Lobbying For An Extension

Lobbying For An Extension
Case Study From The Hotel Group Illustrates Challenges For Hoteliers
By Dennis Nessler | May 15, 2020

By Dennis Nessler

The Payroll Protection Program (PPP) has provided much needed relief for many hotel companies throughout the country, but many industry executives have emphasized the need for the U.S. government to extend the program well beyond its designated 8-week time frame and to provide additional areas of funding.

One such executive is industry veteran Doug Dreher, President/CEO, The Hotel Group, a Redmond, WA-based hotel management company with the majority of its properties located in the Pacific Northwest. Dreher lobbied for an extension of the (PPP) deadline to the end of the calendar year and possibly beyond during a recent press briefing, which included the AHLA, the U.S. Travel Association, the International Franchise Association, and the Economic Innovation Group.

Furthermore, the AHLA earlier this week expressed its support for a number of elements contained in the HEROES act that would potentially improve the PPP. Some of the measures include offering PPP loan flexibility and extending the covered period to use loan proceeds. The lodging industry is in the process of releasing a “roadmap to recovery” laying out its top priorities to Congress.

Dreher, meanwhile, offered his perspective on the impact of the current Coronavirus pandemic. “In my 40 years in the business we have never experienced a crisis like this before. It’s truly been a cumulative effect of all past recessions; the S&L crisis, 9/11 and the great financial crisis combined. It is for us utterly devastating and the great depression with an unspeakable toll on our valued team members and hotels,” he said.

Dreher cited the 254-room Hilton Garden Inn in Bellevue, WA, as a prime example of a property that has been particularly hard hit. The downtown area is located just east of Seattle, which is home to Amazon, Microsoft, FaceBook and a number of other major companies. According to Dreher, the property had been operating at peak performance with more than 80 percent occupancy in February just prior to the outbreak of the virus.

Dreher noted that immediately following the first reported COVID-19 case in the Seattle area and Amazon’s announcement of its corporate travel ban that “literally everything started cancelling from groups to sports and conventions.” He detailed the property’s reversal of fortunes. “Our hotel subsequently went from peak performance of 80 percent occupancy to single-digit occupancy in less than a week back in early March and it’s not even begun to recover,” he said.

According to Dreher, the property is currently running at 2 percent occupancy and noted its April revenues equated to some $20,000 or roughly 10 percent of its $200,000 mortgage, which he noted represents merely one operating expense for the property. He further added that only 13 core employees are currently working for the hotel, which at one point had as many as 80 workers.

“The loan forgiveness portion of the [PPP] program really needs to be extended until year end or later when demand will begin to improve to levels worthy of rehiring the 80 percent of the valued team members who have been laid off,” said Dreher.

He further emphasized the need for additional financial relief. “Based on what we’re seeing in Bellevue and beyond nationally for our portfolio, there’s no way our hotels will be back to any normal business operations anytime soon,” said Dreher.

He also noted it was “absolutely critical and essential” to extend the time frame of the federal program. “The current deadline of June 30 is simply unrealistic given the majority of hotels are running below 20 percent and many others have suspended operations with no end in sight. As much as we look forward to welcoming our guests back once its deemed safe to resume travel we know this isn’t going to happen for a while, certainly not in time for a busy summer season. Travel, in general, as well as hotel demand, is likely to be adversely impacted for months, if not years, even after the health crisis subsides,” concluded Dreher.

Dennis Nessler
Dennis Nessler is Editor-in-Chief of Hotel Interactive, parent company of Hotel Community Forum. Nessler brings more than 28 years of editorial experience to his position, including some 17 years in the hospitality industry. As part of his duties, Nessler not only covers the industry editorially but moderates various high-level panel sessions at hospitality events and frequently conducts one-on-one interviews with C-level executives.