Toby Malbec, Managing Director for Constrata Technology Consulting
The hotel industry is greeting the $900 billion COVID economic relief package passed by both houses of Congress with guarded optimism.
The measure is the result of bipartisan compromise and cooperation among Congressional leadership and the administration, plus input from the incoming Biden administration. It was carried over the goal line by a group of moderate legislators from both parties. As a result, of course, no one is 100% satisfied. But the stimulus package is seen as a short-term solution to support individuals and businesses over the next few months.
For hotel operators and employees, the big takeaways are:
- The return of the Paycheck Protection Program, with $280 billion allocated for loans
- An increase in Paycheck Protection Program loans to 3.5 times a business’s payroll
- Tax-deductible status for Paycheck Protection Program loan expenses
- A one-year extension for Troubled Debt Restructuring relief
- Tax-deductible status for business meals through 2022
- An expansion of the Employee Retention Tax Credit
The bill does not include provisions for protecting businesses from liability claims related to COVID-19 exposure. At present, some states are addressing that concern, and to date there has not been significant litigation against hotels or other businesses.
Chip Rogers, president and CEO of the American Hotel & Lodging Association (AHLA) said in a statement, “This short-term relief package is a vital step toward helping the hotel industry survive this crisis. The proposed measure provides temporary relief over the next few months and will help thousands of hotels stay open and retain employees.” Rogers also noted that the AHLA was an active advocate for the legislation. During Day 3 of HT-NEXT 2020, Rogers detailed the impact of the pandemic and encouraged attendees to lobby their elected officials. “For months, the hotel industry has been imploring lawmakers to help the people and industries that have been most affected by this crisis. After more than 250,000 individual grassroots actions taken by AHLA members, we are pleased to finally see a long-overdue agreement.”
Although the original $523 billion Paycheck Protection Program, launched last spring, was a potential lifeline for hoteliers and other small businesses, it was far from perfect. The House Select Subcommittee on the Coronavirus Crisis has identified more than $4 billion in improper loans, and the Justice Department has charged individuals with more than $127 million in fraud. “The PPP is a tough subject, with a lot of Monday-morning quarterbacking,” notes Toby W. Malbec, Managing Director, ConStrata Technology Consulting, which specializes in hospitality, food service, and retail services. “The program’s premise was noble, but the lack of specificity and enforceability led to abuse and in some cases money earmarked to assist individuals, including employees in the hotel industry who lost their jobs, was not properly allocated.”
Looking to the future, Rogers said, “We look forward to working with Congress and the new Administration on a longer-term stimulus package that will ensure our industry survives and is well positioned to help the country recover economically once the public health threat subsides.”