US luxury hotel groups return emergency COVID funds amid controversy
The skyline of Austin, Texas. (Photo from Pixabay)
Three Texas hotel groups linked to hotelier Monty Bennett return relief funds following controversy over eligibility for bailouts.
A trio of hotels in Texas returns $59m in Paycheck Protection Program (PPP) relief funding after Monty Bennett, a hotelier linked to all three luxury companies, said he would not turn back the money. The payback comes amid controversial bailouts to bigger corporate hospitality groups, while smaller brands and independent operators are struggling to get financial relief. We find out more.
PPP funding controversy
The US government has been the subject of scrutiny for its handling of the current and ongoing coronavirus crisis. From instructions by the president to disinfect the body with bleach to stimulus packages said to favour big corporations instead of small businesses, there is no shortage of fodder to pour over when it comes to COVID-19 and its myriad fallouts in the United States.
A group of luxury hotels in Texas recently became embroiled in the coronavirus controversy when they decided, amid significant national pressure, to return PPP funding to the tune of $59m, despite comments by hotelier Monty Bennett, to whom each of the groups is linked, saying that he would not turn back the relief money. The groups in question were Ashford Inc., Ashford Hospitality Trust and Braemar Hotels & Resorts, and the loans in question would have been bestowed as part of the government’s $2tn stimulus package aimed at bolstering the economy during the pandemic.
The groups released a statement addressing their return of the funds on the same day that the New York Times ran a front-page story about the Ashford group’s operations. The statement said that the return of the Payment Protection Package loan was due to “the agency’s recently changed rules and inconsistent federal guidance that put the companies at compliance risk.”
Further to this, Monty Bennett also released a statement, saying, “The hotel industry has been devastated by the COVID-19 pandemic and resulting National Emergency. Hotel industry executives met with the Administration at the White House on March 17, 2020, to plead for help for our industry. We are disappointed that, in an abundance of caution to avoid any risk of non- compliance with the changed PPP rules, our actions mean that our employees, vendors, communities and others in need will not benefit from the PPP as Congress intended. We call on Congress, the Treasury Department and the Federal Reserve to provide assistance to the hotel industry to protect jobs and asset values that have been severely impaired as a result of the pandemic and the government’s actions that have followed.”
Small business struggles
While Bennett’s comments seem to suggest that his affiliated groups have returned the funding because it wouldn’t be able to be allocated in an appropriate way, many factions in the US have come out to say that unaffected organisations shouldn’t be eligible to apply for PPP funding as it would take away from monies that could be allocated to keep smaller businesses (those less likely to survive this economic crash) afloat.
U.S. Travel Association and the American Hotel & Lodging Association and Democratic presidential nominee Joe Biden both weighed in on the issue, and following mounting pressure, the three groups finally agreed to return the funds, despite Bennett’s comments.