Despite provisions for hotels in the CARES Act stimulus package, the American Hotel & Lodging Association this week sent letters to U.S. congressional leaders in support of $250 million in additional funds for small business loans, and to the U.S. Federal Reserve, Department of the Treasury and the Securities and Exchange Commission regarding debt service requirements.
"We strongly support legislation proposed by President [Donald] Trump, Senate Majority Leader [Mitch] McConnell and Speaker [of the House Nancy] Pelosi to provide additional funding for small business loans," said AHLA president and CEO Chip Rogers in a statement. "We need immediate action to update the CARES Act and increase the limit on SBA loans. The current limit will not allow a business owner to meet both payroll and debt service obligations beyond an estimated four to eight weeks. Consequently, it will result in continued layoffs of the very workers the bill seeks to protect."
The letter to McConnell, Pelosi, Sen. Chuck Schumer (D-N.Y.) and Rep. Kevin McCarthy (R-Calif.) noted that the economic effects of the coronavirus pandemic on the hotel industry is estimated to be seven times greater than the 9/11 terrorist attacks.
The letter addressing debt servicing, which the Asian American Hotel Owners Association co-signed, noted that hoteliers have a limited ability to work directly with holders and servicers of commercial mortgage-backed securities debt. "Debt relief, including forbearance and other loan modifications, for hoteliers from servicers and special servicers is necessary during this time of crisis," the letter stated. "It is critical that regulators act swiftly to ensure the over $300 billion worth of CMBS debt backed by hotel and lodging assets remains in good standing."
Without debt servicing action, "this crisis will lead to widespread foreclosures, snowballing into mass disruption and a critical lack of liquidity in the commercial real estate market," Rogers said.