The US housing boom in 2004 lured many to go in for second homes but unable to pay the mortgages, some were forced to return to rented apartments. The 43rd part of a series describing the unknown triumphs and travails of doing international business

As we moved into 2004, one important activity that was noticeable was the great publicity and advertisement programs relating to leasing and sale of newly built houses in and around Washington DC. In fact, this phenomenon was noticed everywhere, and the building construction activity was in full swing. Beautiful communities were coming up, offering townhouses, of various sizes, and at competitive prices. But these prices were relatively high, and the prices of old houses were going up at a fast rate.
 
As the prices began to go up, all of us were flooded with mail and offers from finance companies and banks for extending credit. Phone calls would be received from marketers who would talk about your increased valuation of your own house, and how they would be able to arrange for immediate credit, which would enable you to replace your old cars; how you may take your much needed vacation and enjoy the sun in the Caribbean; take a long cruise; or fly down to Paris, have car at the Charles De Gaulle airport and drive around the whole of Europe, which you always wanted to do; or take a trip down to the Orient, gamble in Macao or walk up the great Wall of China! The enticing list things and activities that you could do with the extra cash was overwhelming!
 
A townhouse, bought for $160,000 was presently valued at $250,000 and the market price of the house was growing by the day; the marketer was willing to get a cash credit arranged immediately for $50,000 and one could do any of the above; and slowly pay back along with the house mortgage. It was easy to buy houses and the interest rates attractive.  If on your budget, you decided go in for a house valued $200,000 your agent/broker would highly recommend that you buy a more spacious single independent family home for $300,000 or more, particularly when he/she finds out that both the husband and wife are employed. “It is far cheaper to buy now than continue to pay rent; we can work out a deal that would practically bring the mortgage payments at par with your rent?” The sales pitch was very high, and newly built houses had all the amenities one would hope for.
 
We declined to fall into a death trap of taking any loans; we felt the market was saturated with reckless credit and even more callous methods for spending this ‘unearned’ cash. Many of my colleagues were keen to buy bigger houses than they really needed, because, they ‘feared’ that they may lose the opportunity. In fact, many bought a “second home” because they had a little cash in the bank to play with and always felt that they could rent the house, as long as the rent covered or was equal to the mortgage costs. What they failed to realise was as to what would happen if the tenant simply disappeared after delaying the rent payment?  This happened to many. My own colleague, who went against my advice, and bought a huge single family home, not only lost it, but had to take a huge debt and return back to a rented apartment in a matter of less than two years!
 
The credit squeeze had began to affect everyone, including our regular visitors to the hotel; our guests began to demand ‘compensation’ for delays in picking up at the airport, which was a complimentary service, fixed at certain intervals, taking into account the distance and time covered for the travel. Slowly, we became victims of circumstances where customers would misuse our friendly hospitality at the restaurants by being in cahoots with servers! Three guests would enjoy the meal; get charged for two, and give a rewarding ‘tip’ to the server!  Likewise, there were hanky-panky practiced in the paid garage facilities; when these were noticed, the associates received marching orders mercilessly. Every hotel had different incidents that they faced, and, when the top brass met for the monthly get-togethers, notes were exchanged!
 
The staff facilities included free laundry for our uniforms; so, if one was working five days a week, it would be normal to have these and a couple of pants for cleaning in the laundry, but certainly not any other garment, and that too from other family members! When such things began to be noticed by the receiving associate, not only the front office manager received the data but also the human resources director (though the FOM), and the associate got charged for the services utilized and warned future sterner action in case of repeat performance!
 
We continued to receive a greater number of government ‘servants’ staying with us at the fixed rates meant for this purpose. This was only when they were on ‘duty’ and paid for in our recorded cards meant for this purpose. If they had to extend their stay and convert it into a personal visit, though, for the sake of long standing relations, they may be able to get the government rates, but they would automatically pay for it by cash or by their personal credit cards. The guests were very clear on this and admirably followed the rules and regulations to the book.
 
As the housing boom continued, there was a lurking fear in the minds of many that as the reckless credit ballooned up, it was bound to burst sooner than later. Many owners of second ‘homes’ really found they were suddenly saddled with collectable rents, as the tenant had run away, and still they had to pay for water, gas and electricity bills! The market stalled for a while, but home prices in good locality remained high.
 
An unusual incident came to light, when one guest, Ms Maria called and asked for me by name.  When I answered her call, she mentioned that she gave her credit card for payment to the only girl in the counter, and when she reached home at Baltimore, she could not find it! She had searched everywhere, and felt positive that she didn’t take the card back! “Can you search at your end immediately, before I report it to the card company and have it cancelled?” After assuring her, I began the search, all over the place, including the front desk, Computer terminals for guest’s use, the restaurant she had used for breakfast, her room and also the ladies rest room!  There was no sign. The last thing she must have done was the check out at the garage, where she must have used the room key which was activated to permit her entry and exit in the garage. The garage attendant was on duty, and she confirmed that there was some problem in the morning as most guests had difficulty in using their room keys to exit. I called in Nelson, from the engineering department and had to open the key box at the exit gate, where the guests are requested to drop the keys, so that we may recycle them. Ms Maria had apparently exited the garage, and, mistakenly dropped her credit card in the key collection box! I called her back and arranged for sending it back to her by courier, which she got a day later!  I had quiet forgotten about the whole incident until she had sent a letter of appreciation to the management!

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at [email protected].)