A day after House Democrats released a $2.2 trillion aid package that would authorize more funds for a second round of Paycheck Protection Program loans, the American Hotel & Lodging Association and several travel-related organizations renewed calls for further congressional support to the sector, bringing in both state tourism representatives and business owners from each state to put a human face on the crisis.
During a press briefing, AHLA President and CEO Chip Rogers acknowledged the PPP has been “very valuable to our industry and many small businesses around the country,” but emphasized that the measures were only meant to last for 10 weeks. With the summer travel season already over, he said, travel-related businesses need another round of support. “Our industry looks at declining revenues and dramatically increasing expenses at a very very difficult time.”
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California
Lynn Mohrfeld, president and CEO of the California Hotel & Lodging Association, said the California hotel industry has been decimated by the pandemic and travel downturn. “Since travel and tourism is one of the pillars of our state economy, unfortunately, we can expect this impact to be felt for several years at a minimum,” he added. “The numbers tell the story: 108,000 job losses statewide as of September ... Almost 6,000 hotels closed or foreclosed on.” Without Congressional aid, he said, these numbers are only going to increase, and California's job losses could almost double to 200,000 people. While full recovery for California had been expected in 2023, he said, without additional support it may take a full decade to come back to 2019’s levels.
Bijal Patel, CEO of Coast Redwood Hospitality and a third-generation commercial real estate entrepreneur, said that this downturn is like nothing his family business has seen in their collective years in the industry. “Owners and operators in California like myself rely on the summer season, May to September, to be able to operate year-round,” he said. As of last month, the company’s hotels were averaging 41.2 percent occupancy compared to last year’s 74.6 percent occupancy. “Without relief from D.C., we feel that owners and operators like ourselves will be forced to close indefinitely and lay off the associates that we have come to regard as family over the years.”
Read more of Hotel Management's coverage of the Paycheck Protection Program here.
Patel also noted that 482 California cities collect occupancy taxes through hotels that generated $2.6 billion in municipal services. “So not only is this as an issue for us as an industry for our associates, but also for the communities in the state of California that rely on tourism to continue to operate today,” he said.
Florida
Carol Dover, president and CEO of the Florida Restaurant & Lodging Association, said that despite Gov. Ron DeSantis’ reopening of the state’s tourism sector in early summer, the visitor numbers were still devastating, and the sector’s job losses were second only to California’s— “more than New York, Texas and Nevada,” she said.
Lisa Lombardo, chief people and culture officer for Ocala, Fla.-based HDG Hotels, said that she and her team are trying to remain optimistic, but are also facing a grim reality. “We have hotels with [revenue per available room] down $42 year over year, and [average daily rate] dropped in our state where tourism is supposed to rule.”
The company, she added, was an early recipient of PPP funds. “We played by the original rules and deadlines. We brought our people back, and they were champs. When we didn't have breakfasts to serve because we didn't have guests, and we didn't have laundry to do, they would pick up that pressure washer or a paintbrush because they just wanted to be back to work,” she said. But by the end of June, the funds were gone, and the company’s full-time employment is now on a decline. “Under normal circumstances, we know how to find a way forward for ourselves. But these are not normal circumstances. So we're left holding our breath, wondering what's in store for us and we just want to be able to exhale with some relief.”
Illinois
“Winter is coming both literally and figuratively,” said Michael Jacobson, president and CEO of the Illinois Hotel & Lodging Association. While the national occupancy rate has recovered to about 50 percent nationwide, he calculated Chicago’s hotel occupancy is still hovering around 20 percent occupancy per week with job losses at 67,000 people as of September. The typical fall downturn is likely to be devastating not just for the businesses but for the state’s coffers. The hotel industry is one of the state’s largest economic engines and tax generators, Jacobson said: “In fact, every Illinois household would pay over $1,600 more in taxes without the tax revenue that we generate for the state.”
Bob Habeeb, CEO of Maverick Hotels & Restaurants in Chicago, said his hotels started to see “a little bit of a light at the end of the tunnel” toward the end of the second quarter when the Coronavirus Aid, Relief and Economic Security Act act helped the company rehire some team members. “Now that light at the end of the tunnel appears to be a train headed in our direction,” he said. “Our PPP money is long gone, the summer travel season is exhausted and we're being forced to go back and look again at laying off our team members.”
“Our community simply can't afford for us to fail,” Jacobson said. “The PPP was a good start but we just need another lifeline and we need it from Congress now.”
Solutions
Rogers offered suggestions on how Congress could finance additional support for small businesses: “The second round of PPP—which hopefully will come soon—could simply tap into the additional resources that were left over from the last round,” he said, estimating about $150 billion was left untapped due to restrictions on use in the spring. “It only seems reasonable to direct that to the businesses that have been hurt. Most clearly hotels fall into that category, along with restaurants and anyone else in the tourism and travel world ... If you just took the money from PPP that was already appropriated and made it eligible for businesses that have been hurt the most—whether it's 30 percent [or] 40 percent revenue decline, those businesses could possibly survive until next spring.”
With a new bill proposed, Rogers emphasized that the AHLA supports the Democrat version of the PPP funding as well as the Republican version. “In fact, there doesn't seem to be much disagreement between the two parties on the need for PPP and what it might look like,” he noted. “The challenge that we face is that both parties seem to agree on the PPP part of this, but what they don't agree on is holding up the rest of the process.” Some of these disagreements include liability protection—“which we think is critically important,” Rogers said—and state and local funding details. “We understand the arguments on both sides that are holding this up. But if Congress can agree on those items, then we would ask them to simply agree on the things they can agree on. And there seems to be widespread agreement on the refunding of the PPP.”