Royal Inn, alleged prostitution den, is closed. Neighbors are relieved

Wednesday at the Royal Inn, things were quiet.

Located on West Palo Verde Drive just off Interstate 17, the three-story hotel sat empty and neglected. Fencing and yellow police tape surrounded the building and its parking lot, permitting access only to the workers toiling to board up its doors and windows.

Early Tuesday morning, Phoenix police and federal authorities seized and shut down the property, claiming it had been a den of drug dealing and prostitution. Varsha Patel and Nilam Patel — the hotel's owner and manager, respectively — were indicted on a host of federal charges, including racketeering and money laundering.

The constant activity at the hotel had troubled residents of the adjoining neighborhood for years. The Royal Inn is located just off a freeway access road, and "cars would be lined up" on Palo Verde to pick up sex workers, said longtime neighborhood resident Karen Young. The Royal Inn was a buzz of activity every night, leading Young and other neighbors to install security systems and cameras on their homes.

Residents on 26th Drive, just a half-block away from the hotel, didn't feel as though they could sit in their front yards. Phoenix City Councilmember Betty Guardado, whose district includes the hotel and the surrounding area, said parents couldn't shield their children from the hotel's activity.

"They had to explain to their children what were those syringes they were finding in their front yards. They had to explain to their children what a fentanyl pill looked like and what it could do to their bodies," Guardado said in a press conference in front of the hotel Wednesday. "These are not conversations parents should be having with their 5-year-olds, with their 10-year-olds."

Longtime resident Luis Amador said his 11-year-old daughter had to walk the long way to the Alhambra Traditional School, which is just a couple of streets west, in order to avoid sex workers and drug dealers. Amador installed motion-activated flood lights on his home to scare off cars parking in front of his house in the middle of the night. He and other neighbors have had to chase off johns and drug dealers in the early morning hours.

And residents say things have only gotten worse in the past couple of years. According to the federal indictment, Phoenix police received more than 200 calls for service at the hotel from January 2017 to May 2019. That pace quickened in recent years — police received roughly 177 calls for service in the first half of 2023 alone.

"All of a sudden, there started being like 10 or 15 girls here, and they were going toward the school," Amador said. "That was scary. You don’t know who’s picking them up there. It was scary."

The investigation

Phoenix police had issues with the hotel going back to 2017, though it wasn't until 2022 that the department began the investigation that led to the Royal Inn's seizure.

According to the indictment, police spoke about the illegal activity around the hotel with manager Nilam Patel five times between 2017 and 2023. Police requested that she "be proactive" about reporting criminal activity, require guests to provide credit cards and identification and institute occupancy limits and a stricter dress code. During one such meeting in 2017, the indictment said, Patel "stated that all people deserved a place to live, and she was providing a service."

At the Wednesday press conference, Phoenix police Cmdr. Steve Martos said the department "realized quickly that no matter the number of arrests that were occurring out here, that was not going to fix the problem." Since 2022, Martos said, the department deployed undercover officers from its Human Exploitation and Trafficking unit to investigate the hotel. In an interview with Phoenix New Times, Martos said undercover officers posed as both johns and prostitutes and used "advanced investigative techniques" to collect evidence on criminal activity at the hotel and the involvement of the hotel's management and ownership.

In its indictment, the U.S. Attorney's Office alleged Nilam Patel "took a variety of steps to intentionally facilitate the illegal activities of prostitution and drug dealing." Those included directing sex workers to park and attract johns away from the property before bringing them to the hotel, alerting them to the presence of police, renting rooms to known sex workers and drug dealers without requiring credit cards or IDs and not calling police when criminal activity occurred.

Nilam Patel and Varsha Patel were indicted on 34 counts each of promotional money laundering for using "proceeds of some form of unlawful activity" to pay the mortgage for the hotel and for a home in Chino Hills, California, which federal authorities also seized. Varsha Patel also was indicted for making false statements that she was "not engaged in any illegal activity" when she applied for a total of $125,500 in loans through the Paycheck Protection Program during the COVID-19 pandemic.

According to the U.S. Attorney's Office, a money laundering conviction carries a maximum penalty of 20 years in prison and a $500,000 fine.

‘Nice and calm’

For many in the neighborhood surrounding the Royal Inn, the raid Tuesday morning was a surprise. The city had taken some measures to limit the activity around the hotel, including closing off the neighborhood's alleys, but residents had little inkling that a deeper investigation was afoot.

"Anytime I saw a policeman, I asked them. ‘Hey, 2 or 3 o’clock in the morning, they’re driving by here and picking up girls,’" Amador said. "They were like, ‘We’re on it.’ That’s all we get?"

At certain points, Amador assumed nothing consequential would ever happen. But then he was awoken at 4 a.m. Tuesday by the raid at the hotel, and he and other neighbors immediately felt relief.

“That kind of activity is not good for anybody, especially for the kids who go to school," said Celso Mireles, who has lived in the neighborhood 25 years. "When this happened yesterday, it was good for the community. We are very happy.”

It remains to be seen what happens to the sex workers who frequented the hotel. While the indictment also included charges for several individuals accused of distributing drugs at the hotel, no sex workers, pimps or johns were arrested. Closing the Royal Inn solves an immediate problem for the neighborhood, but it may just push those sex workers to other parts of the city.

When asked about that Wednesday, Guardado cited $8 million that the city has spent to outfit the nearby 27th Avenue corridor with cameras, gunshot detectors and license plate readers.

"Everyone who owns a hotel like this, I hope they’re looking at what we’re doing, and they can see that we know this is not OK," Guardado said. "We will continue to push, and we will continue to work together with the neighbors and with our police officers and everyone else that’s involved, and we’re going to stop this. We’re going to make sure that neighbors continue to take their neighborhoods back.”

Near the Royal Inn, though, things are finally quiet. The hotel is boarded up, and when Amador leaves for work early in the morning, all he sees are a few police cars keeping people out. Wednesday morning, his daughter walked the short way to school.

"Now, it’s going to be nice and calm," he said. "You won’t see cars passing by and parking in front of the house at two in the morning. That will be nice.”