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[Recap] Lodging State of the Industry highlights lessons learned, importance of unity

May 27, 2021 | Hotel COVID-19 Operations Guide

Amidst a historic recovery for hoteliers and lodging businesses across America, the Washington Hospitality Association held a national state of the industry conference with Chip Rogers, the president and CEO of the American Hotel and Lodging Association (AHLA).

An underlying theme of the discussion was unity, and Rogers started off discussing an inspiring – if not unprecedented – show of unity for the industry. The Save Hotel Jobs Act was introduced by U.S. Sen. Brian Schatz (D-Hawaii) and U.S. Rep. Charlie Crist (D-Fla.) and is meant to offer a lifeline to hotel workers until travel returns to pre-pandemic levels. Rogers said that the AHLA and Unite Here!, North America’s largest hospitality workers union, both supported and continue to advocate for this act which is rare due to the two organization’s frequent disagreements.

Rogers explained that the Save Hotel Jobs act would allow hotels to choose any three-month period from 2020 and compare that to 2019’s revenue. If revenue was down by 40% year-over-year, the business would be eligible for relief totaling three months of total compensation for what you would have paid your employees during 2019. Hotels would have nine months to spend it, and there are very few restrictions on the types or sizes of hotels that would be eligible.

Much of the national association’s focus is on passing this act that would provide immense relief to hoteliers and put employees back to work. The benefits from a grassroots movement, however, reverberate beyond this single issue. Rogers explained that 350,000 people have already sent letters to Congress asking them to approve this act, and that an army of passionate supporters in the industry can be deployed for local issues as well. Rogers explained that recently, they sent an alert out to supporters about an issue in Maryland, and generated 16,000 letters to the State legislature, sparking interest beyond Maryland. Because a single state’s laws can affect the whole industry in a business as travel-oriented as hospitality, staying involved with issues affecting other states helps everybody.

Rogers went on to discuss other issues facing the industry and took questions from participants. One issue that came up was the Employee Retention Credit, a tax credit that encourages businesses to keep people on their payroll. Unfortunately, many smaller hotels were not eligible for the credit because they use larger employee or property management services to manage their property. Lawmakers seem unwilling to go back and make this change in the tax credit that was included as part of the CARES Act, but Rogers said it has been helpful to have examples from those affected so that they can prevent restrictions like this from impacting future relief.

Another win at the National level came in a recent bill that would allow for higher per diem rates for federal workers. Rogers said that many private companies also base their per diem rates on the government’s standard rates, so this will have impacts across many sectors. Raising per diem rates “will inject millions into the hotel industry”, said Rogers.

One of the final issues has been a thorn in the side of many hoteliers for the length of the pandemic, and some are still tangled in it. Commercial Mortgage-Backed Security or CMBS loans are a common loan type for the lodging industry and differ from most other loans in that they are not administered through a bank, and the lender is a group of bondholders. Typically, the bondholders appoint a master servicer to be the main point of contact for someone with a CMBS loan, but the master servicer is not allowed to grant forgiveness. As many soon found out, getting relief on one of these loans was extremely difficult, and often ineffective due to the amount of time it took to get approved for relief. The AHLA has been working on the national level to improve the process, and the theme of unity was again invoked in the discussion surrounding CMBS loans. With so many people experiencing these issues for the first time simultaneously, communication from members with local and national associations, and with each other helped everyone to navigate situations that nobody expected to be in.

The conversation with Chip Rogers closed around that sentiment. The hospitality industry is expansive, but many situations are not unique, and a growing level of cooperation is extremely helpful for everyone. In that spirit, the AHLA has been adding local area managers to strengthen grassroots efforts with local chapters and members. Rogers also wanted to remind folks to look past the red state/blue state divide to find a common interest and create a solution. Just as the industry’s largest labor union and the AHLA were able to come together, varying political ideologies should be able to do the same, Rogers argued. The negative lasting effects of the pandemic get a lot of attention, but the industry may have a renewed spirit of cooperation as well. Chip Rogers echoed many across the hospitality industry in saying “if we can get through this, we can get through anything.”

You can watch the replay of this event here.