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Unprecedented Package

Congress Greenlights $2 Trillion Stimulus; Hotel Leaders Call For Another Phase

Thursday, March 26, 2020
Dennis Nessler
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WASHINGTON—Answering the call of the lodging industry as well as businesses in a number of other segments, the U.S. Senate has officially passed an unprecedented stimulus package that will provide roughly $2 trillion in relief.

The CARES (Coronavirus Aid, Relief and Economic Security Act) Act, which includes one-time payments, unemployment benefits expansions, and business loans—still needs to pass the House of Representatives and get signed by the President, both of which are considered a formality.

While major hospitality industry associations applauded the package, they did collectively express concern about the lending terms and the specific benefits that the lodging industry would receive.

AHLA President and CEO Chip Rogers did find fault with one aspect of the legislation. “There is one challenge that makes the current plan unworkable for hoteliers. The legislation limits an SBA loan to 250% of average monthly payroll. This limit will not allow a business owner to meet both payroll and debt service obligations beyond an estimated four to eight weeks. Consequently, it will result in furloughing the very workers the bill seeks to protect.

“Since the measure reduces debt forgiveness with any reduction in payroll, hoteliers would be forced to use the entire loan amount on payroll, at the expense of debt service. The harsh reality is that travel restrictions and mandated business closures remain in place. The outlook for the foreseeable future is zero revenue for most hotels. If a hotelier cannot make debt payments, the business will go under and the jobs are lost,” he stated.

AAHOA President/CEO Cecil P. Staton reinforced the point. “This legislation is a step in the right direction; however, there are administrative hurdles between small businesses and the capital they need. It may take weeks to get this capital, and many small businesses have days until they close,” he said. “We are disappointed that the formula for determining the maximum loans available to small businesses still does not provide hotel owners with sufficient liquidity to meet their obligations. This is of great concern to us because we do not anticipate travel to resume by May. That said, we are optimistic about working with the Trump administration and Congressional leadership on phase four of the economic stimulus to meaningfully address the liquidity crisis facing small-business owners across the country,” he said in a statement.

The AHLA has estimated that the industry will has lost or will lose some 4 million jobs in the coming weeks, or roughly 44 percent of hotel employees.

Rogers underscored the devastating impact specifically on the industry. “COVID-19 has been especially devastating for the hotel industry. Every day, more hotels are closing, and more employees are out of a job,” he said. “We urge the House to swiftly take up this legislation, while making these important changes. The hospitality industry stands ready and able to do whatever we can to make it through this unprecedented crisis, while building a foundation for a stronger tomorrow,” he said.

As an example, the association yesterday announced an initiative which has identified more than 6,500 properties nationwide in close proximity to health care facilities that will provide temporary housing solutions for the health community.

Rogers did acknowledge the stimulus package represented a “critical step forward to save our economy.”
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Dennis Nessler    Dennis Nessler
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