Rinkesh Patel is the President and guiding force behind RAM Hotels, headquartered in Columbus, Georgia. RAM Hotels focuses on developing and managing midscale and upper-midscale Hilton and Marriott branded hotel properties across Georgia and Alabama. As of 2019, RAM Hotels has 25 hotels open and 11 other hotels in development stages. As of 2020, RAM Hotels is preparing to spin off three additional divisions, RAM CRE LLC – Construction and Development arms to serve RAM Hotels and nonaffiliated parties, RAM Capital LLC – Equity and Debt Placement, and QSR By RAM, the company’s Quick Service Restaurants division.
We sat down with Rinkesh to talk about financial capital in the world of COVID-19. He shared nothing but invaluable advice and information with us, and we can’t wait to share it with you! Head to the StartUP Columbus Instagram page to listen to the conversation and continue reading for an exclusive look into Rinkesh and Ben’s conversation.
Ben MacMinn (BM): Rinkesh, tells us about yourself and RAM Hotels.
Rinkesh Patel (RP): The story of RAM hotels began in 1998 when I, my brother Mitesh, and our parents arrived in the United States on May 18, 1998. Due to the sudden and rapid decline in India’s diamond exchange, our family business had to be closed and we decided to stay in the United States in pursuit of a better life for us and our future children and to earn enough money to help repay the debts incurred by the business back home.
Life in America brought us to the small town of Opelika. During this time, while shadowing my uncle, I learned how to manage hotels at the age of 16 and gained the necessary first-hand experience in hotel development and construction. After high school, my brother and I both attended Auburn University. I studied engineering and Mitesh graduated with a B.S. in Business Administration.
In 2002, along with our parents, I organized our family’s first business deal purchasing the Days Inn in Phenix City, Alabama, and operated under the name RAM Hotels. Our family poured our hearts and souls into that endeavor, and in just two years, we were able to save enough money to purchase our next hotel.
In 2007, after several more deals and new development projects, RAM Hotels was approved to develop our first Hilton brand hotel in Phenix City. Today, RAM Hotels has some of the most robust and market-dominating hotel brands in its portfolio and continues to add trendsetting hotels to its growing portfolio throughout Alabama and Georgia.
BM: How did your company respond to the pandemic? How did this affect you financially?
RP: Well, we immediately had to address many aspects of our business. However in early March, as the novel coronavirus pandemic was unfolding, it became very critical that we urgently address contagion scenarios on our properties as well as how to keep our associates and guests safe and healthy. A wave of cancellations and early departures turned our hotels into empty buildings. That was truly an unbelievable time for us. In short weeks, our hotels had gone from vibrant and promising businesses to fighting for survival. What followed was the immediate furlough of some 270 associates, pay reductions, and cuts to many services in order to reduce or eliminate all variable costs.
It became very clear that our hotel business, along with many others such as airlines and restaurants, would now face dual crises. One from the pandemic itself and the second from the financial crisis unfolding as revenue diminished suddenly and significantly. We were in uncharted seas, and what gave us the best chance of surviving was transparency, communication, and an extremely talented leadership team, as well as all remaining associates implementing our new operating model.
Now, with regards to investors and lenders, this alone would not suffice. After all, we were responsible for some $85 million in equity and $185 million in addition, as debt from nine different lenders was deployed to capitalize our 25 operating hotels. Honestly, we could only see 18 months ahead with certainty as that is what our cash position was, and that was not good by any means. What would ensue is a modification of 25 credit facilities within two weeks of the pandemic, fielding calls late at night with Chief Credit Officers of the banks, and investors wanting to know what we were seeing ahead and what we were doing to safeguard our investments. Certainly, as we rolled into summer, our hotels started humming again slowly, but positively. Coupled with loan deferment and Payment Protection Program grants, our liquidity increased by 35%. We finished our 2020 year with 18 of our hotels recovered and in ramp-up. As of 2021 Q1, our seven remaining hotels are in the early stages of recovery, and we expect all 25 hotels to be in the ramp-up stage as we finish this year.
While we were facing the crisis, we had to defer construction commencement on many of our 11 projects that were in various development stages. We had just closed on two construction loans amounting to $24 million in the first week of March. After sensing unease from our lenders, it was best for us to voluntarily defer the project and release the mortgage and loan commitments. We remain committed along with our investor and lender on resuming all 11 projects as market permits.
BM: Are investors still looking for opportunities right now?
RP: Absolutely! Because of various measures by both the Trump and Biden administrations, as well as the overall economic cycle, cash remains widely available and in-abundance. Obviously, Wall Street’s performance over the last year is attracting more than others, but US households have more cash in their bank accounts now than ever before.
BM: What are the most important things to prepare before looking for investors?
RP: My best advice is to know and elect one of many types of investors, and do it early enough. Although they all have one thing in common, i.e. they provide a source of capital, they all vary when it comes to cost and terms associated with their capital.
BM: What are the top three pieces of advice you would give to someone preparing themselves for an investor search?
RP: 1) A Business Plan is a must. Don’t overcomplicate it; keep it simple. You should also know the following: What are you selling, and what makes it unique? What’s the quantifiable demand for the product or service? You should also know your projected operational cost and forecast for the first three years and the first ten years. This is commonly known as Performa. 2) Look for passionate individuals with skin in the game who have demonstrated traction with significant growth potentials. 3) Finally, leadership and analytical skills.
BM: Last question. What types of resources would you recommend for our audience of entrepreneurs? We’re interested to know what you’re reading and/or listening to on a daily basis.
RP: A bit of everything! From industry publications, which is a must, and Wall Street print and television coverage, to podcasts from inspiring leaders, not just from business leaders but political, innovative, and philosophical leaders as well. I also watch a lot of documentaries about people and places, origins, history, and marvelous achievements. I’m always reading up on pieces from The Economist for macro trends as well as world news articles on geopolitics. While I’m not big into sports, I love reading all articles regarding advancements in technological breakthroughs related to natural science and engineering. My news sources are typically never local, and I now find myself more frequently tuning into daily newscasts from NPR, BBC, and others on Spotify on my drive home from work.
I do want to offer a bit of advice regarding the way we ingest news these days. 1) Try your best to refrain from reading or liking any and every viral post that comes up on your social media feeds that are trending or just because someone in your network is resharing it. Instead, follow the original source if you do not already and then seek out other up-and-coming and trendsetting individuals to follow. 2) Stop watching so much Shark Tank and other reality television-based shows. The way these programs present entrepreneurship is not always as realistic as the world of entrepreneurship actually is.
To learn more about Rinkesh Patel and RAM Hotels, visit https://www.ramhotels.com.