The economic impact of COVID-19 on the U.S. hotel industry has already been greater than that of 9/11 and the recession combined. The U.S. hotel industry supports 8.3-million jobs across the country — that equates to one in 25 American jobs — and provides $660 billion in GDP (gross domestic product). The 33,000 small-business hotel operators and franchise owners represent 61 per cent of the industry.
Given the current impact of the Coronavirus pandemic on travel demand, the hotel industry is losing $1.4 billion in revenue every week. Based on current estimates, approximately one million direct hotel jobs, or 45 per cent of all hotel jobs, have either been eliminated or will be eliminated in the next few weeks. Current forecasts for a 30-per-cent drop in hotel occupancy over a full year would result in nearly four million jobs being lost.
As a result of the significant decline in consumer and business travel demand, as well as group bookings, industry leaders from Best Western, Choice Hotels, Hilton, Hyatt, InterContinental Hotels Group, Marriott, MGM, Pebblebrook, Universal and The Walt Disney Company —along with the American Hotel and Lodging Association’s (AHLA) president and CEO, Chip Rogers and U.S. Travel Association’s (USTA) president and CEO, Roger Dow— met with the White House and Congress March 17 to recommend urgent action and specific solutions to protect millions of hotel-industry jobs, which directly impact both the U.S. and local economy, as well as provide relief to its employees and small business owners.
On April 14, with the tourism industry all but shut down by the pandemic, the U.S. travel industry submitted a fresh list of urgent policy requests to Congress to protect the 15.8-million Americans whose livelihoods depend on travel.
At the top of the list: adding $600 billion to the Paycheck Protection Program (PPP), expanding eligibility to small businesses that were previously left out and ensuring loan forgiveness can cover both payroll and other operating expenses during the shutdown.
A key example of small businesses that were unintentionally excluded from the PPP under the CARES Act are local and regional Destination-Marketing Organizations (DMOs), whose work is crucial to driving travel and tourism business in every pocket of the country.
“The CARES Act was an ambitious step, but now the urgent problem is that assistance is simply not getting where it needs to go,” says U.S. Travel Association president and CEO Roger Dow. “Major adjustments and more aid are needed immediately to support small businesses, including local non-profits that are essential engines of the travel economy that employs one in 10 Americans.”
The latest economic data indicates travel in the U.S. has a long way to come back: weekly travel spending in the U.S. has fallen 85 per cent from the same point a year ago, according to figures prepared for U.S. Travel by the analytics firm Tourism Economics.
That puts the economy squarely on pace to lose 5.9-million travel-related jobs by the end of April, as had been predicted earlier — more than a third of the travel-supported workforce.
The policy measures proposed by U.S. Travel include new relief as well as some corrections to the provisions of the CARES Act, including:
• Expand eligibility for the PPP to DMOs that are classified as 501(c)(6) non-profits or “political subdivisions” of their local governments, as well as to small businesses (fewer than 500 employees) that operate multiple locations.
• Appropriate an additional $600 billion for the PPP and extend the coverage period through December 2020. The PPP is currently slated to expire on June 30 — the economy will not realistically be in recovery by then — and the initial round of funding is expected to run out in just a few weeks.
• Revise the PPP maximum loan calculation to eight times a business’ monthly outlays and allow it to cover both payroll and non-payroll expenses. Currently the formula is two-and-a-half times a business’ monthly outlays and covers payroll only, not other expenses — inadequate for immediate needs.
• Provide loan forgiveness to large businesses under the Exchange Stabilization Fund (ESF), rather than just loan guarantees, and clarify ESF eligibility for 501(c)(6) non-profits.
• Increase Economic Injury Disaster Loan (EIDL) funding to $50 billion, raise the loan cap from $500,000 to $10 million and allow a second EIDL if a business is still unable to meet its ordinary expenses.
“Congress must move swiftly to correct and supplement the CARES Act with additional rounds of aid,” Dow says. “Travel-related small businesses will be vital leaders of an economic recovery, but first they need to survive until the point when travel demand returns. In order to make it, these businesses need to be able to access the resources that will enable them to keep the lights on and retain their employees.”
