countries where you might not have been able to go before,” Koshivos said.

Bringing on board new owners gives hospitality companies the opportunity to enhance, drive and change brand directions. “This is something that we focus a lot of attention on, but the key thing is to make sure that you’re doing it the right way and get more people into the system that allows them to expand, [and] create the wealth generation and the opportunities provided through this industry,” he said.

For Brian Parker, VP of emerging markets and new business development at Choice Hotels, “diversity is about growth.” He redirected the conversation back to Wilner’s point on the importance of educating minorities about the inner workings of the hospitality industry and used Koshivos’ comments on franchising as an example of how education efforts over the years have helped many minority communities move forward.

Misperceptions about hotel ownership were prevalent in minority communities, especially within the African-American community, according to Parker. “It’s gotten better,” he said.“The education, the awareness, has gotten better.” Owning a Dunkin’ Donuts, McDonald’s or Subway seemed more achievable than a hotel at the time, but these misperceptions are being weeded out of these communities; however,There’s still more work to be done, especially when the numbers between minority groups are compared.

“The Asian-Indian community is less than 1% of the population in the UnitedStates, but own more than 50% of all the hotels in the country,” Parker said.“So we look at that and say, well, theAfrican-American community is 14%,[the] Latino community is probably16%, 17%—I may be off a couple of percentage points—but they own less than1% of all the hotels in the country.”The franchise model can also present challenges to diversity if core values and beliefs aren’t followed, pointed out Marriott’s Apoorva Gandhi, VP of multicultural affairs. A hospitality company’s culture needs to play a role in ensuring all of its properties are operating in a way that puts people first, he explained. It’s “absolutely crucial ”the industry operates in a way that shows an understanding of how to be“diversity competent” in various ways, especially when it comes to treating guests and associates, Gandhi said.

“From a business perspective, theLGBT population represents 17 million people—that’s $63 billion in domestic travel spend, according to the American Hotel & Lodging Association,” he said.“African Americans represent about$50 billion, Latinos around $70 billion, so there’s a clear business opportunity here: If you welcome all, which we all do, and treat everyone like they want to be treated with dignity and respect, people will come back.” HB