AHLA CEO applauds relief measures, but says SBA loans limits will not allow hoteliers to meet payroll and debt service obligations – resulting in likely continuation of furloughing of hotel workers
The following is a statement from Chip Rogers, AHLA president and CEO, on the Senate passage of the CARES Act.
“The hotel industry applauds leaders in the Administration and Congress who are working around the clock during this unprecedented public health crisis, to ensure the health and well-being of our country and to pass a financial package that helps save the American worker and the industries that drive our economy, including the hotel industry. We are especially appreciative of Senate Majority Leader McConnell, Minority Leader Schumer, and Treasury Secretary Mnuchin for their leadership and driving this process forward. It’s an important first step to getting our country’s economy up and running.
“We continue to support the underlying foundation of the CARES Act to help the livelihoods of millions of American workers and thousands of small businesses. We are very grateful for all the work the Senators have done on this bill, and we believe it is a critical step forward to help save our economy.
“However, there is one challenge that makes the current plan unworkable for hoteliers. The legislation limits an SBA loan to 250% of average monthly payroll. This limit will not allow a business owner to meet both payroll and debt service obligations beyond an estimated 4 to 8 weeks. Consequently, it will result in furloughing the very workers the bill seeks to protect. Since the measure reduces debt forgiveness with any reduction in payroll, hoteliers would be forced to use the entire loan amount on payroll, at the expense of debt service. The harsh reality is that travel restrictions and mandated business closures remain in place. The outlook for the foreseeable future is zero revenue for most hotels. If a hotelier cannot make debt payments the business will go under and the jobs are lost.
“COVID-19 has been especially devastating for the hotel industry. Every day, more hotels are closing, and more employees are out of a job. We urge the House to swiftly take up this legislation, while making these important changes. The hospitality industry stands ready and able to do whatever we can to make it through this unprecedented crisis, while building a foundation for a stronger tomorrow.”