Mr. Fernandez, Sr.

Diversity Issues

NABHOOD: Success in Minority Franchising

By Gerald Fernandez, Sr., President & Founder, Multicultural Foodservice & Hospitality Alliance

A TEN-YEAR PERSPECTIVE

First, let me say that I am not a hotel operator by training. I did not grow up in the family motel business and I did not attend college to become a future star of the lodging industry. I have, however, come to love the hotel business. I believe that if someone had introduced me to the business as a young man, my goal in life would have been to become a general manager of a major hotel property. But that is a story for another time.

For ten years, MFHA has been promoting the concept of diversity and inclusion as a key management strategy in the hospitality and foodservice industry. During this time, we have seen significant progress made in the areas of minority worker recruitment, diverse and under-leveraged community marketing and minority franchising.

According to NABHOOD (National Association of Black Hotel Owners, Operators and Developers) there are more than 200 African-American owned hotels. Consider that it was less than a dozen just ten years ago. Why has Black hotel ownership increased so dramatically? I believe that there are seven reasons for this success.

1. CHANGING ATTITIUDES & TIMES

Changing times in America have opened up dialog around creating wealth in under-leveraged communities. Simply put, the hardcore "racial red-liners" of an older generation are retiring, being pushed out and literally are dying off. Their children and grandchildren do not harbor the hatred and bigotry that once fueled discrimination against non-whites in business. Also, more and more leaders today have had multicultural experiences and therefore are not afraid to talk about and work on race issues.

The minority (non-Caucasians) are fast becoming the dominant group in terms of trends, consumption and workforce representation. All of these changes have created an environment of opportunity for Blacks and other under-leveraged groups.

2. DIVERSITY EFFORTS ARE WORKING

Diversity initiatives have been increasing in corporate America for more than 20 years now. Workforce diversity efforts have made clear gains. One very visible indicator is the increased number of Black and/or female Chief Executives who lead Fortune 500 companies including Stan O'Neil at Merrill Lynch, Dick Parsons at Time Warner, Meg Whitman at eBay and Ken Chennault at American Express, and now, Indra Nooyi at PepsiCo.

Black, Asian and Caucasian businesspeople are all profiting and growing their businesses by focusing on inclusion. These forward-thinking individuals and corporations have learned that "Green is the Color of Diversity." Green means growth. Growth for the bottom line. Growth for franchising programs. Growth for shareholders. Growth for brands.

3. TREND OF INCREASED MINORITY BUSINESS OWNERSHIP

Do the math. Minority-owned businesses are popping up across America. Some of these new business owners are immigrants but an increasing number of these new enterprises are being led by Black Americans eager to seize their own slice of the pie. Some are young idealists looking to follow the path of Bill Gates and others from the tech industry. Others are early retirees looking to leverage their corporate success and own something they can pass onto their children. Whatever their background these new entrepreneurs are looking for opportunity. The lodging and hospitality industry is well-positioned to capitalize on this trend.

4. ENLIGHTENED LEADERSHIP

Personal Leadership by white and black men and women of goodwill makes the difference. Individuals like Mike Leven and Henry Silverman, two Jewish-Americans who understand that people, Americans of all backgrounds can be successful in the lodging business if given the chance. They understand what it feels like to be excluded--they identified with the struggle of the Indian franchisees who were attempting to build their businesses amid discrimination from other hotel brands.

Silverman and Leven put up the money and the resources to help establish AAHOA (what does it stand for?) and their brands have reaped the benefits. Today, AAHOA is arguably the most potent force in the lodging industry controlling over 60% of the hotel rooms in America. Ask any of the AAHOA founding members and they will tell you that the leadership of these two great Americans made all the difference.

5. ACCESS TO RESOURCES (Financial & Informational)

Most successful franchisees employ talented businesspeople who provide essential advice and counsel. Additionally, banks and financial institutions have stepped up to supply capital to help grow young minority businesses. Major lodging brands like Marriott, Hilton and the former Cendant Hotels have helped fuel the growth by creating incentives for first-time hotel developers and minorities. These programs have made available capital, discounts and, more importantly, experienced hoteliers to coach and mentor new operators for success. .

6. GLOBALIZATION

Minority franchising has accelerated in part because the lodging industry is a global industry. The global outreach is for employees, guests and investors and the lodging industry is fast-growing outside the United States. This growth brings cultural competency as a management issue to the forefront. Managers and executives must learn to work with people from diverse cultures and backgrounds if they want to grow their brands. This new market knowledge and skill- building has benefited lodging and hotel companies domestically. Once a manager learns how to work across cultures, he or she is much more likely to be open to new opportunities at home in America.

7. IMPORTANCE OF STRAIGHT TALK

In my view, one of the most important reasons for the success of Black Hotel and Lodging franchisees is the high level of open, direct and brutally honest dialog between minority franchisees and majority franchisors. Straight talk about barriers that prevent Black operators from securing financing, acquiring quality real estate sites and access to information have really made a difference.

When Blacks and Whites talk openly and honestly about what they want, what they need and, most notably, what they don't understand, business deals get done. Trust is developed and prejudices and biases are overcome to reveal the true bottom line. Diversity and minority franchising is all about business.

AAHOA'S PROVED IT COULD BE DONE

AAHOA set the example and led they way. They utilized the aforementioned seven reasons for success and partnered with Andy (what's this?) early on and never looked back. AAHOA believed in the vision and understood that it could happen for black business-minded leaders in the same way it happened for them. Thus, they initiated a minority franchising success story in NABHOOD.

NABHOOD targeted successful businesspeople to recruit into the industry particularly those with an entrepreneurial spirit.

Then they made a commitment to truly learn the business. Good franchisees have a willingness to learn the intricacies of the industry by getting involved in industry issues. And by working with local associations, the franchisee better recognizes pertinent emerging issues while making local contacts.

NABHOOD was able to set realistic expectations and not overstate projections.

Gerald A. Fernandez, Sr., is president and founder of the Multicultural Foodservice & Hospitality Alliance (MFHA), a national non-profit organization that promotes the social and economic benefits of diversity. He founded the Alliance with support from Cargill, Coca-Cola, General Mills, Nation's Restaurant News and PepsiCo, Inc. in 1996. Gerry holds a Bachelor of Science degree in foodservice management from Johnson & Wales University, where he also earned a culinary arts degree in 1976. The university awarded him an honorary Doctorate in business administration in 1999. Mr. Fernandez, Sr. can be contacted at 401-461-6342 or gerry.fernandez@mfha.net Extended Bio...

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