When state Sen. Jeff Partridge urged his fellow legislators to approve the creation of a small-business relief fund at the end of March, he made a prediction.
He said the money would be needed by the kinds of businesses “that we might not even be thinking of yet.”
Partridge was right. There was a group of business owners that South Dakota’s overwhelmingly white Legislature probably was not thinking of: Indian-American hotel owners.
They ended up getting about 30 of the 200 loans from the fund.
Partridge, a Republican from Rapid City, was surprised to learn recently that the state has so many Indian-Americans in the hotel business.
“I mean, my comment would be, I think it’s great,” Partridge said. “I mean, we welcome people from all over the world into the United States, and if that’s a business that they can get into and find a foothold in, I think it’s wonderful.”
Lawmakers teamed with Gov. Kristi Noem to create the relief fund on March 30, which was the final, hectic day of this year’s legislative session. At the time, the coronavirus was invading the country, and economic activity was plummeting.
The bill adopted by legislators plucked $10.5 million from several existing economic-development programs. The money went into the new relief fund for zero-interest loans to small businesses.
Many hotel owners needed the money, because they suffered some of the earliest and most severe economic effects from the spread of COVID-19. That also meant Indian-American hotel owners were some of the first U.S. business owners to suffer economically from the pandemic. Their 19,500-member trade group, the Asian American Hotel Owners Association, says they own nearly half the hotels in the United States.
South Dakota numbers are harder to find, but the state’s pandemic loan fund gives an indication. About 50 motels, hotels or lodges got loans from the fund, according to an SDPB analysis of the loan recipient list. Among those hotels, Indian-Americans appear to own about 60 percent of them. That’s based on an SDPB analysis of names in public documents that corporations have to file.
Rikesh Patel is one of those hotel owners. About 25 years ago, he emigrated from India to join relatives in North Carolina. He has a master’s degree in engineering, but didn’t like the job offers he received. So he decided to follow other Indian immigrants into the hotel business. He found a Super 8 to buy in Vermillion, home of the University of South Dakota.
“Knowing that Vermillion is a college town, I thought my kids would have a good education and surrounding good neighbors – a good family environment for education,” Patel said.
Patel’s kids are grown now. One’s a physician, and another’s a dentist. Patel has expanded his business and now owns eight hotels in South Dakota, plus others elsewhere.
His path to hotel ownership is common in the Indian-American community, and so is his last name. Many of the Indian-American hotel owners in South Dakota and across the country have the surname “Patel.”
Amherst College Professor Pawan Dhingra says the Patels are not a family dynasty.
“It’s just an incredibly common surname for the region of India from which the first owners and many of the owners came from, which is Gujarat,” Dhingra said.
Dhingra is the son of Indian immigrants. He wrote a book about Indian-American hotel ownership, called “Life Behind the Lobby.”
The story started in the 1940s and ’50s. Indian immigrants trickled into California, looking for opportunity.
“They weren’t planning on getting into the hospitality industry,” Dhingra said. “They had no familiarity with the industry at all.”
Many took seasonal jobs on farms. In the offseason, they went to San Francisco.
“They’d come into the city, looking for work,” Dhingra said. “And they would stay in these inexpensive, residential hotels.”
Eventually, some immigrants bought motels from owners wanting out of the business. Those immigrants brought more family members over from India. The newly arrived immigrants lived and worked in motels owned by their relatives, and eventually the new immigrants bought their own motels.
“And this is how a domino effect happens,” Dhingra said.
COVID-19 interrupted that. Rikesh Patel, in Vermillion, said the pandemic cut revenue at his hotels by as much as 90 percent.
“The first 10 to 15 days of March were fairly nice, and suddenly it just crashed, like a car wreck,” Patel said.
Patel applied for eight loans from the state relief fund, because he said all eight of his South Dakota hotels needed help. He received two loans for the maximum amount of $75,000 apiece.
The Governor’s Office of Economic Development said it imposed a limit of two loans per person on people owning multiple businesses. Loan applicants had to show they were economically affected by the pandemic, had to have a minimum credit score, and had to satisfy other criteria.
The governor’s office fielded 389 applications. Some applicants failed to meet the qualifications, and some applicants filed multiple applications, like Patel. Officials in the governor’s office selected the 200 successful loan recipients, and all the money was loaned out by the beginning of May.
Beyond hotels, the loans went to a wide variety of businesses all over the state, including restaurants, hair salons, auto mechanics, breweries and small-town lumberyards, to name a few. Borrowers have five years to pay back the loans.
- Seth Tupper is SDPB's business and economic development reporter.