‘Devastated’ travel industry pleads for hundreds of billions in coronavirus relief
Travel industry executives visited the White House on Tuesday with a dire warning on the fallout from the coronavirus pandemic: half of all hotels in the United States could close by year’s end and put 4 million Americans out of work without a massive bailout from Washington.
Hotel and tourism CEOs are pleading for $150 billion in direct grants for hotels and their suppliers “within days,” and an additional $100 billion for other tourism businesses such as attractions, recreation, retail and rental cars, dwarfing roughly $50 billion requested by airlines in a combination of tax relief, federal grants and loans.
Travel industry executives entered the meeting with President Donald Trump with plans to request $150 billion, but “things have gotten so dire so quickly” that an additional $100 billion was included, said Tori Barnes, an executive vice president at the U.S. Travel Association, an industry umbrella group.
“The coronavirus already had a more severe economic impact on the hotel industry than 9/11 and the 2008 recession combined,” said Chip Rogers, president and CEO of the American Hotel & Lodging Association. “However Congress wants to package it, and the president wants to sign it, we’ll take it.”
Executives emerged from the meeting saying they had a sense the president understood the “severity” of the crisis, which could have a ripple effect that will tip the nation’s economy into recession.
But it is the rapid speed of this crisis that caught industry executives off guard. Industry executives said they are seeing 10-20% hotel occupancy rates in the nation’s largest cities, and expect the annual average to reach only 30% this year.
“We’re facing a catastrophe that is sudden, and needs to be fixed suddenly,” said Roger Dow, president of the U.S. Travel Association.
Executives who attended the White House meeting included Dow and Rogers, along with the CEOs of Marriott, Hilton, MGM, InterContinental and Disney, among others.
The group proposed the creation of a travel workforce stabilization fund that would be managed by the Small Business Administration, providing urgent access to liquidity and low-interest loans for small businesses — the majority of travel businesses nationwide.
One attendee described the effects on small business owners as “utterly devastating.”
“The human toll breaks your heart,” said Jon Bortz, president and CEO of the Pebblebrook Hotel Trust, a group with multiple properties in the Seattle area.
Trump told executives in the meeting that he knew the industries represented in the room “are among the hardest hit” by the coronavirus pandemic, which has swept across over 120 nations and all 50 states.
“All over the world it is a disaster,” he said.
But asked at a press briefing on Tuesday what specific help he is prepared to offer the tourism industry, Trump demurred.
“We’re going to help. They need help – look, let’s face it,” Trump said. “They go from having record-breaking years – this is the third year of record-breaking years, travel and tourism, airlines, everything – they were ordering new planes, building new hotels, everything was really hunky-dory. And then one day we hear about this rumor in China. And then we find out it’s much more than a rumor.”
In the media briefing, Trump again made a vague promise of help to the cruise line industry without offering specifics.
“You have a big problem with the cruise ship industry. It’s an industry that was setting all sorts of records two months ago. And then, all of a sudden, there is nobody on the ships,” he said.
While industry executives told Trump and Vice President Mike Pence, who leads the White House coronavirus task force, that they would promote new federal guidance against Americans congregating in groups of 10 or more, they did offer one criticism of the administration’s crisis response.
Bortz said that rumors of domestic travel restrictions were further hampering the industry by suggesting to Americans they would not be able to return home if they decided to proceed with their spring break or summer vacation.
The administration is asking Congress to approve more than $1 trillion in its next legislative package to ease the impact of the spread of coronavirus for businesses and American workers, though specific details of the White House proposal were few on Tuesday.
So far, the administration has spoken less extensively about its plans to help the tourism industry than it has about aid for airlines, another industry that has suffered a historic drop in occupancy since the crisis began. Airline executives on Monday requested close to $50 billion in direct grants and loans.
“I think as you know, this is worse than 9/11 – for the airline industry they are almost ground to a halt,” Treasury Secretary Steve Mnuchin told reporters at the briefing. “The president wants to make sure that although we don’t want people to travel unless it’s critical, we want to maintain for critical travel the right to have domestic travel.”
White House officials and congressional leaders are also hearing from the airport industry, which is seeking $10 billion to help recoup revenue it has lost, and anticipates losing, because of the coronavirus outbreak.
Joel Bacon, executive vice president for government and public affairs at the American Association of Airport Executives told reporters that the request was well received on Capitol Hill.
The cruise line industry has not yet made a public request for economic relief from the federal government.
Next Steps
Senate Majority Leader Mitch McConnell announced on Tuesday that the Republican-controlled Senate would soon begin work on what is being referred to as “Phase Three” – a legislative response that is likely to incorporate much of the $1 trillion White House request to help industries impacted by the coronavirus crisis.
“Through no fault of their own, major industries that our nation relies on have seen businesses virtually dry up overnight,” said McConnell, R-Ky. “Again, not due to any business decision they made, but because of appropriate directives from public health experts.”
Less than two weeks ago, Congress cleared an $8 billion emergency funding bill to address the mounting coronavirus crisis.
Last week, the Democratic-controlled House passed a $100 billion measure to provide funding for additional access to COVID-19 tests and expand paid sick leave, among other proposals. The Senate is poised to send that bill to the president to sign into law in the days ahead.
McConnell plans to take control of drafting “Phase Three,” telling reporters that senators would work at “warp speed” and the Senate GOP would come up with an agreement with the White House and then bring Democrats to the table to negotiate a final deal.
It could still take some time, however, to agree on the terms of the next package. It will come with a far steeper price tag and risks being labeled a “bailout” -- a term that could drain support from lawmakers on both sides of the aisle.
Some Republicans on Tuesday were already pledging not to support direct economic relief to industries like the airlines.
“I do not believe in bailouts for the companies. Period,” said Sen. Rick Scott, R-Fla., who is currently in self-quarantine after meeting with a member of the Brazilian president’s delegation who later tested positive for COVID-19. “It is their responsibility and they will figure this out because it’s run by smart people.”
Democrats on Tuesday appeared resigned to support a major economic stimulus package, but they also made clear they would drive a hard negotiation with Republicans and the White House in exchange for their support.
Senate Minority Leader Chuck Schumer, D-N.Y., said any bill that included economic relief for industries also needed significant support for struggling individuals.
“If we’re going to follow up the House bill with another major economic stimulus package, which we must, our major focus cannot be based on bailing out airlines, cruises and other industries,” Schumer said. “We should help our fellow Americans first, even as we plan and execute policies that protect our economy.”
House Speaker Nancy Pelosi also put out a statement Tuesday laying out House Democratic demands that “Phase Three” should provide stronger protections for workers needing to take sick leave during the crisis.
“During negotiations, the Democratic House will continue to make clear to the Administration that any emergency response package must put Families First before any aid to corporate America is considered,” she said.
David Lightman, Brian Murphy and Alex Daugherty contributed reporting.
This story was originally published March 17, 2020 at 6:27 PM.
