The $250 Billion Hotel Industry and How It Works

physical offices in over forty states throughout the country. And we're thirty years deep, and we're best in class and what we do, and we help to create financial literacy policy for the US federal government, where I've served as an advisor for three US presidents from both parties. And I'm also an entrepreneur and a businessman, having created over forty entities, including the largest platform for faundly residential rental real estate for a person of color in the country,

that was the Promise Homes Company. And then there are other ventures that I have involved myself in and I'm involved in which gives me the credibility to talk to you here. But as I want to be at everybody's kitchen table, I want to empower all of you. I can't get to everybody, and maybe everybody has not yet

yet accessed the power of operation hope. I don't know you should because through the fundraising I do, and we do your scholarship in But in case you have not done that, I wanted to give you a teaser version.

I wanted to be able to unpack capitalism and free enterprise, economics, ownership, opportunity, financial literacy and repack it with you in mind to get you from the streets to the c suites where executives make critical business decisions and you can decide whether you want to be one of them or maybe you don't want to cash a check meaning to be an employee, maybe you want to write one. Maybe you're a business owner. So I want to give you a platform for that too.

So I'm giving you a whole year of episodes that will allow you to have a portfolio, a library of learnings that can transform your life and give you optionality you have before, and you can pass it on to somebody going to college or starting their life or getting married. Say look, just read this book Financial Literacy for All, which is the book I wrote number one book on business finance in the country for the last four months. By the way, if you don't have it, get it.

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in business finance. You've got Operation Hope number one in the country of financial literacy coaching, counseling, financial literacy education, certainly in underserved neighborhoods. You have my personal experience as an entrepreneur with a lived experience. I'm not telling you what I don't know. And now you've got the actual toolbox, which is this podcast Weekly Ministry of Finance I have. And today we're going to dive into and unpack the

hotel industry. Now, it's a pretty provocative statement I've made, is a two hundred and fifty billion dollar plus industry in America. Two hundred and fifty billion dollar plus. The hotel industry does not include the Airbnbs and others. This is just hotels, right, two hundred and fifty billion dollars, and I made the provocative statement that half of that is controlled by minorities. What the heck? Yes, I want you to be inspired. Before I break down the hotel

industry and tell you how it works. I want to tell you who's doing it and who and how minority group controls half of this entire sector of hotels. So let's get into it. Indian Americans own a significant portion of hotels in the United States, inspiring particularly those well I'm talking about Indian As from India, so you know native American Indians unfortunately, right, these are Indians from their native country of India, who own fifty percent share in

all hotels in this country. The phenomenon is largely associated with immigrants from the state of Gujarat in India, especially from the Patel community. All Right, so the Gujarat region. A substantial number of Indian American hotel owners are from this region, a state in western India. I've visited India, the Triangle they call it, which is Delhi and Roger starred and Jaipor. I mean, India's amazing wonderful place. Really

a country. You've got fifty countries within the country really when you think about it, with all of the dialects and cultures there. And again my experience mostly was in Delhi and around that area, but you have other areas like this area Agujarat, that's in western India where the Patel community also known as Patidar in particular, originate. Their surname becomes synonymous with the hotel industry in the United

States in the mid twentieth century. The initial wave of immigrants arrived in the US, you know, in the mid nineteen hundreds, investing in small motels as a way to achieve economic stability and upward mobility. Up from Nothing. That was my last book, by the way, Up from Nothing. The surname has become synonymous with this sector, and for good reason. They actually are extraordinarily good at this and

they have vertically integrated their space. Their habit has to been to create just really great structures for business and no surprise, hire those they know and really they're family members. There was an immigration act, the Nationality Act of nineteen sixty five, which allow for greater numbers of skilled workers and their families to enter the US and this was a sort of a triggering opportunity for those who want to come here and to build entrepreneurial activity and businesses

and to gain asset ownership. The Patel community and other Gujerati immigrants brought with them a strong entrepreneurial spirit. They often pulled resources within their extended families to purchase and manage hotels motels. Mostly, this practice of communal financing and support helped them to gradually expand their holdings. Not you know, this was not some organized situation of group think where you have one corporate entity that owns these hotels. These

are a group of entrepreneurs and business owners. And yes, entrepreneurship and business ownership are different. Maybe I'll do that as a separate podcast. But as a group or as a community, they own once again fifty percent market share

in this area. They collaborate, cooperate together and quickly in the area of pooling their finances, I've already mentioned many Indian American hotel owners started with budget hotels and they gradually expanded their business through hard work, being very frugal and reinvesting their profits. They didn't floss, uh, they just wanted to be the boss. They often lived on site,

meaning they lived in the hotels and motels. They managed operations themselves and kept low costs or kept their costs low to maximize their profitability by again you know, hiring their family members and you know living. They didn't have any living expenses because they were staying on property, which means they didn't have to cut a check to themselves, which would have taken profitability out of the business enterprise. UH,

Indian American hotel owners. When I say hotel, I mean motel and the entire I'm gonna get into the categories of what makes up the hotel industry in a minute, but I'm saying in general, in general terms hotels at the moment, which includes moteils, et cetera. They've established a strong network and associations such as this is the Indian Americans, such as the Asian American Hotel Owners' Association, which provides support, advocacy,

and resources for their members. They're one of the largest such organizations in the US and is played a crucial role in the success of Indian American hotel owners. Now, what poor group has a lobbyist in Washington, what struggling group like this is one of the problems. If you're not at the table, you tend to be on the menu. And these folks made sure that they realize that legislation was going to be created in Washington, whether they liked

it or not. And when you're being run out of town, get in front of the crowd and make like a parade. So these folks decided to get in the game and not complain about it to masterate. That's so what I talk about about financial literacy, as I say all the time, because the Freedmans Bank eighteen sixty five, when a bank charted to teach free slaves about money, Lincoln was killed and the bank was lost, even though Frederick Douglass of

Great Black Entrepreneur tried to save it. That as a result of that, it does not get the memo for one hundred and fifty years. We're not dumb and we're not stupid. It's what we don't know that we don't know. This killing is what we think we know because no one ever taught us what I'm telling you now, which is how capitalism and free enterprise works. And so in many ways we've been afraid of money. We think we thought that money was evil, and money's not evil. The

love of money is evil. And here is the exact opposite of that example. They understood that this group understood of Indian Americans and from India that they had no political power. They had no they weren't part of the

class structure. Here all that stuff the power structure. So they had to create their own influence and power through ownership, through making a profit and reinvesting it back in their own communities, and through having a trade association of their own that was focused on, you know, managing legislative process in Washington, d c. And elsewhere. The second generation involvement often you hear with wealthy families the first generation, first

generation makes it, second generation spins it, third generation loses it. Hello, That is very true. I repeat again, first generation makes it, second generation spins it, third generation loses it. So the first generation feels sorry that they they did words hanging out with their children, giving them time whatever. The don't want their children to struggle. I think struggle has a purpose to it. You cannot grow without legitimate suffering. So it says the Bible, we can have a rainbow without

a storm. First, so we rob our kids in the second generation, oftentimes of the ability to understand what it took in the first generation to make it in the first place, which means the third generation ends up losing everything and good intentions are not enough. So the second generation of Indian Americans have been involved with the hotel industry. The success of the first generation immigrants paved the way for their children to continue in the business, often expanding

into more upscale properties and diversified business ventures. Many second generation Indian Americans have pursued higher education in business and hospitality management to further professionalize and grow their family businesses. Software upgrades as you go. You've heard me talk about that a lot. You always want to be better. God gave you two ears in one mouth, so you listen twice as much as you talk. I'm just nos ask Quincy Jones. How'd you get so smart? He said, I'm

just nosy as hell. I want to know everything about everything. Well, I'm nosy too. That's why my study here where I record is filled with books, and my iPad is filled with books when I'm traveling. That's why I write books and I read books because I'm nosy and knowledge and education is something that no one can take from you. The Indian American community, again different from the Native American Indian community. I'll do a separate podcast on the Native

Americans as part of the series. But the Indian American community from India recognized what it took to create power you didn't have any, and they've done a really good job of it, and they've been very focused, keeping their head down and building. This combination of cultural background, community support, and entrepreneurial mindset and strategic use of resources has enabled Indian Americans, particularly those from the Patel community, to dominate

a significant segment of the US hotel industry. Isn't that cool? I mean, I just love that now there are not just the Indian Americans who've done well in the hotel sector. And let me also say that there's a reason why African Americans have not done as well as they could in this sector, and that's because Jim Crow laws almost legally restricted them from even accessing a hotel yet loan

owning one. And the Indian community started their hotel ownership at a time during the Civil Rights movement period where after Americans had problems even accessing meaning being able to sit at the countertop the counter of a restaurant or even check into one period. But I'm getting ahead of myself. So here's the minority. Groups who've done pretty well are noteworthy, shall I say? In the hotel industry, Asian Americans, particularly

Chinese and Filipino Americans. Many Asian Americans have leveraged strong family networks, community support, and traditions of entrepreneurship. The cultural emphasize emphasis on education and hard work has also contributed to their success. Additionally, some Asian American entrepreneurs have focused on niche markets, markets and specialized specialized services catering to

specific cultural needs within their own community. And I'm sure speaking Mandarin in the case of Chinese to Mandarin visitors really helped them to own a niche in let's say that you know Chinatown, maybe in small hotels and motels in Chinatown, the Chinatown communities across the country, that that was a way for them to really have a lock on that business sector. African American owners of hotels in the US, I'm gonna come back and do this last.

Hispanic American owners often leveraged bilingual skills and cultural connections to cater to a diverse clientele. Many have also capitalized on the growing Hispanic population in the US by offering culturally relevant services and amenities, including again language specialization, speaking Spanish, community support, and entrepreneurship and entrepreneurial initiatives aimed at Hispanic business owners have also played a significant role in their success.

Middle Eastern Americans have been successful in hotel ownership. Middle Eastern American entrepreneurs and small business owners have found success through strong community networks and a focus on high quality customer service. I say entrepreneurship in small business, they're not interchangeable terms. By the way. Small business owners are somebody who has an existing business plan. They're using an existing business plan, and an entrepreneur basically creates a new business plan,

a new idea. And yes, you can have an entrepreneur that's also a business owner. You can have a business owner this entrepreneurial right. But hotels as a as a general rule, are just businesses. Because you know, you're a business owner, you have a traditional business plan. But if you've rewritten the rules of how you're going to succeed in in that space, then you might be called in that example, and entrepreneurs that you just learn something new.

Some of you today differ between an entrepreneur a business owner, which many people use as an interchangeable phrase. Many from the Middle Eastern communities. I think Iran, think a Persian empire, you know Iraq. Think all of the folks that come from the Middle Eastern region. This is the group you know, Saudi Arabia, et cetera, et cetera that I'm talking about, UAE, etc. Etc. Many have also targeted niche markets are offering unique experiences

and catering to specific cultural differences. Again, language and food and religion is an area that they could positively exploit for. I don't mean exploit in the bad way. I mean exploiting the positive way for those that they are trying to garner as customers. Now, African Americans could have done that without question and did do that. In fact, the underground you heard about the underground railroad. There was an underground hotel system for African Americans during Jim Crow and segregation.

It was called the Green Book. Did you know that it was officially tied with the Negro motorist Green Book, published annually from nineteen thirty six to nineteen sixty six by Victor Hugo Green. Yes, there was a guy named Green and he called it the Green Book. He had a right to name it after himself, exactly right, And I want to give him his credit. It was a black postal worker, hello the Green Book provide and he

was a business owner in this example. In fact, I would say he was even entrepreneur in the way in which he went about this. The Green Book provided African American travelers with information on safe places to stay, eat, and obtain services across the United States. It was an essential guide that helped black travelers navigate the dangers and

inconveniences of segregation in Jim Crow laws. You know who else used the Green Book prominent entertainers, African American entertainers and sports figures who could not would not be allowed to stay in mainstream establishments. Now, several African Americans have made significant strides and achieved success as hotel owners, and I want to give them some love. Sheila Johnson. Sheila Johnson is a success full entrepreneur, not just a business owner.

She remodeled the whole situation with her hotels that I'm aware of even in and around Washington, d C. But

me back, I'm getting going too far. She was an entrepreneur, business owner at Philantha Business, co founder of Black Entertainment Television BEET with another gentleman on this list, by the way, she's the CEO and founder of Salamander Hotels and Resorts, which owns and manages luxury properties including the Salamander Resort and Spa in Middleburg, Virginia, and other luxury hotels in the US, including what used to be called the Mandarin Hotel in Washington, d C. And I'm planning on going

to visit both of those hotels and giving her some business very soon. Now she's number one on the list, and oddly enough number three on the list. It's her ex husband, Robert Johnson. Robert Johnson, the founder of Beet and a successful I guess he's a co founder with her. A successful businessman with ventures in various industries including hotels, and in fact, he founded our LJ Lodging Trust, a real estate investment trust and a rate they call those

focused on the ownership of high quality hotels. Our LJ Lodging Trust Trust owns a diverse portfolio of hotels across the US. Herman J. Russell god Rest is so great businessman. Construction management company and developer and owner. He was an influential businessman and by the way, a big supporter of doctor Martinluther King junior friend of my mentor and bassiar Andrew Young, a really friend of the civil rights movement.

He's a philanthropusiness known for contributions to the construction and real estate business here in the atl In Atlanta, Russell founded the HJA Russell and Company, which is children who are friends of mine. Michael Jerome the sister. The family run it now, which developed and owned several hotels, including a hotel they have us right now that's next to the famed restaurant that's in the I forget what I

what you call that. I don't want to miss call the area, but I'll just say it's on the middle west side of Atlanta and the historically black hodges In universities. His company played a pivotal role in shipping Atlanta skyline and hospitality landscape. I think he also built the Marriott Marquee in Atlanta. I don't know if he owned it, but I think he built it. And then my brother Don Peoples. I loved his brother, prominent real estate developer and an author. He lives in Florida and New York.

He's a founder and CEO of People's Corporation, the real estate development company. You know, the real estate development companies don't necessarily own and operate what they developed. Sometimes you develop it, you spend it off, or you develop it for somebody else. But he has developed and also owned several luxury hotels and mixed use developments, including the Royal Palm Resort in Palm Beach. He's trying to do a major development now, not a hotel, a skyscraper. Will be

able to lookout for what Don Peeples is doing. Michael V. Roberts is an entrepreneur and author of interest in various industries, including telecommunications in real estate. Roberts and his brother Stephen Roberts co founder the Roberts Companies, which includes Robert's Hotel Group.

The group has owned and managed several hotels, including the Roberts Mayfair Hotel in Saint Louis, Missouri, where my friend is Mayor Jones is the mayor to this day or on this day or like I say, these days trying to help Saint Louis to go to the next level. And she's going to be part of my American Aspiration tour. So watch out, look out for that which is coming coming here here soon. And so why or how shall

I say, does his business work? How can they own you say, half of all hotels when you drive by hotels all day, only three or four names that you know of. Well, first of all, just because you drive by and see the name of a hotel Hyatt, Marriott, Starwood, you know, Hilton, et cetera, Ritz, Carlton, whatever, whatever, the four seasons, that does not mean that the company owns that hotel. Did you know that? So let me get

into this a little bit. Oftentimes he's in management agreements where you have, like the Four Seasons hotel on Duhenian in Los Angeles, one of my favorites since I was, you know, eighteen nineteen twenty years old to go and visit, and I stayed there to this day sometimes and I don't want to tell you guy, it's too much about where I'm stay, so people hunt me down. But it's one of my favorite hotels. But there's a gentleman who owns it in his wife and they on the top floor.

They're the real estate developers and owners who own the hotel. But it's managed by Hello the four Seasons. Four Seasons does not own that hotel, even though their name is plastered on the side of it. So here are the types of hotels. So now you can start to figure trying to figure out who's the owner, and who's the man, and where's the owner, Where's in what instances there's an owner and or a management company involved in the hotels that you love. Types of hotels. Budget hotels, they offer

basic accommodation and amenities at a lower price point. That's their niche. You can think about the names of those. A lot of these hotel management companies, the hotel chains have tried to vertically integrate their offerings, so you have a little bit of everything. I'm about to mention. Mid range hotels. They provide a balance of comfort and affordability, often including additional services like restaurants, fitness centers, and meeting rooms.

COVID changed all of this, by the way, and a lot of these hotels, with exception of the ones at the top of the food chain. Here, uh you get it's like it's do it yourself now, like room service is a thing of the past. COVID cut out a lot of that out and allowed them to start doing

cost cutting, and I think sometimes their own detriment. And I want to start naming names here, but there's one hotel I thinking about it in particular, owns a high end hotel, actually chain that they've really taken a hit on their customer service. I try not to stay there, so if you can guess which chain I'm talking about, they used to be best in class and now they're

just another class. And I think that they've won the battle and lost the war by cutting out or even given the option for a high end services or even just room service. You know how irritating it is to get into a city at midnight. Uh, and the hotel is like my second second home. My wife would tell you, I reside Atlanta and live on a plane and then and then temporarily residing in these hotels. And you know, irritating is to get someplace at midnight and room services

shut down. There's no or even eleven o'clock or ten o'clock, and there's nothing there, and they have no optionality and they just tell you to go order food online or go find some unhealthy option that some little store or something. So those who do it really well as you know, I told you that the Indian American experience. Are really spend a lot of time thinking through that. The resident or or client experience. I want to say resident, because

you only resign there for a day. You think about it, by the way, I think about a hotel, it's like a day's stay. Apartment building. Okay, so it's an apartment building with a logo, with a logo on the outside. That's that's really designed for you to stay by the day. Thought about that deep? Huh. So the revenue is collected every day versus in an apartment building is collected once a month. Mid Range hotels already covered that. Luxury hotels high end. By the way, you don't have to own

if you want to get in these businesses. You don't have to own the hoe. You can do what my Ethiopian brothers and sisters have done in places like Washington, d C. They come in and they're they're all the they're the bellman, and they're actually being paid the dormant, the bellman. They're paid to do that. And then they get to know all the clients, they get to know all the you know, the needs, and then they've gone

into the taxi business. They've gone into uber and lift business and you and really in many of these hotels, like the one of the hotels I stay in in Washington, d C. No, I'm not gonna tell you the name. I mean literally there is Ethiopians from the door to the curb to the transportation. It's like a t the door, all that traffic of dormant helping with your bags and opening the doors and all that stuff, and the curb same thing, welcoming you, and the transportation going both ways.

The taxis, the the lifts, the ubers, the transportation, the VIP transportation. All that's effectively controlled by my Ethiopia brothers and sisters who saw a market and didn't need a lot of capital to do that. And I'm and just like my native native murder, just like my Indian brothers and sisters from Indians from India, but teil community, the Ethiopians can do the same thing. Not just that group, any group, right, But I'm just giving you some examples

of folks who are actually doing it. Luxury hotels, high end accommodations with premium services, amenities, and personalized guest experiences. Think about four star and five star hotels, boutique hotels smaller unique hotels that offers personalized services and distinctive decor and themes. These are typically one off hotels. Boutique hotels that and this is something your family can do, something you can do if you're passionate about a certain area, community,

medion area. You want to retire to and rewire to. You don't want to just retire, you want to rewire. Yeah, this is John Brian quote us. Make sure you give me credit a few times before you try to steal it. You know, Doctor King used to say to pastors when he'd hear's something he loved. He said, Oh, Joe, reverend past love that idea. I love that quote that. I

love that saying that's great. You know, I'm going to use that the first three times, first four times I use it, I'm gonna give you credit the fourth or fifth time. Is mine happy to use anything? I say? Success is a habit, right, Success is intentional, And I want you to be intentional about picking up good habits because, as you've heard me say be repeatedly, if you hang around nine broke people, you'll be the tenth Extended stay.

Hotels cater to guests needing accommodations for longer periods and typically offering kitchen facilities in more living space and extended day hotels and budget in mid range hotels often triangulate, they intersperse, they're the same thing. In many cases, those who want budget accommodations and mid range accommodations typically also are the market for extended stay. Although you can have a upscale boutique extended stay hotel, right, you can mix

this thing up. The revenue streams. Room revenue the primary revenue of income and generated from renting out rooms to guests on a nightly basis. What did I just tell you that an apartment building is basically thirty days worth of room rates daily room rates from hotels or an apartment building. If you look at a hotel, it could be an apartment building. Yes it could, all right, but it's chosen to in his business model to make its

money in a hotel by the day. Food and beverage sales income from on site restaurants, bars, room service, room service and banquet services. Events, event hostings revenue from hosting conferences, weddings, and other events, and meeting rooms and banquet halls. Additional services. Income from services such as laundry, SPA treatments, spa treatments and other kind of I was about to say the gym,

but I hope they're not chartering for gym activities. But there are other treats beyond spa treatments that are wellness. They're more wellness oriented, et cetera that these places are getting into. And some of these places are even providing like red light therapy and also other kind of stuff

which are in again. Either they got captured there. You're held captive there by your own you know, you're voluntarily held capture captive there, and while you have you within their four walls, they want to figure out how many ways they can separate you from your wallet in a

positive way by meeting your needs. Parking and a concierge services are also additional revenue streams, and oftentimes when folks are referring you to an outside service at the hotel there, the hotel is getting a piece of it, or the concierge is getting a commission. All good, no problem with any of that call structure. There's fixed invariable costs expenses that do not change with occupancy levels, such as mortgage or least payments. This is you're not the owner of

the hotel. Property, taxes, insurance, and salaries permanent staff. Those costs are permanent that are locked in variable costs costs that vary with occupancy levels, including housekeeping, utilities, guests, amenities, food and beverages. So you can you can moderate those depending on you know what your how busy your hotel is. You can you know, increase them or decrease them. UH.

Operations and management front desk operations. They hand the reservations, check ins, checkouts, guest services, housekeeping of course, cleanliness, ordering in the UH, you know, the order of the rooms and public areas, food and beverage. They manage the restaurants, the bars, the room service, catering services. Maintenance ensure that the property and the facilities are in good working order, right including internet, things like that you've called it internet?

You ever called it midnight or one in the morning. My in that's not working. UH, can you send a technician up. That's maintenance. Sales and marketing promote the hotel. They manage relations with travel agencies and online booking platforms and develop promotion packages. In other words, they're in charge of getting customers, distribution channels. I'm going to do this real quickly here, because you're smart and you think you've gotten the gist of this so far, like your heads

should be nodding. Okay, I get this right. I want to get to a bonus track I'm gonna give you on Airbnb, right, I'm gonna get to that in a minute. So distribution channels, direct bookings, reservations made directly through the hotel's website, and reservations that used to be a big thing now is just a thing. Online travel agencies OTAs, bookings made through third party platforms like Expedia, Bookings, dot Com, Airbnb, which typically charge a commission. Came back to that because

that's not their primary business at all. And by the way, you can start an online booking service yourself. You know, this is another business you might even start. You also the all the vendors that support a hotel. You can start be a vendor of one of those businesses and you don't have to sell the whole hotel chain. To sell the owners of that one hotel or the management company of that one hotel on your ability, the general manager of that hotel on your ability to meet a

need or provide value. And that's the way you can get started with your business in a box, your business within their box. Their businesses literally just survive on the business or or on the contracts with hotels. That's all they do. Global distribution systems GDS used by travel agents to book rooms for their clients. GDS corporate accounts agreements with companies like my company, Brian Group Companies and the operation of Hope, etc. Which gets a nonprofit rate, by

the way, which a whole other thing. So nonprofits should get a if you get a discounted rate at these major hotels, they provide accommodations for their employees at negotiated predetermined rates. Did you know that companies, nonprofits, organizations, governments, there's a government discount group booking reservations for groups such as tour groups and conventions and birthdays and corporate events. Pricing strategies, right, there's dynamic pricing, adjusting room rates based

on demand, competition, and market conditions. You notice that the room rates go up and down based on the season. That's what I'm talking about. So it is supplying demand. Don't get angry, don't get upset. The room rates change is supplying demand, fair exchange is no robbery. This is just the way business works. I've already talked about seasonal pricing, package deals, offering bundles services such as rooms and breakfasts

or special event packages. I'm going to be talking about reward programs in one of my podcasts, so wait for that. But you want to try to get a package deal, well, this is if you're the consumer side. If you're on the business side, then you want to bundle this with vendors right and with your in house services so that you're providing a lot of value for the customer, but more profitability for yourself. Loyalty program and senterms for repeat guests,

such as discounts, free nights, or exclusive benefits. These are the pricing strategies right of the hotel customer experience include, you know, service quality, ensuring high standards for service to meet expected the guests expectations. That's been been talking about that endlessly because it's so important. Guest feedback and personalization, offering tailored experiences based on guest preferences in previous days. I go to this hotel and this is a New

York City. I'll tell you which one that is the Park Height in New York City on fifty seventh near Central Park, and I recently showed up there. It was very late and I was wiped out and I walk in and they've got a smock a smock an apron that they made just for me. They embroidered my name on it, John O'Brien, and it was a gift to me, which just reminded me of how much business it must be giving, you know. But they're also just got really nice people. It was a gift for me and it

really touched my heart. And they I could have, you know, and they're like, let you know, let us cook a meal together. I was like, oh my god, this is great. And I actually sent a the gender manager note and I mean, I'm sure that you know they're trying to lock me in as a guest that won't go anyplace else. And by the way, in New York City City, it's working. I just go there. UH Technology and Innovation Property Management Systems PMS UH software to manage reservations, billings, and guests.

UH Information Revenue Management Systems r MS tools to optimize pricing and inventory. Customer relations management CRM systems totract guest preferences and interactions. This is pretty cool. Way does this work, isn't it? Mobile and online services apps and websites for booking, check in, room service and guest service UH and guest services. So these platforms allow the hotel to work efficiently. Right franchising and ownership models, That's what I was talking about earlier.

Right independent hotels owned and operated by individuals or small groups without affiliation the major brands. A lot of the ptail community have done. This is how it's almost all of them started out, and how the black community also started out. Franchise hotels operate under a franchise agreement with a major hotel brand, paying franchise fees for brand recognition, marketing, and operational support. There is a young lady here in Atlanta.

I don't know any about her business and not endorsing it. I don't, I don't. I don't know a thing about her business, right, But I do want to give her some acknowledgement because I know she's hustling and trying to make it Davon Reeves and she is, you know, working to acquire one or several hotels. And as I understand it,

they're franchise arrangements right. There might be there might be management contracts also, but you know she's associating herself with recognized brands and she's trying to come up from nothing. And I commend her on her hustle and wish your well. And there are others out there that you guys. Send me a note, some other African Americans and Latinos and minorities and women and trying to make it, even if

you're poor white, you're trying to make it. Let me know what's going on with you, so I can promote and encourage you and go to Operation Hope for free services through our small business programs and our one million Black business program that helps in our financial coaching programs that helps you come up from nothing right. And it's all scholarships so it doesn't cost you anything because of our partnerships with our members at Operation Help and our partners.

So you have independent hotels, franchise hotels, management contracts. This is the part I was telling you. You drive by these places, you assume that they own, that that's the owner because their name is on the wall. Don't make that assumption. Whenever you assume, you make it out of you and me, you figure out what I'm trying to say. Property owners hire hotel management companies to operate the hotels on their behalf,

sharing revenue and profits. That deep. So an investor like me owns a building and they give a measure contract to a That's why you can see the same property that changes hands, you know, month to month, not month to month, but from one month to the other, because just in the name outside change. Because it's just as simple. Another property managerent company took over hotel chains. Large companies that own management are franchised multiple hotels under various brands.

So the hotel business you know, has been around for centuries, yes, centuries, it goes back forever. And so if you're looking for a business that will be around for a long time and will it's pretty much AI bulletproof because you can't give an artificial intelligence experience to actually physically staying somewhere, even though AI will refine how these places do business. And the next model I wanna give you is using AI. I know the founder, this is Airbnb. Brian Cheske is

the founder. Good guy. I just saw him recently and he in full disclosure. They are a member of Operation hope the as five project and a new partner in our work. I believe it's one million black business initiative and I want to and so they're hopefully good news is coming soon what we're doing with them. I told him there's a market that that you know, people of color, underserved communities, are untapped, are under under tapped as a market potential for Airbnb. So here's how air andbnb works.

So this is separate from the traditional hotel industry. Folks, this is is really smart and you should read Brian's story of how he and his co founder. His co founder is also a cool guy doing philanthropic work and helped bring a lot of immigrants in from war torn areas in the in the world a few years ago during the past deemic. Actually I think it was. So. Airbnb is a peer to peer platform that connects individuals looking to rent out their proper hosts with those seeking

the short term accommodations guests. So here's a breakdown in summary of how this platform works. It provides an online marketplace where hosts can list their properties and guests can search for in book properties. So hotels are big buildings that look like apartment buildings with a hotel brand on the Airbnb typically is a home at least you start out as a home, but whole on a minute, because

even that's changing or expanding, shall I say. The platform facilitates the entire booking process, including communication, payment, and even reviews. Hosts you list your property. Hosts create listings for their properties, which can range from single rooms to an entire house or unique stays like tree houses and boats. Yes, treehouses and boats. And by the way, the founder, Brian goes around the country and stays in a lot of different places for a while. I think he need have. He

didn't even have a home. I think he told me because he was just one to full experience all the airbbs in his networks. He's living his he's living his dream like literally, and I respect that. So these different properties provide details and photo availability and pricing for what they're offering you. Hosts set their own prices for their properties. Did you know that there's a guide that Airbnb offers as a guiding tool, But is America do what you

like even though they're a global company. By the way, but you got to be competitively priced, otherwise nobody's going to stay in your spot hosting services. Hosts are responsible for maintaining their properties, providing amenities, and ensuring a good guest experience. Guests guest search for accommodations based on location, date, price, dates you know that you want to travel, price range, and other preferences. They can view listings, read reviews, et cetera,

et cetera. Guests pay through ABND, Airbnb's platform, and Airbnb holds a payment until twenty four hours after checkout to ensure the property meets guests expectations. Now, the revenue model guest service fees, it's about fourteen percent, so if you're staying, so most of the money comes from folks staying at airbnbs, not the people own the properties, which I think is a pretty cool. I think that's a very fair and

smart approach. So about fourteen percent of what you pay in Airbnb is going to cover Airbnb, and it covers customer support and other services, bookings, et cetera. The host is charge of service fee tied to their experience with Airbnb, of about three percent of the booking subtotal to cover

the cost of processing payments. Now, Oddly enough, and it may not be what Brian had intended or may have been the reason he did this, But I just find that interesting that that's about the fee that a broker with charge on one side of a transaction to sell or buy or help you buy a home, you know, the real estate brokerage commissions. Yeah, six percent. Half of that three percent, But that's just my own riffing on the topic. But it's three percent, which is, you know,

pretty reasonable. And that combined that seventeen percent is how Airbnb makes their money. And I'm gonna come back to that. The minute is tied to revenues, so airbb also offers guests the option to book local experiences such as tours, classes, activities hosted by local experts. Airbnb takes a percentage of the fee for these experiences. They disclose it no problem again for exchange is no robbery. Airbnb plus did you know about this? The program features high quality listings that

have been verified for quality and comfort. Hosts pay an additional fee for this this verification and the enhanced visibility that comes with it. It's like getting in an Uber black car or something. I guess right. Airbnb lucks Hello a luxury tier offering high end properties and premier services, and these a fee structure for these listings are typically higher, and they're competing with these companies, many of which I

know about. Whereof where wealthy people you want to rent a mansion or whatever it is you want to rent, or a resort property, they're now competing with these companies. And some of these companies actually you've become part of an ownership group that owns well, you're part of an ownership group of the company, and that gives you access to luxury properties all around the world free x period of time times of the year. Think about like a

time share for rich people. It's pretty cool platforming because the real estate actually, unlike a timeshare, goes up in value typically and you can typically sell your membership at a profit. So that's a different business model for another day, but that's who Airbnb lucks is sort of competing with

insurance and guarantees host guarantees. Airbnb provides a host guarantee program that offers protection up to a million dollars Did you know that for damages to host properties Host Protection Insurance. This program provides liability insurance for hosts an event of guess injury or damage their belongings. We all know important reviews and ratings are regulation and compliance. Airbnb must complying

with local laws. This has become a thing in certain parts of the country in the world where local leaders push back on having Airbnb in their communities. You know, in Maui work place I love, there's like an unofficial Airbnb where folks buy a property and they rent out a guesthouse in the back, and the guest house is actually how you're able to stay in the front house.

Like that's the way people can afford to live in Maoor because it's very expensive, and there's been a lot of pushback from the local government to basically ban that activity, which i put a lot of people out of busines and lower the value of the property. Okay, I'm getting off topic. You know, I love real estate and technology and data. We're going back to Airbnb now. Airbnb uses data analytics to provide user to improve sorry user experiences,

to optimize pricing, and provide personalized recommendations. They also I'll be talking to them about this because I'm involved now in this AI Ethics Council. They also invest in AI, artificial intelligence and machine learning to enhance search functionality, fraud protection. We all want that and enhance customer service. Now revenue, hold on your boots. In twenty twenty three, Airbnb generated

about just under ten billion dollars in revenue. That was just under a twenty percent increase from the previous year. They saw four hundred and forty eight million bookings and hosted around seven point seven million listings. Globally, airbnb gross bookings booking value was about seventy three billion dollars in change, reflecting a significant market presence and growth of the platform.

Kudos to you, Brian Jesskey for what you've built. Proud of you, and if you look at the seventy three million dollar number and you back out of that the nine point nine ten billion dollar number, now you can see those fees I was talking about earlier. Okay, So I've explained to you the hotel industry. I've explained to you the different types of hotels. I've explained to you the difference between a motel and a hotel, and different

kinds of hotels in the hotel categories. I've explained to you the revenue model and how they make their money. I've explained to you how this minority group, Indians from India, the Patel community. How they've done so well and in less than one hundred years, really seventy years ish to dominate minority ownership presence in the hotel and motel space, representing fully fifty percent of all hotels and motels in

the country. And I've explained to you and broken down the different minority groups that have done well in this space, and just to go one step deeper, hotels versus motels, right, we want to be like fully briefed in this area because maybe this is an area that you want to retire to and you want to know everything about it because you're going to start your own. Motels are commonly located along highways and on outskirts of towns, usually one

or two story buildings with exterior interests to rooms. They have basic facilities, often limited to parking with sometimes where they have often limited parking, like they don't have parking structures, right, Typically motels don't and they're not looking like the apartment buildings I mentioned earlier about hotels. These are typically one or two story buildings. Right, you can get your mind around what I'm talking about now. A motel the parking

is typically out outside. Typically you actually drive up in front of some of the r the rooms where you would stay at Sometimes you have a small swimming pool or a breakfast area. More limited services with a focus on convenience and affordabilities so you get your own stuff is what I mean by a motel. Hotels are typically found in city centers, business districts, and tourist areas, larger buildings with multiple floors and extensive facilities. These amenities include restaurants, bars, gyms,

swimming pools, conference rooms, concierge. Starting to get It generally offer higher levels of service, including room service. Listen hotel owners and managing companies watching and listening to this podcast get you get your stuff right? Otherwise folks are eating your lunch. No pun intended. Uh, finding other ways good to compete with you. People like me want good service

when we're away from home. We need to feel like we're at home and we're already tired and worn out, and we get to the place we don't have to go having to figure out, you know, how not to get botulism at two in the morning and ordering from some app to you know, get some food delivered to us. Even though the uber eats apps and all those apps are actually a pretty cool option. You know, you're already tired, you worn out. You don't want to be wasting your

time having to order food. You got to go back, get dress, go back downstairs and get to meet the person. And do I sound irritated by the way, By the way, Okay, quick funny story before I let you go. By the way, if you enjoyed this episode or you have, let me know on one of my social media accounts what you liked about it, and also what else you want me to cover? What other topics, industries, businesses you want me

to unpack for you and things I'm not even thinking about. Okay, So I'm in I don't know what city I was at. I was traveling with Sir James Buchanan, who works as an assistant with me, even though it seems like I work for him sometimes. And we got in late. It was in South Carolina, I believe it got in late to this hotel and room service was closed. We had to order I had to order food and the delivery

was late, and Sir James said he would meet them downstairs. Well, Sir James went to sleep so they call, and you know, I go down to meet the folks, and I woke Sir James up so we had to bear witness and he went down with me. So we're down in this midnight and the driver, you know, is he got his food and they missed the drink like they brought the food.

And they always bringing these little you know, these little plastic bags and you hope that don't burst on you, right, and it's got the plastic utensils and all this kind of stuff. Anyway, I'm a little bougie. I've earned the writers all this time. It's got my three million mile plaque from Delta Airlines alone. I'm another two million miles on United Airlines. By the way, we're the coach financial coach for all Delta Airline employees. So I get my

bag and he doesn't have his drink. Always says, oh, the provider forgot the drink. He wasn't the saying I'm gonna go back and get it for you. I wouldn't do that, but he didn't even offer. Well, I had already given the guy a very generous tip in the app. My wife has taught me how to do that well on these apps, and I also want I know these people they you know this how they make the money, the tips. So I'd already given him a tip like

twenty five thirty percent. So he's just sort of standing there. The guy reaches out his hands to Sir James. I don't know whether Sir James reached out his hands first or the guy reached out his hand, but anyway, they end up shaking hands, and Sir James said, nice to meet you, have a nice night. The guy looks at Sir James sort of crazy and sort of walks away.

I'm like, Sir James, he reached it reaches out his hand because he wanted an extra tip, and he thought that Sir James has gone in his pocket, that's what he was or he put his hand out of his pocket, and the guy reached his hand out to shake his hand. And the guy just assumed. You never want to assume rested earlier, you make a you know what out of you and me. He just assume Sir James was giving him another tip, a twenty bucks or whatever cash, and you know, Sir James like, have a nice nice, nice

to meet you. And I mean it was Sir James is the King of dead humor like dry humor. So it was really quite hilarious. And he's like, look the guy you know and everything else. The guy didn't even bother him check your order before he got it. What do you want from me? So? Uh, look, you got to keep take take a life seriously, never took yourself too seriously. Like you got to find a way to laugh through all this stuff. But this is an example of where I will always remember that this place did

not give good customer service. They could have provided an overnight basic menu for those who are traveling who don't want to go external for their food, just want to They want to get there relaxed, get undressed and chill. They don't want to leave their room again, and they'll pay a premium. I'll pay premium for that, by the way, so there's no expense for the hotel in question. And I also remember the hotel, the Parkhayat in New York City that went out of their way after so much

business I've given them that, we've given them that. They even had a cooking apron with my name on it. And I don't cook, but I may learn now because and I will remember that forever little things matter a lot. This is John O'Brien. This is Money and Wealth on the iHeart Network Black Effect podcast series. It's my weekly pulvid of financed and I'm here to make the streets meet the sweets. Hope you've enjoyed this, go change your

life and get the book Financial Literacy for All. Money and Wealth with John O'Brien is a production of the Black Effect Podcast Network. For more podcasts from the Black Effect Podcast Network, visit the iHeartRadio app, Apple Podcasts, or wherever you listen to your favorite shows.