indica News Bureau-
With the house of representatives’ passing a $484 billion enhancement of the existing federal stimulus against the COVID-19 pandemic related downturn, hotels and other small businesses are set to get another financial boost. Whether it will be enough remains to be seen. However, the reactions of the hotel industry suggest that a larger section of hoteliers is not happy with this. The legislation also provides funding for hospitals, coronavirus testing, and economic injury disaster loans, among other things.
The Asian American Hotel Owners Association, AAHOA, the largest association of its kind in the world, said the second stimulus package passed by Congress was not enough to meet the needs of the industry.
“America’s hotel owners support this crucial step to support small businesses and workers. The fact that, in fewer than two weeks, banks distributed the initial $350 billion in the Paycheck Protection Program is a testament to the financial hardship facing American small business owners and their employees. Hotels and restaurants made up only about eight percent of businesses that received loans under the initial PPP funding,” AAHOA President & CEO Cecil P. Staton statement said.
The overwhelming majority of the members of AAHOA are of Indian origin. According to the organization, the 19,500 AAHOA members own almost one in every two hotels in the United States, an industry which is one of the hardest hit by the COVID-19 pandemic.
“America’s hotel owners are grateful for our government’s swift action to appropriate additional funds for the Economic Injury Disaster Loan Program and the Paycheck Protection Program,” Staton said. “However, we are concerned that these measures do not go far enough to blunt the impact this economic crisis is having on the hospitality sector of the economy.”
Staton went on to say the formula for determining the maximum PPP loan amount still does not provide hotel owners with enough liquidity to weather this storm, and that on an average, PPP loans only cover about 47 percent of a hotel’s operating costs.
Currently, many hotels’ occupancy rates were hovering around the single digits, and owners are struggling to keep their doors open, Staton said.
“The stimulus also does not address the reality that this crisis will not be over in a matter of weeks,” Staton went on to say, urging Congress to extend PPP through the end of 2020.
“Hotels are a signal industry. Hotel owners and their employees felt the impact of the COVID-19 pandemic at its onset as occupancy rates and revenue declined steeply,” Staton noted adding that warnings from government officials about reopening will mean a slow return to travel, tourism, conventions and meetings.
“This means that hotels will be one of the last industries to recover. Without targeted and meaningful support, policymakers run the risk that thousands of hotels and the millions of jobs they create may not be around when the recovery from this pandemic begins.”
With billions of dollars in property assets and hundreds of thousands of employees, “AAHOA members are core economic contributors in virtually every community,” the organization said. “AAHOA is a proud defender of free enterprise and the foremost current-day example of realizing the American dream,” it added.
Nancy Patel, a Knights Inn owner in Corpus Christi, Texas, had a similar concern about the enhancement of PPP loans, such as the one she recently received to keep her 11 employees on the payroll.
“The PPP loan is only enough for me to keep my staff going. You need to pay the people,” she said. “But now, the PPP loan is also a little bit of an issue. When you say 75 percent of it has to be used toward payroll, what if there’s no business? How much are you going to give your staff between rooms?”
The payroll amount covered in that 75 percent supports her employees for about eight weeks unless she finds more work for them to do.
“Now you just find work for them. They can deep clean, redo everything in the hotel,” she said.
Patel said she had an easier time procuring her PPP loan because she has a close relationship with the small, community bank she uses. Others were not so lucky when the loans first became available.
“Not a lot of people got the [PPP loan] too because per the news and articles I continue to read, bigger banks have given those loans to the bigger corporate companies, leaving the small business owners to not have enough,” she said.
That’s why she prefers the small community bank she deals with.
“My banker, the first thing he said is ‘Hi, Nancy, I know it’s a difficult time, what can I do for you?”
In a later statement after the House passage of the enhancement bill, Staton also called on Congress to extend the PPP through the end of 2020.
“With many hotels’ occupancy rates hovering around the single digits, owners are struggling to keep their doors open. The stimulus also does not address the reality that this crisis will not be over in a matter of weeks,” he said. “We also encourage policymakers to give more consideration to a business’s debt obligations, such as mortgages, as they formulate relief loans and determine how they can be spent.”
Hotels are a signal industry; Staton went on, meaning they were one of the first businesses to feel the effects of the pandemic.
“Public caution and conflicting messages from government officials about reopening will mean a slow return to travel, tourism, conventions, and meetings,” he said. “This means that hotels will be one of the last industries to recover. Without targeted and meaningful support, policymakers run the risk that thousands of hotels and the millions of jobs they create may not be around when the recovery from this pandemic begins.”