Twenty-five years ago, Angie Patel was working the front desk of a small hotel she and her husband Bob owned in Hannibal, Missouri. It was the middle of the night, and a stranger came looking for a room. The man mentioned how hard it was to find a vacancy in nearby Burlington, Iowa, and it got Angie thinking. A short while later, excited, she woke her husband to tell him about the conversation. Soon after, they sold their Missouri hotel and built a Comfort Inn in Burlington.
Fast-forward to today, and the Patel Family owns what is becoming one of the nation’s fastest-growing hotel portfolios. Their company, Hawkeye Hotels, owns and manages 50 properties in 14 states, and the family has partnerships in 30 other hotels.
It all started in the early 1980s, when Bob and Angie Patel emigrated from Gujarat, India, and saved $20,000 to buy an 18-unit motel in a small Arkansas town. Bob, only 23 at the time, renovated the distressed property himself and worked around the clock to make it profitable again. Angie ran the books and did all the housekeeping, often turning over all 18 rooms alone. “It was a perfect fit for my parents because it didn’t require excellent English skills or a specific developed skill set other than the will to work hard and learn,” says Raj Patel, Hawkeye’s current vice president of development.
The Patel siblings, Raj, Sajni, and Ravi, were all raised in hotels. “I lived in a Comfort Inn for the first 10 years of my life, and we’ve all learned the business the same way our father did: from living and doing it,” Raj says. Although he heads development and manages the family’s construction company, the youngest Patel has no formal training. Instead, his education has come from a lifetime in the hotel industry.
When he was 10, he would race his brother and sister to deliver soap or towels to any hotel guest who called the front desk. When he was 13, he was sitting in on meetings with lawyers and accountants and reading PNL statements. “We all have a sense of passion that you can’t really have if you don’t live and breathe this business,” he says. “Schools might teach you how to build a commercial building, but you don’t learn how to align what you know to build specifically for your own company. Those are the intangibles that you only learn by growing up in the business.”
At first, the Patels grew Hawkeye slowly, but that changed in 2009. Then, the company had about a dozen hotels but maintained a corporate staff of just three. Bob Patel, who had become Marriott’s first minority franchise owner, had just built three Hilton hotels and bought two more before selling them all to an REIT at a premium two years later. Then the recession hit, and while it devastated the industry, Hawkeye found itself in an interesting position. Other companies were struggling, but the Patels had cash on hand and could buy for $0.40 on the dollar or build for $0.60.
“We were well capitalized and had the ability to underwrite on deals very quickly,” Raj says, adding that healthy relationships with lenders helped his company close deals. During the recession, Hawkeye went from 12 to 30 hotels, and from there, the company made another sale that catalyzed a second growth spurt. During that time, it went from employing a few hundred to more than 2,000 associates, and today the Patels are able to buy between 5 and 10 hotels on retained earnings as they build a healthy portfolio of company-managed properties. In the state of Iowa alone, Hawkeye has a multibillion-dollar influence.
Now, Raj is 23, like his dad was when he bought his first hotel, and together they’re tackling an important company project in Iowa known as Hotel Fort Des Moines. The iconic landmark hotel, built in 1919, once hosted 12 presidents and many top celebrities but has deteriorated in recent years and now has an average occupancy in the teens. Raj, who happened along the building while driving, set up a lunch with the previous owner, Jeff Hunter, and later worked out a deal to acquire the property. Hunter, who had owned the hotel for 40 years, was relieved to find a developer interested in restoring Hotel Fort Des Moines to its former glory.
“Most interested parties wanted to convert it into apartments or tear it down, but I have a vision of reclaiming its place in history for the next 100 years to come,” Raj says. Hawkeye is the hotel’s fourth owner since its opening.
Although several other developers walked away—and industry peers told them it couldn’t be done—the Patels remained unfazed and finalized a contract in 2014. “Everyone told us we could never do it on our budget, but every milestone we’ve reached in the company has been because someone told one of us that something couldn’t be done,” Raj says.
This summer, Hawkeye will close the property and perform a full rehab, including updates to all mechanical, electrical, and plumbing elements. When Hawkeye halts the hotel’s operations for the rehab, it will be closed to guests for the first time in its history. Workers will remove and replace all walls from floors 3 to 11 while preserving historical elements such as the lobby and the grand ballroom on the first and second floors, respectively. The original 250,000-square-foot property had 235 rooms, but it will reopen with 260 after its third-floor offices are converted into guest rooms. The property is on target to open in late 2016.