“The Paycheck Protection Program does not provide enough capital for a typical hotel owner to get us to the other side of this government-mandated lockdown on travel,” says Peachtree Hotel Group CEO Greg Friedman. “Unfortunately, it’s one of those situations where we probably need ten times what the current programs providing capital wise to get us to the other side and to be economically neutral. When I say economically neutral, I mean covering just the economic losses. So it’s not even us making the profits that we were projected to make over the next twelve months but it’s actually just to break even.”
Greg Friedman, CEO of the Peachtree Hotel Group, says in a CNBC interview that the typical hotel owner will need ten times that amount of capital from the Paycheck Protection Program to get them to the other side of this government-mandated lockdown on travel:
PPP Is Not Enough To Save The Travel Industry
Business today (with 120 hotel assets) is extremely challenging given the government-mandated shutdown on most travel. We look across our portfolio today and on average are running somewhere between 15 to 20 percent occupancy level. Most of our hotels are in the select-service space (Marriott and Hilton brands) with typically limited services. These hotels continue you have some (minimal occupancy). We do have a couple of full-service hotels and those are closer zero percent occupancy. There is very little conference or group business out there at this point.
We’ve shored up a lot of liquidity over the last 30 days. From our projection, unfortunately, the impact from COVID-19 has been soft over the last 30 days and is going to continue to be soft over the next 60 to 90 days. We expect the effects of it is going to be felt for probably the next 12 months as it relates to our hotel properties.
We’ve been pretty aggressive from an asset management perspective of just shoring up as much liquidity as we can so we can make it to the other side of this pandemic. That’s been a big focus, finding ways to cut costs both corporately as well as with other properties. This will (set us up to be in a) good position from a defensive perspective. As a company, we’re starting to look at ways that we can play offense as well as we come to the other side of this unfortunate event.
Hotels Needs 10 Times PPP To Get To The Other Side
We did get approval for the Paycheck Protection Program (PPP) and I’m very appreciative of the bipartisan support of that program, but unfortunately, that’s not enough capital for a typical hotel owner to get us to the other side of this government-mandated lockdown on travel. Unfortunately, it’s one of those situations where we probably need ten times what the current programs providing capital wise to get us to the other side and to be economically neutral. When I say economically neutral, I mean covering just the economic losses. So it’s not even us making the profits that we were projected to make over the next twelve months but it’s actually just to break even.
Personally, I believe as a country that we’re very resilient. I think without question that the next 12 months is going to be challenging. I think a lot of people are going to have concerns as it relates to travel given COVID-19 barring us finding some type of therapeutic or some type of vaccine. That could limit especially group travel, conference business, and the meeting business. That business is likely to be extremely soft over the next 12 months. When you look out 24 to 36 months from now I do think you will end up getting back to 2019 levels.