Seeking Coronavirus Relief: What Hotel Execs Told the President

Hospitality industry leaders have requested billions in government aid to pay employees and keep businesses solvent during the COVID-19 crisis.

The hotel industry is suffering badly from the coronavirus. With occupancy dipping into the single digits, properties are shutting down across the country, and millions of employees are expected to be laid off or furloughed.

As the impact of COVID-19 worsens every day, hotel owners need a fast infusion of capital to survive, U.S. Travel Association president Roger Dow emphasized in a press conference on Tuesday. On that day, U.S. Travel revealed a dire projection based on a new impact study by Oxford Economics: The decline in travel will strike an economic blow of $809 billion to the U.S. economy this year and the hospitality industry will lose 4.6 million jobs by the end of April. Federal aid is imperative for the survival of the travel business, which directly affects the U.S. and global economy, Dow stated.

Chief executives of the largest U.S.-based hotel companies took that deeply concerning message to the White House this week for a 25-minute meeting with President Donald J. Trump, Vice President Michael Pence and Secretary of Commerce Wilbur Ross, Jr.

In the room where it happened: the leaders of Hilton, Best Western, Marriott, InterContinental, MGM Resorts International, Choice, Hyatt, Wyndham, Disney and the American Hotel & Lodging Association. Each had a few minutes to state his organization’s immediate needs, which were focused on two points: securing money to pay otherwise out-of-work employees immediately and providing capital to allow owners and operators to see their properties through the COVID-19 crisis.

The President asked few questions. He promised to provide aid and assured those assembled, "You’ll be back in business soon."

Following are highlights of the White House meeting, based on a video posted by C-SPAN.

Christopher J. Nassetta, CEO, Hilton:

We have 6,000 hotels around the world, about 4,500 in the great United States of America. We employ, globally, about 450,000 people, and about 260,000 people here in America. Our industry, as you will hear from others, has been impacted in a devastating way. I’ve personally lived through many crises - the S&L crisis, the 9/ 11 crisis, the Great Recession. I've been doing this for 35 years, and I’ve never seen anything like it.

We're hoping to have a constructive dialogue about how we protect the small businesses that make up the bulk of this industry, and how we protect the people on the front lines of this industry. That number - 5 million people - are in harm's way.

President Trump: And tell me, so you're in many countries; how are you doing in other countries? Some are in very, very bad shape.

Nassetta: I was looking at our numbers last night; it is strikingly similar everywhere in the world. Within just a few days or maybe a week, we will probably be running 10 to 15 percent occupancy all over the world. If you look at the major cities around the United States, they're running in the single digits.

Hilton has been around for a hundred years, and during that time we've never closed a hotel that wasn't going to be demolished for rebuilding. The bulk of our hotels in the major cities are closing as we speak.

President Trump: Well, we'll get it open soon. We’re doing a yeoman’s effort. We're going to be very successful. You'll be back in business soon, but we have to keep your employees going, your businesses going, and we will be able to do that.

Hotel Owners Are Struggling

David Kong, president and CEO, Best Western Hotels & Resorts and WorldHotels

We have about 5,000 hotels around the world and half of the hotels are in the United States. We employ tens of thousands of people. This is a very challenging time for us.

I was on a call today with one of our franchisees. He owns about 10 different hotels across different brands, and he was lamenting that he was about to lay off of hundreds of people, some of whom have been with him for 20 or 30 years.

He was really concerned about their livelihood, and the other thing he mentioned was that if the government can help with liquidity and access to capital, that would be of great assistance. He specifically mentioned that his loans are swap loans and therefore there are severe penalties to refinance. And so, if there's any way to alleviate that burden, we would be most grateful.

President Trump: We're dealing with the banks; the banks have been very accommodating.

Arne Sorenson, CEO, Marriott International

We have about 750,000 people who wear our name badge around the world every day. Probably about two thirds of those are in the United States.

The coronavirus outbreak started the third week of January in China, and within a week, business was down about 90 percent there. About three weeks ago, we had that horrible weekend where it showed up in Korea and in Italy, and that was sort of a clarion call, if you will, that it had left China and it was moving to the rest of the world.

And while we didn't know exactly how it would show up in the United States, it was fairly clear that it was now a broader spread…In the U.S. in the last couple of days, when you look at the decline in reservations and the rise in cancellations, the total is negative. So, we're losing business every day. We’ll have some time to discuss that later today, but I think employees first and liquidity second -- those are the two things on our list.

Communities Feel the Loss

Elie Maalouf, CEO, InterContinental Hotels Group Americas

We have nearly 6,000 hotels around the world, over 3,800 hotels in the United States and over 530,000 rooms. Eighty percent of those are owned by small businesses across 50 states, across every county, across every community. Those small business owners are the bedrock of their communities. It's not just their employees who begin to see an impact on job losses. There’s an entire ecosystem of their suppliers, their vendors.

I'm very pleased that we can work together with you and the administration to find a solution to preserve that network of entrepreneurs across the country.

Patrick Pacious, president and CEO, Choice Hotels International

We have 6,000 hotels in the U.S. One out of every 10 hotels in the U.S. flies our flag. We're in secondary and tertiary markets; we may be the only hotel in a small town. Those owners have two key concerns: one, what do they do with their employees when they've got zero occupancy; and two, how do they pay their mortgage? So, it is a question of employee retention and liquidity so they can get through this period.

Ninety percent of our hotels are SBA-eligible, so we're very familiar with the [Small Business Association] loan program and disaster relief. There's some red tape there, and we have some suggestions that we think the SBA could consider.

President Trump: OK, give us those suggestions.

Pacious: The first is the disaster relief cap. It's only $2 million, and if you've taken out the full five you can't get access to the to the additional two. So, we need the cap raised; we need it raised to at least $10 million on a per-individual basis. Secondly, is the personal liquidity test, which just got put in place; that could be rolled back. And the final one is figuring out the affiliation; an individual may own a partnership in multiple hotels, and that again restricts the amount of capital available to them. So, we'd really like the opportunity to speak to the SBA about lifting some of those requirements to really help inject some liquidity into the market.

Missing: Millions of Would-Be Meeting-Goers

Mark Hoplamazian, president and CEO, Hyatt Hotels Corp.

We have 950 hotels around the world, and we have 600 in the United States, over 70,000 employees. We have a large base of group business in the United States - big conventions and meetings - and we've been tracking major cancellations in the U.S. alone. These are cancelled events, and I'm not talking about major sport leagues that are shut down, or universities and those kinds of things, but actual convenings, conventions, big meetings.

When we look at just the other meetings that have been cancelled, they involve attendees of over 1.5 million people. So, when you think about the ecosystem impact, it's in major convention markets where those attendees are not showing up. They're not traveling on airplanes, they're not staying in our hotels, they're also not going out to restaurants. The collective impact is quite significant.

The urgency is very high because day-by-day occupancy rates have dropped precipitously. Now we are seeing occupancies below 10 percent, in the single digits, for the vast majority of our hotels — whereas a week ago they were 20 to 30 points higher than that. It's happened very rapidly.

President Trump: When this ends, do you see a quick buildup?

Hoplamazian: I think that all depends on how confident people are to get back on planes and start traveling again. That's really the key issue. We’ve got to also position ourselves to get people back into their jobs, either retain them or rehire them. We are all proud of the people we employ, and we want to retain them.

President Trump: Hopefully you can retain them; that’s what we're shooting for. You want to retain them.

Getting Down to the Dollars

Nassetta: When our owners are running at 8 or 9 percent, we're shutting hotels, so all of those employees are being furloughed or laid off right now, day by day. We're laying off tens of thousands because our owners can't pay [their salaries], and so the timing is really important. One of the things we want to talk about is trying to create a fund for those people in order to stop that from happening.

President Trump: What kind of a fund would that be, in terms of dollars?

Nassetta: Our quarterly payroll for the industry is $45 billion, so you can sort of scale it from there.

Leisure Will Recover First

Michael Brown, president and CEO, Wyndham Destinations

We're in the vacation ownership and exchange business, the world's largest company in that space. We employ 23,000 associates and take care of over 5 million households on vacation every year. Largely, the industry has about an $80 billion impact to the overall economy, and we employ directly 250,000, and another 250,000 through other small businesses that work well with our industry.

To your point about a quick recovery, we purely serve a leisure customer, which means just like after 9/11, just like 2008 and ’09, our customers will be back really quick, as soon as we're on the other side of this. We really believe our industry will recover quickly and be an accelerant to the economy once we get to the other side.

Jim Murren, chairman and CEO, MGM Resorts International

On behalf of MGM, we have made a decision around the country to close our resorts. On Wednesday night we will close all the resorts in Las Vegas. That’s 70,000 people we are now putting on a furlough. I want to retain those employees. I want to bring them back as soon as possible. Las Vegas, as you know, will come back rapidly once you give us the green light. But it's very important that we keep these people on our payrolls as soon as possible.

I also represent the 2 million jobs in the gaming industry in the United States. And as you know, many of those casinos are in cities that rely upon them for their tax revenue, so I appreciate your efforts and I stand by to help you in any way I can.

Tax Breaks on the Table

Richard Bates, vice president of government relations, Disney

Today I'm here to represent Disney’s theme park and hotel business. We have about 220,000 employees. We think our company is great because of our employees. Employee retention is the single most important issue for me. A second would be liquidity. I frankly support some kind of employee/employer payroll tax holiday.

President Trump: Is that what you like the best of the various scenarios?

Bates: I like them all. That one I like a lot.

President Trump: That’s most direct; not as quick, but most direct.

Help Is on the Way

As the White House meeting with hospitality leaders concluded, journalists shouted questions to the President. One asked, “What is your message to the tens of thousands of employees who have been furloughed and who live paycheck to paycheck, in many cases?”

The President answered, “We’re going to take care of it. We'll be bigger, stronger, better than ever before, and it won't take that long.”

Source:  Northstarmeetingsgroup.com