House approves Paycheck Protection Program expansion

According to Chip Rogers, American Hotel & Lodging Association president/CEO, an extension of the Paycheck Protection Program would help more hotels rehire and retain employees and keep their doors open. Photo credit: American Hotel & Lodging Association (Chip Rogers talks)

On Thursday, the U.S. House of Representatives overwhelmingly approved bipartisan legislation sponsored by Rep. Dean Phillips (D-Minn.) and Rep. Chip Roy (R-Texas) that would relax the terms of the Paycheck Protection Program, a federal loan program intended to help small businesses survive the economic downturn caused by the COVID-19 outbreak. 

Under the approved legislation, small businesses now will have 24 weeks (up from eight) to spend the funds loaned to them through the program. In addition, the percentage of the loan that would need to be used for payroll costs will be reduced to 60 percent from 75. According to the New York Times, some of the loan recipients were about hit the end of their original eight-week period within days. With an estimated 70 percent of hotel employees currently laid off or furloughed, and tens of thousands of mostly small business hotel owners struggling to keep their doors open, the relaxed terms will provide a necessary lifeline.

Click here for all of Hotel Management's COVID-19 coverage

Chip Rogers, American Hotel & Lodging Association president/CEO, said the extension would help more hotels rehire and retain employees and keep their doors open. Since the start of the pandemic, the hospitality and leisure sectors have lost 7.7 million jobs—“equal the losses in manufacturing, construction, retail, health care and education combined,” he said. “Policymakers can look at that and say, ‘If we don't help these type businesses now and in the future, if we don't recognize their importance to our economy, then we'll never recognize it.’”

When the program was first passed in late March, Rogers said, most leaders in the industry expected the crisis to last for eight to 10 weeks. “Now that we've seen what has happened since and realize how long it's going to be for our industry to recover, we recognize that while the PPP foundation is good, the dates [have] got to be extended and there's got to be an opportunity for hoteliers to use that money to stay afloat.” Extending the time for hoteliers to use the loans for 24 weeks, he said, is “really critical” as occupancy “slowly creeps up a couple percentage points per week” and employees return from furlough.

The next steps Rogers sees would be increasing the amount that a particular hotelier can borrow. “Remember, the original amount—which is maintained in the law today—is that you can borrow 250 percent of your average monthly payroll [from 2019],” he explained. “There is another piece of legislation that has been introduced in the Senate on a bipartisan basis that would allow you to earn up to 45 percent of your total revenue from last year if your particular business has lost at least 25 percent of your revenue this year. Almost every hotel falls into that category,” he added. “If you're able to borrow 45 percent of what you brought in last year, up to a maximum of $12 million, that's going to really help.” 

If there is an upside to the industry’s downturn, Rogers hopes policymakers and legislators will have a better understanding of hospitality’s value to overall economies. He recommends industry professionals sign up on AHLA’s website for the HotelsAct grassroots action center to send consolidated messages to Congress. “Every industry is working with their members of Congress right now as we're in this historic economic downturn, and if your voice is not loud, succinct and unified, then you're going to have a hard time getting heard,” he said. “We've been able to generate 140,000 letters through our HotelsAct program ... And what that will do is it will keep everybody on message, and it will allow these lawmakers to hear one single loud voice—and that is so critical at a time like this.”