Lumberjack, tailor, counselor, host: A hotel owner does it all during the pandemic
By Emily Flitter
Since the pandemic began, Montu Patel has learned how to sew masks and fight with Wall Street lenders. He has helped draft pleas for relief to state and local officials on behalf of small business owners. He knows how to fashion plastic dividers.
As the head of a small business, Patel, whose family owns eight budget hotel franchises, was used to wearing multiple hats. But since March, when the long-haul drivers, families on road trips and business travelers who made up most of his clientele stopped checking in, forcing him to lay off workers and hunt for cash, Patel has become a one-man army battling for the survival of his business. Its death would be no less than the extinguishing of an American dream.
One August morning, before meeting with a loan officer whom he had to convince that the hotel industry had a rosy future, Patel had to hack down a tree that had fallen across the parking lot of one of his properties.
The hotels are Patel’s whole life. The son of Indian immigrants, he grew up in and around an Econolodge hotel that his family owned and operated in Bordentown, New Jersey. He studied real estate in graduate school, knowing he would eventually take over the business from his father.
“My parents came to this country with nothing in their pockets,” Patel, 43, said. “Everything that we’ve accumulated since then has been gravy.”
Patel has managed his hotels through tragedy and growth. Two years ago, his sister, who was the business’ finance chief, died of a brain tumor. Last year, Patel bought four new properties, and now the family runs three Hampton Inns, two Comfort Inns, two Holiday Inn Expresses and one Days Inn, licensing the popular names from big hotel companies.
The pandemic has forced thousands of small businesses to close permanently. Those that have survived, like Patel’s, have had to recalibrate constantly, as their owners cling to the hope that things will improve. But a widely available vaccine is at least a year away, there is little chance of new federal aid weeks before the presidential election and the virus is still spreading.
“As long as the pandemic subsides next year, we will be in good shape to start replenishing our savings, digging ourselves out of the hole we’re in,” Patel said.
Operating the hotels required adjustments. Elevator buttons had to be cleaned hourly, and electronic key cards had to be sanitized each time they were returned. Front desks required Plexiglas screens. Trays and equipment for meals served buffet-style — a common feature of budget hotels — were removed. Gyms were shut; pools were closed.
Patel shored up his hotels’ finances. Between April and August, he drew roughly $500,000 from a pool of cash contributions made by friends and family. He secured forgivable loans of about $150,000 per hotel through the federal government’s $650 billion Paycheck Protection Program for small businesses, which he used to pay employees through the early stretch of the lockdowns.
With few guests, Patel assigned some of his staff to deep-cleaning jobs. Still, he furloughed around 225 people, or about 75% of his workforce. (He has now asked almost everyone to come back, but some have chosen not to, he said.) He tried to upgrade the properties, but it became harder to do as supply chains faltered. LED vanity mirrors and faucets were back-ordered.
He also struggled in the spring to find a reliable supply of masks and hand sanitizer, which the hotel chains overseeing his properties required him to provide free to every guest. Supplies were easier to get as the summer progressed, but it was still hard to pay for them.
“When you’re renting rooms at a steeply discounted rate and still trying to offer all of these additional things, it’s either a very thin profit or not profitable at all,” Patel said. He added that some of the hotel companies’ requirements had started to seem unreasonable. “They can come up with any rules for the franchisee that they want, and they don’t have to worry about fulfilling them,” he said. “They’re not part of our hardship at all.”
Patel has pleaded with government officials for help, especially for his property in Hershey, a town once popular with tourists. In late August, he attended a county commissioners’ meeting in Harrisburg, Pennsylvania, seeking relief for himself and other local businesses on property taxes. The commissioners said there was nothing they could do.
Over time, having fewer guests created fresh peril with lenders. Rather than take out a traditional bank loan for his Hershey property, Patel had borrowed from Wall Street, attracted by terms that did not allow for the seizure of his personal assets in case of a default. It turned into a nightmare. The commercial mortgage-backed securities loan was controlled by a contract with onerous terms that were almost impossible to change.
Patel worries that he may lose the Hershey property. He has set aside $200,000, taken from his company’s other holdings, to pay the $60,000 monthly shortfall he expects to face starting in November, for four months. After that, only another round of aid from the government could keep the property afloat. He is also finding it harder to deal with traditional banks, which typically had more straightforward loan terms but became stricter during the pandemic about negotiating changes to existing loans and even with disbursing what they have already agreed to lend.
In early August, Patel’s biggest lender asked him for a 12-month “pro forma,” a detailed estimate for how his business would perform over the next year, a monumental request considering how uncertain the future remains. On the morning he had to make a bullish case to the loan officer about the hotel business, the dissipating winds of hurricane Isaias had knocked down the tree in his Hampton Inn parking lot in New Jersey, forcing him to grab a chain saw.
His daily routine has changed, too. He used to reach for his phone while still in bed each morning and scroll through spreadsheets that showed the daily activity at each hotel. But there was little point in doing so after the lockdowns slashed occupancy.
“If I were to calculate all the money that we’re losing, I think I would become unable to just do and see the strategy ahead,” he said.
These days, he often spends hours every day on the phone talking to employees who can’t make it back to work because of child care conflicts or transportation problems. He strategizes about how to help them pay for transportation and their families’ care. He has also found more time to spend with his wife and three children, his parents and members of his extended family who help run the business.
When a vice president in the company started sewing masks in April, Patel, his wife and his parents joined her in the effort. They kept some of the masks they made for personal use and donated the rest to a hospital. And Patel picked up a new skill: “I learned how to sew.”