‘Decimated’ Hotel Industry Seeks More Virus Relief From Congress

The $240 billion hotel industry is ramping up its advocacy to secure additional relief in the next coronavirus package, as it faces long-term economic suffering caused by the coronavirus pandemic.

The American Hotel & Lodging Association sent a letter to congressional leaders Monday seeking to create a specialized loan assistance fund at the Federal Reserve, ease access for hotels to a small business loan program, and put in place liability protections for businesses, among other provisions.

“What happens in the next two weeks is incredibly important,” Chip Rogers, the group’s chief executive, said in a telephone interview. He said the lack of action now could cascade into a “downward spiral” for both the hotel industry and surrounding economy.

The leisure and hospitality industry — which includes hotels, bars and restaurants — has lost 4.8 million jobs, and most of the job gains in this area since April have been in the restaurant sector, according to the Bureau of Labor Statistics. Hotels employ an estimated 2.3 million people, about half of whom remain furloughed or laid off.

In the letter, Brian Crawford, AHLA’s top lobbyist, said the “hotel industry has been decimated by the COVID-19 health crisis.”

Photo by Joe Raedle/Getty Images
The Clevelander South Beach Hotel in Miami Beach, Fla., announced July 13 it was closing again until further notice due to growing concerns about the Covid-19 pandemic in Miami-Dade County.

The group and its advocates have been working with every level of government, Rogers said, talking to President Donald Trump and Vice President Mike Pence; members of Congress; and Treasury staff, all the way up to Secretary Steven Mnuchin, who is one of the key administration officials holding negotiations on Capitol Hill.

“We never got to a point where we said, ‘Oh, OK, this passed, now we’re good to go, we can move on to something else.’ This has been our sole focus, every single day, seven days a week since March,” Rogers said, estimating that he’s made upwards of 100 calls to lawmakers himself.

The Asks

Topping the list of priorities for the hotel industry is the establishment of a Commercial Mortgage Backed Securities (CMBS) market relief fund at the Federal Reserve, referring to a type of specialized loan taken out by hotels and other commercial buildings. CMBS loans are packaged together and sold as investment bonds, making it difficult to receive help, such as payment deferral or relief.

“We’ve been working, trying to get servicers to allow there to be some forbearance, but keep in mind that on the other end of this transaction is someone who made an investment, and they’re expecting their guaranteed rate of return,” Rogers said.

The threat of increasing payment defaults on $90 billion worth of CMBS loans held by hotels is looming. Should these properties go into foreclosure, Rogers added, it could have a negative impact on the surrounding economy.

AHLA is also seeking changes to the qualification requirements of the Main Street Lending Facility, which was set up in the CARES Act (Public Law 116-136) to provide assistance to small and medium businesses. Hotels hold a large amount of debt due to the property or land they own, which can exceed the program’s threshold for eligibility and effectively shut out the industry.

Inserting language into a bill that “recognizes that the debt is tied to a piece of real estate” that’s something of value and not just debt from a large loan, Rogers said, would help alleviate the problem.

Among other proposals, AHLA’s letter also requests tax credits to help offset the costs of increased cleaning, to encourage travel, and for business entertainment expenses.

Like many other business groups, the association is also fighting for an expansion to the Small Business Administration’s Paycheck Protection Program and liability protections to guard against lawsuits if proper health precautions are taken.

The SBA issued guidance in April that made it easier for some hotels to apply for PPP loans. Rogers said that his group’s members need more, and Congress should allow the hardest-hit businesses to obtain additional PPP loans.

“The first time that was passed, the view was this was an eight to 10 week problem,” he said. “It’s gone on much longer than that and for our industry it’ll go on for years.”

To contact the reporter on this story: Megan R. Wilson in Washington at mwilson@bgov.com

To contact the editors responsible for this story: Kyle Trygstad at ktrygstad@bgov.com; Bennett Roth at broth@bgov.com

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