After the U.S. House of Representatives approved the Coronavirus Aid, Relief and Economic Security Act on Friday, President Trump signed it into law. Travel and hospitality
advocacy groups say more is needed.
The largest economic rescue package in U.S. history CARES, specifically addresses $50 billion in economic
aid for airlines and more than $1 billion to support Amtrak, but mostly leaves hoteliers
and ground transportation providers to seek aid under $349 billion in Small
Business Administration provisions.
An individual SBA loan maxes out at $10
million. Loan amounts will be determined, however, by a formula tied to payroll
costs. Allowable uses include payroll, including salary and paid sick or medical
leave), insurance premiums, mortgage or rent payments and utility payments. Hotel
industry advocacy groups fear it may not be enough to carry hoteliers through
the economic storm.
President Trump, after recently
indicating he would lift U.S. social distancing recommendations by April 15,
conceded over a fitful weekend that included statements about potential
regional border closures that countrywide measures should stay in place through
April 30. As Seattle saw reported initial data that showed evidence of reduced
coronavirus transmission, New York City continued to battle against more than 23,000
cases while Chicago, Detroit and New Orleans appeared to be developing into new
hot spots.
As Covid-19 spreads into middle America
and distancing recommendations stay put, the outlook for a return to previous
travel conditions dims considerably.
Given the current limitations of the SBA
loans under the CARES Act, many hotels aren't going to make it through, according
to the American Hotel & Lodging Association.
"Under the current limits, hoteliers will only be able
to meet their payroll and debt service obligations for an estimated four to
eight weeks," AHLA president and CEO Chip Rogers said in a statement. "While
we all look forward to the day when it is safe to resume traveling, the reality
is that most hotels today are facing single-digit occupancy, and that is
unlikely to change in such a short time period. With no revenue coming in,
hoteliers can’t make their debt payments, which will result in the business
going under and employees losing their jobs permanently."
In the meantime, however, the money available
through the SBA provision can't come fast enough.
"The Phase 3 relief package passed by Congress this
week is a great first step in this process and comes at a time when the
American travel industry is facing catastrophic economic disaster, with almost
six million travel-supported jobs expected to be lost in the next five weeks,"
said U.S. Travel Association president and CEO Roger Dow, who also urged the
Department of Treasury and the SBA to expedite the rulemaking process, "to
get this money out the door and into the hands of those who so desperately need
it… there is no time to wait."
Both organizations referred to additional aid packages working
their way through Washington.
“As Congress weighs additional stimulus programs in the
coming weeks, we urge them to swiftly address this shortcoming in the CARES Act,"
said Rogers, referring to the current SBA loan limitations. "We will
continue to work in a bipartisan manner on a fourth wave of [Covid-19]-related
legislation and future economic stimulus packages to help affected workers and industries."
USTA's Dow added, "While the CARES Act represents tremendous progress toward keeping
our economy functioning at this challenging and unprecedented moment, it is
clear that more will need to be done."