Today, as I sit in my office (alone, that is), the city of Boston is still in Phase I of what promises to be a slow and prolonged return to work, business re-opening and easing into a “new normal.”
We are not allowed to have more than 25% of our employees return to the office (although all of my team have remained working remote through this first phase), most restaurants remain closed or provide take-out only, and beaches remain closed to the public or are reserved for the exclusive use of town residents…a polar opposite scene here in Beantown from say, the Ozarks. And, it is important to note that cases and hospitalizations are down. So, this is what an extremely cautious re-opening looks like.
Although we are seeing many U.S. cities begin to lift restrictions at a much more aggressive pace, including markets such as Atlanta and many across Florida, this is not an automatic trigger to re-open hotels. If there is one thing we’ve learned during this crisis, it’s that the cost to carry is much higher than anyone anticipated, even for a closed or operationally suspended hotel. Therefore, the decision to furlough or bring back employees has been in large part dictated by economic factors, some of which include the arbitrary timelines set forth in the U.S. CARES Act and specifically the payroll protection program (PPP).
The point here is each hotel, based on its location, local government restrictions, demand profile, owner liquidity, employment status, among other factors, is on a unique recovery trajectory. Therefore, despite early and commendable intensions, the PPP is not a one-size-fits-all solution.
The only thing all hotels have in common is that they need relief. But the manner in which the relief is provided requires a greater degree of flexibility to make it worth any owner’s while, and for some may mean the ability to even re-open at all.
Fortunately, the AH&LA has been diligent in highlighting these needs and advocating for the industry in this regard. The U.S. House of Representatives and then the Senate passed the Paycheck Protection Program Flexibility Act last week, and the president signed it into law on Friday. The act outlined enhancements to the original act to better address the needs of the industry.
- Changing the forgiveness period for PPP loans to 24 weeks from eight weeks;
- Extending the covered period for loans to December 31, 2020;
- Changing the restrictions limiting non-payroll expenses to 40% from 25%;
- Changing the loan maturity limit to five years from two years, and;
- Ensuring full access to payroll tax deferment.
The actual amendments to the CARES Act can be found here.
A big thank you to the AHLA for its ongoing lobbying effort and grassroots campaign. The PPP Flexibility Act is just what the industry needed as we begin to re-open hotels across America.
The big question now is, can owners apply for new or additional relief?