With the COVID-19 travel shutdown stretching on into its seventh month with no real end in sight, advocacy organization Economic Innovation Group hosted a conference call of business representatives to encourage a new round of support from Congress.
EIG President and CEO John Lettieri started the presentation by emphasizing that until the coronavirus is controlled, the challenges facing small businesses will continue to grow and persist. “And unfortunately what we've seen so far are the consequences of short-termism in federal relief,” he said, noting that the primary small-business relief program has expired twice so far during a once-in-a-century crisis. “This is obviously unacceptable, but unfortunately somewhat predictable, based on the short term nature of the response in each of its different phases. This only adds to the toxic uncertainty that is facing small business owners and their employees.”
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Seven months into the pandemic, he said, small businesses across the country are becoming increasingly pessimistic about their ability to survive without additional relief. “One in 20 small businesses now reports that they expect to close in the next six months, which could equate to up to 1.5 million additional businesses across the country closing in addition to the million that have already shuttered,” he warned.
Federal Support
With these challenges in mind, Lettieri criticized the cycle of “lurching from one short-term response to another,” and called for Congress to break the cycle with longer-term support that is not captive to political timelines.
Related: The state of finance after the three-month deferral
“The House and Senate cannot be allowed to adjourn without passing additional small business relief,” he said. “This is not a challenge you can simply wait until after the election or to another politically convenient timeline to address. The time is right now.” The crisis will not end within the timeline of another Paycheck Protection Program extension, he noted. “PPP was never intended to be a long-term solution. And so while we think it was an effective way early on of blunting the damage that the pandemic was causing and buying time, unfortunately Congress hasn't used that time to prepare a more coherent longer-term strategy.” While an extension of the program would “certainly be preferable to nothing,” he added, Congress “can and must do better.”
Travel & Tourism
Before the pandemic, said Tori Emerson Barnes, EVP of public affairs and policy at the U.S. Travel Association, travel and tourism supported the employment of one in 10 Americans, but 40 percent of the American jobs lost to the pandemic are in the leisure and hospitality sector.
“It is by far the industry that has been hit hardest by this health crisis,” she said. “It's especially important to note that there are travel and tourism jobs in every congressional district in every corner of the country, and prepandemic travel and tourism was a top 10 employer in 49 states and the District of Columbia. We need real leadership from Congress; we need them to act now and we cannot let politics keep getting in the way of a real unnecessary action.”
Chip Rogers, president and CEO of the American Hotel & Lodging Association, said that the American hotel industry was driven by franchise businesses. “About 63 percent of these franchisees—according to the [Small Business Association]—are characterized as small-business owners, and they're the ones that are facing the real challenge that this pandemic has laid before us.”
Heading into the year, Rogers added, the AHLA commissioned a study that found one in 25 jobs in America have relied on the hotel industry. “We had 900,000 job openings as we started January 2020,” he said. “Today, as we are on this phone call, the unemployment rate in the hotel industry is almost 40 percent.”
Widespread unemployment is only one harrowing statistic. “When we look at the commercial loan status for hotels, almost 25 percent are already in delinquency,” Rogers continued. In a recent study of the AHLA’s membership of 28,000 people, 74 percent of hoteliers said they anticipate further layoffs and more than two thirds said they would be out of business within six months without aid.
“These are real numbers—millions of jobs and the livelihoods of people that built their small businesses for decades,” Rogers said, emphasizing that Congress has, so far, not taken any steps to extend further aid as the downturn continues. “Clearly, we're in a bad position when Congress believes that elections are more important than the very small businesses that support this entire country's economy. We've got to get that message through.” Now, he added, is the time to set aside partisanship and find a solution within the next few weeks—ideally within 10 days.
“We've got to get a bridge into—probably—the second quarter of next year,” he said. In the short term, this bridge would focus on helping hoteliers meet their debt obligations. “But then after that, we have got to be able to make sure we're investing in things that will get people out traveling again. You can't have [destination marketing organizations] collapse. You can't have hotels and restaurants closed down forever. These are things that are going to take what could be a one- to two-year recovery and make them a five- to seven-year recovery.”
Barnes agreed with Rogers, noting the different structures of different businesses that require support. “There are destination marketing organizations that are structured as 501(c)6 or quasi-governmental organizations,” she said. DMOs and convention and visitors bureaus will likely be hurting for a while as business travel remains slow and large-scale conventions remain on the back burner. “They're an important part of our industry as well, and so we need to take into account how we reopen that kind of meeting," she said. "How do we encourage folks to be willing to travel in a way that—of course—is healthy and safe, but that can open up that bigger part of the industry? ... We can't leave those that have been most impacted out, simply because of the structure of our organization, either.”