The Latino population is the fastest-growing in the U.S., and Latinos have the fastest-growing number of new businesses, but their presence is small in hotel ownership, according to The Latino Hotel and Entrepreneurship Investment Report.
In the inaugural edition of the report, it states Latinos make up 19% of the U.S. population, yet they comprise only 9% of hotel entrepreneurs.
Lynette Montoya, president and CEO of the Latino Hotel Association, which is dedicated to expanding the community of Latino and Hispanic hotel owners and operators, said there are many barriers hindering Latinos from pursuing hotel ownership, including lack of mentorship and knowledge of the industry.
"The support that we get is great, but I feel like there needs to be more support from the brands because they do want to see more Latino owners. There needs to be more engagement in really helping to make that happen, whether it be financially on the partnership side, offering events that we can organize people to go to so that they can understand each of the brands, she said. “Overarching, it's the education piece. Most of the time, when I’ve spoken to Latinos, they’ve indicated that there has been no knowledge that they could own a hotel. Latinos are always opening businesses of some kind, so why not hotels?”
Americans are starting new businesses at a record pace since 2019, according to the report, with an uptick from 3.5 million new businesses that year to 5.4 million in 2022.
“In the decade preceding the pandemic, the number of Hispanic business owners increased 34% compared to an increase of just 1% among non-Hispanic business owners. Almost 5 million Hispanic-owned businesses contribute over $800 billion to the U.S. economy annually and our goal is to increase awareness of hotel ownership as an attractive opportunity to these entrepreneurs,” the report states.
Mike Lakusta, CEO and founding partner of EthniFacts and part of the Latino Hotel Association’s board of directors, said Latinos are 91% of labor force growth between 2010 and 2020, according to the Bureau of Labor Statistics. It’s projected that Latinos will comprise 78% of labor force growth over the next 10 years.
“Awareness is an issue; mentorship is an issue; financing is an issue,” he said. “One of the purposes of the Latino Hotel Association is to get the word out, not only to Latino entrepreneurs … but to the hotel chains that are finding franchisees.”
G6 Hospitality, for example, is one hotel brand that is supporting the inaugural Latino Hotel and Entrepreneurship Report.
“We are proud of our diverse franchise owner population and are committed to seeing that diversity continue to evolve. And with Latinos projected to make up 78% of the labor force growth over the next 10 years, it is more important than ever to ensure we’re doing our part to bring more Latinos into hotel ownership,” Julie Arrowsmith, president and interim CEO of G6, said in the report.
“We are committed to advocating for greater representation in Latino hotel ownership. Together with the Latino Hotel Association, we are paving the way to help Latinos on the path to not only owning their own business but guiding them to profitability to create a better future for themselves, their families, their communities, and the entire hotel and lodging industry,” Arrowsmith added.
Montoya said there needs to be more responsibility on the brands to "put [Latinos] on the spot.”
“There needs to be more investment overall,” she said. “There needs to be that true desire. Oftentimes, we’re ignored because we’re so small in the ownership space. I do believe [we need] more pointed efforts to educate, mentor, help direct in financing and identify those auxiliary entities that really help in the process of ownership.”
Lakusta added it’s been a challenge to get the Latino community comfortable with some of the financing programs available. Hispanic entrepreneurs, according to the report, are less likely than white entrepreneurs to secure funding of $100,000 or more from national banks.
During the pandemic, “it was really sad to see ... the lack of knowledge about [Paycheck Protection Program] loans, just taking advantage of that. The Latino community just wasn’t using that program to their advantage the way that other people were. There is this hesitancy within that community that really doesn’t exist within non-Hispanic whites as much, within the Asian community as much.”
One solution is having a prominent voice in the industry share what opportunities are available to the Latino community, he said. Another option is via lobbying government officials.
Montoya also called on industry conference organizers to have more diverse speakers representing companies on stage.
“Of course we get one now and then, but there’s just not enough. It’s just not a representation of some of the owners that we have. It’s a frustrating point for me, personally, when I go to these conferences,” she said. “I do hope that it gets a lot better, and I am seeing a shift and change. It’s just [the Latino Hotel Association] needs to grow so there’s more people representing it than the people I keep putting upfront.”
While the share of Latinos in skilled and higher-paid occupations has grown by nearly 5 percentage points in the past 10 years, Latino workers remain over-represented in lower-wage jobs and are generally paid less than non-Latino white workers, the report notes, citing statistics from McKinsey & Company.
Lakusta said one issue that occurs too often is that an individual’s or group’s median income is judged.
“For both the African American community and the Latino community, that has been an issue for years. Some of the people that are going out and finding franchisees, [they have] stereotypical ideas about the wealth and opportunities within the Latino community,” he said. “The point being, that is changing. You can no longer ignore these communities.”
The Latino community also has a strong desire to create generational wealth. Lakusta said there are three factors that affect household wealth: a college degree, owning a home and owning a business.
Carlos Rodriguez Sr., founder, chairman and CEO of Driftwood Capital, a real estate investment and development firm based in Coral Gables, Florida, said in an email interview that building generational wealth is what he’s currently focused on.
Rodriguez Sr. also serves on the Latino Hotel Association's board of directors.
“The world is changing fast. My goal is to provide my family with additional tools to cope with the challenges of the future. Leaving them financially secure is obviously the first tool, along with education and a worldly or international outlook. The more knowledge and wealth people have, the better prepared they will be for the future,” he said.
His son, Carlos Rodriguez Jr., is founder, president and chief operating officer at Driftwood Capital. Rodriguez Sr. said hotel ownership provided a path to achieve his end goal of controlling his own future.
Montoya said the Latino Hotel Association often works with the National Association of Hispanic Real Estate Professionals, which helps guide brokers and others in the industry on owning their own home, starting a 401k and building an investment portfolio to create avenues of wealth. She feels there's an opportunity to influence that group to pursue hotel ownership opportunities.
“We see that group looking at multifamily, so let’s have them start looking at hotel ownership,” she added. “We’re not just out there talking to anybody [about hotel ownership], we’re really directing our energies to those that we feel like could have the capacity to look at ownership.”
Advice for Entering Hotel Ownership Today
Ultimately, Montoya said hotel ownership requires knowledge, a full desire to seek information and being surrounded by the right people to get a deal done.
“You have to know about the financial aspects of it, you need to know what it would look like to partner because it’s not necessarily just for one person. How do you understand every acronym out there that’s going to really apply to what you’re going to achieve? Do you know all the opportunities that are out there in your particular community of where you’re looking to acquire a property or build a property?” she said. “Don’t let any money out of your pocket until you know that everything has been checked [and you engaged your] legal counsel.”
Lakusta said partnering with a hotel management company on a first deal can be one way to show a lender that the individual has support.
Rodriguez Sr. suggests raising money through friends and family for a first deal.
“They are the ones that will trust you and take risks that normally others won’t take on first-time owners without a track record. The second piece of advice is to always communicate with your investors and your bankers. Whether it’s bad news or good news, you need to communicate it. If it’s bad news, say it quickly but do it with a proposed solution and keep your bankers close — be friends with them.”