The hotel industry is seeking federal backing as they navigate the pandemic.
The health crisis is also creating a crisis for hotels.
The hotel industry is also suffering amid the continuous blow of the pandemic to many businesses. With the travel severely limited by the COVID-19 outbreak, the volume of the flock of people from one place to another has decreased. It may be due to people wanting to stay at home or with restrictions imposed by local governments.
In turn is bad financial reports for the quarter, including the hotel sector. Subsequently, many of the hotels are struggling to pay for their mortgages. Now they are seeking the help of the government.
In a desperate plea for help, the hotel industry says 25% of hotels are at risk of foreclosure. https://t.co/zi4UbYp3ZG
— CNN (@CNN) August 19, 2020
Tuesday a statement from American Hotel & Lodging Association’s chief exec Chip Rogers has even informed possible shutdown of many hotels. “With record low travel demand, thousands of hotels can’t afford to pay their commercial mortgages and are facing foreclosure with the harsh reality of having to close their doors permanently.”
According to the letter written by industry groups, including thousands of hotel owners, and sent to Congress, federal assistance is badly needed by the industry. Delinquency rates are elevating among securities markets backed by commercial mortgages.
It was reported that there are 23.4 percent hotel loans that are delayed by a month or more. Compare that to last year’s mere 1.3 percent, per CNN Business. It is also estimated that one-fourth of the hotels are on the verge of foreclosure. They also noted that the health crisis has impacted the industry by ninefold than the 9/11 incident.
Hope for Hotels
In the letter, they said: “Without action, an unprecedented wave of hotel foreclosures will ripple out from the commercial real estate market causing permanent job losses for thousands and the loss of billions in tax revenue to local municipalities supported by hotels.”
Their plea is support for the HOPE Act (Helping Open Properties Endeavor Act). It is an act that would form funding to give assistance to small enterprises in the commercial real estate market that were severely affected by the pandemic.
The groups explained: “The HOPE Act would allow business owners to keep their businesses running and retain and rehire our valued employees.” They then said that according to the Bureau of Labor Statistics, the accommodation industry has displaced over 5 million workers since February.