Trump sponsors receive government aid
Large hoteliers are subsidized through small business assistance programs.
Dallas Hotel Manager and President’s Principal Sponsor Donald Trump became the largest recipient of state aid for small businesses.
In line with regulations, a total of $ 59 million from the small business lending package was transferred to three real estate management companies under the chairmanship of Monty Bennett. The money went to Braemar Hotels & Resorts, which owns luxury real estate including the Ritz-Carlton in St. Thomas in the US Virgin Islands, Ashford Hospitality Trust Inc., which owns over 100 hotels nationwide.
Loans to Bennett’s companies show how large firms were able to take advantage of the small business program because of a legal loophole in the assistance package that allowed companies with locations in different locations to apply for loans that could be converted into grants if they supported employees and payrolls at certain levels.
This provision was included after hotel and restaurant lobbyists pleaded with lawmakers developing the program, especially a Republican senator. Marco Rubio from Florida. This provision allowed hotels and restaurants to apply for funds no matter how many employees they had, provided that fewer than 500 people were employed in each location..
Over the past six months, Bennett has donated $ 150,000 to the Trump and Republican campaign, according to FEC reports. He also supported Trump in 2016 and made donations his prominent allies such as the leader of the Republican Party Kevin McCarthy and senator Lindsay Graham.
Ashford stated that the relief program «works exactly as intended, providing much-needed capital to the small businesses and larger businesses that have been hit hardest – hotels and restaurants» with a staff of less than 500 people in each institution.
Another Trump supporter and hotel owner – Gordon Sondland – was also a beneficiary of a small business assistance package. According to his spokesman, the Provenance Hotels chain he founded received a loan as part of the assistance program. Sondland is a former EU ambassador who was instrumental in Trump’s failed impeachment process. Its network has more than a dozen sites, including three in Washington state, which has been hit hard by the virus. Portland Business Magazine previously reported that the Sondland hotel group received a loan as part of a relief program.
Ashford Hospitality said Tuesday that it expects to receive additional loans. The $ 30 million received by the group – the largest portion of the funds raised by a public company – came in the form of 42 loans to branches of companies that own hotels. Braemar, which also owns the Ritz-Carlton in Lake Tahoe, California, received $ 15.8 million in eight loans. Ashford Inc., which operates Ashford and Braemar Hotels, received six loans totaling $ 12.8 million.
Major hotel brands such as Marriott International Inc., Hilton Worldwide Holdings Inc. and Hyatt Hotels Corp. did not apply for small business loans. Companies make most of their revenue by selling licenses for brands and services to investors who own hotel properties.
Restaurants and hotels together account for less than 10% of planned aid loans to American businesses, according to data from the SBA, which runs the program. It noted that requiring companies to use the money within eight weeks to obtain loan write-offs is not enough, and the program’s focus on job retention does not give companies the flexibility to cover other costs..
Brian Crawford, executive vice president of government affairs for the American Hospitality Association, said funds are being directed to industries less affected by the pandemic.
«Seemingly healthy industries are using this program and that’s why we’re running out of money», – said Crawford.
A spokeswoman for Marriott, which owns five hotels in the United States, said some of its franchisees, who may qualify as small businesses, are seeking soft loans..
Marriott, which has temporarily closed about 1,000 hotels in the US and laid off thousands of workers, has had little trouble gaining access to credit markets. On April 14, Marriott raised $ 1.6 billion in five-year bonds. The company said it would substantially replace the $ 1.5 billion credit line that the company announced earlier in the day..
Since the Federal Reserve pledged to bolster the corporate bond market earlier this month, Hilton and Hyatt have raised hundreds of millions of dollars in debt.. Hotel chains have a number of additional options for obtaining cash liquidity, including selling loyalty points or borrowing for real estate portfolios.
A Hilton spokesman said the company, which does not own hotels in the US, has no plans to seek financial assistance from the US Treasury Department. A Hyatt spokesperson also said it has no plans to apply for small business loans under the SBA program, although some third-party owners of properties it manages would like to do so..
«What they did was the least expensive, least restrictive option: a simple unsecured corporate bond offering», – said Michael Bellisario, analyst at Robert W. Baird & Co.
Other companies associated with Trump have also faced business problems due to the coronavirus pandemic. Ballard Partners operated by Trump campaign fundraiser Brian Ballard, recently facilitated the addition of laundry services to the Department of Homeland Security’s core business list on behalf of a washing machine manufacturer.
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