On Monday, the American Hotel and Lodging Association (AHLA) released a new report showing small business hotels will need more funding from the Small Business Association (SBA) under the Paycheck Protection Program (PPP). The report warns that further layoffs or business closings are likely unless additional funding is found.
Chip Rogers
The AHLA is helmed by a familiar name to many who follow Georgia politics, Chip Rogers, President and CEO. The former Senate Majority Leader turned GPB executive turned lobbyist now leads the sole national association representing all segments of lodging industry, which contributes some $660 billion to the economy.
“The CARES Act is an historic effort to meet the most serious health and economic challenges of our lifetime, and the hospitality industry recognizes and applauds every elected official who has helped meet these challenges,” said Rogers. “The policy solutions and technical corrections we offer do not overshadow the gratitude we have for the work already done to help save our industry. The additional funding and needed changes to the CARES Act are directly related to our only interests: saving jobs of our employees and supporting our small businesses.”
The report from AHLA explains that the “covered costs” portion of the CARES act only actually covers not quite half of average hotel operating costs. Predicted revenues for the industry are between 20 percent to 40 percent for the rest of the year. Increased PPP loan amounts may be the only way to keep many of these businesses afloat.
The AHLA proposal is bold: “If the CARES Act is amended to raise the loan limit from 250 percent average payroll to 800 percent of covered costs most hoteliers could keep employees and keep their doors open.” Quite a jump.
Somewhat surprising amid the bombardment of marketing for Marriott and Holiday Inn, according to the AHLA, more than 60 percent of U.S. hotels are defined as small businesses. They point to a study by Oxford Economics that the impact of COVID-19 on the hotel industry is potentially nine times worse than the impact of September 11th.
“The hospitality industry is truly engaged in a fight for survival. The human toll is measured in millions of jobs lost, and nearly half of all hotels are functionally closed,” said Rogers. “If small business hotel owners can’t pay the mortgage or utilities, they will have to close their doors with no jobs for employees to come back to work. We are doing everything we can to ensure those jobs aren’t lost forever.”
Due to the nature of the crisis, the hotel industry may be particularly hit in the long(ish)-run, with occupancy levels not projected to return to pre-crisis levels before 2021 and revenue may not recover until 2022. This could mean hundreds of thousands of jobs gone for multiple years. The pressure will likely continue to ratchet up for more rounds of recovery assistance.
