Top Hotel CEOs Urge New Government To Step Up Virus Relief

By Joyce Hanson
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Law360 (November 10, 2020, 6:37 PM EST) -- The CEOs of nine major hotel companies have urged a post-election Congress and presidential administration to do a better job of supporting the hospitality industry during the COVID-19 pandemic, and said a divided government in 2021 should improve the chances of getting workable economic relief.

President Donald Trump and the current Congress' failure to offer small businesses a solid stimulus package could be corrected if the new government improves the Federal Reserve's $600 million Main Street Lending Program and reauthorizes the Paycheck Protection Program, CEOs from hotel giants including Marriott, Wyndham and Hyatt said during Zoom conferences at New York University's International Hospitality Industry Investment Conference, held this year on Nov. 6-12.

Marriott International Inc. President and CEO Arne Sorenson said on Friday that, like the rest of the nation, he's still digesting the election results and waiting to see confirmation of clear winners in the executive office and U.S. Senate. Sorenson said he's hoping for a divided government in 2021.

"The best possible of outcomes would be a spilt government," Sorenson said. "It was deeply disappointing this year that Congress couldn't work with the White House on the last stimulus bill."

The U.S. government failed this fall to reach a stimulus deal that would have allowed the administration to use $134 billion in unused PPP funds.

Sorenson said he expects to see Trump contesting President-elect Joe Biden's win in litigation over the weeks to come, "then hopefully Congress will get to work on a stimulus package" that includes a comprehensive plan to reduce the spread of the coronavirus and support small businesses. "The economy and the health care crisis both have to be managed," he said.

On Tuesday, Wyndham Hotels & Resorts President and CEO Geoff Ballotti seconded the Marriott CEO's sentiments, saying the Democratic president-elect and Republican Senate Majority Leader Mitch McConnell have a longstanding relationship that may bring both sides of the government together.

"Arne Sorenson said it well," Ballotti said. "This election will result in the best of all outcomes assuming that each side of a divided government will support each other."

Looking at hotel businesses' "urgent and acute" need for government support, Hyatt Hotels Corp. President and CEO Mark Hoplamazian said on Friday that a "Purple Congress" next year stands a better chance of helping small hotels, where millions of workers nationwide lost their jobs when the pandemic hit.

There's no demand now for what the government has on offer with its Main Street Lending Program, because the framework and requirements for hotels "are nearly impossible to meet," Hoplamazian said. Many hotels have traditionally relied on collateralized mortgage-backed securities as a low-cost form of debt, and CMBS lenders prohibit additional indebtedness when giving loans to hospitality businesses, he said.

"The executive branch hasn't provided a path, although the Treasury secretary is trying to offer a plan," Hoplamazian said. "In a political sense, it all ends up having to go through Congress. If that's what happens, how about defunding Main Street and reallocating funds to PPP? At least a whole lot of money got out the door with PPP" when the coronavirus relief package launched in late March.

Hilton President and CEO Christopher Nassetta said on Friday that he was sorry to see the currently divided government fail to reach a stimulus deal this fall. That division also has contributed to the government's failure to build public confidence with a reliable virus testing and contact tracing plan that would allow travelers to feel they can get out and be mobile again in a safe way, he said.

"It was very disappointing that we couldn't get something done before the election. It was politically impossible, which is a sad statement," Nassetta said. "If we get a divided government, I'm optimistic there will be motivation to get things done and calmer heads will prevail."

Favoring an immediate bailout plan, Choice Hotels International President and CEO Patrick Pacious said on Tuesday that the stimulus should happen now, during the lame-duck congressional session before Biden takes his oath of office in January.

"We can't wait until February for a new administration," Pacious said. "The Cares Act should have passed weeks ago. And another administration and legislature needs to influence the regulators to push banks to give forbearance on loans."

But banks aren't in business to lend to failing businesses, according to BWH Hotel Group President and CEO David Kong, who added that he views the PPP as "just a Band-Aid."

Instead, Kong urged support for the Reviving the Economy Sustainably Towards A Recovery in Twenty-Twenty Act, introduced in Congress in May. The Restart Act is needs based and allows for loan forgiveness based on 2020 losses, he said.

"That's far more compelling," Kong said on Friday. "The recovery is only possible based on hotels surviving and the ability to depend on the government's help. It's about survival and then recovery."

--Editing by Nicole Bleier.

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