A coalition of lawmakers and a local union are calling on the Small Business Administration to provide greater transparency on how the paycheck loans are spent by the hospitality industry.
In a letter sent this week to SBA administrator Isabella Casillas Guzman, Rep. Nanette Diaz Barragán, D. San Pedro and 12 of her colleagues note that while PPP loans were meant to keep people working during COVID-19 pandemics or brought them when the health crisis subsided, the numbers show that this did not happen.
“Congress intended to use PPPs as a survival tool for small businesses to retain employees, not as a help to wealthy corporations,” Barragan said. “It is important that this funding is used to protect the jobs of hotel workers as intended.”
Other lawmakers who signed the letter include Rep. Ted Lew of Los Angeles, Rep. Alan Lowenthal of Long Beach County, and Congressman Greg Stanton of Arizona, among others.
Their participation was prompted by concerns previously expressed by Unite here local 11which represents over 32,000 employees in hotels, restaurants, airports, sports arenas and convention centers throughout Southern California and Arizona.
Small increase in staff
The health crisis hit hotel chains hard last year during the worst period of COVID-19, when travel restrictions and isolation measures led to the temporary closure of some hotels and significant staff cuts worldwide. Hilton Worldwide Holdings posted a second-quarter net loss of $ 430 million.
Unite Here reported that US hotels have received about $ 14 billion in loans from the SBA. But from May 2020 to June 2021, the number of jobs in hotels increased by an average of 20%. despite the fact that job losses fell much more during the pandemic.
The coalition said hotels were unable to get most of their employees back to work, even though data reported to the SBA on July 1 showed that 97% of the loans received by PPPs went to hotels to cover wage costs.
“This is why disclosure is so important,” said Jordan Fein, lead analyst at Unite Here. “We ask all hotel borrowers to disclose their loan applications and loan forgiveness. They didn’t say how they actually spent the money. “
Unite Here Local 11 said analysis of occupancy data shows 10 Southern California hotels, including the Hilton Santa Monica Hotel & Suites, are not eligible for full loan forgiveness for funds received by their owners or operators in 2020.
The union said the Hilton averaged only 10% of its pre-pandemic employment between May and October 2020.
Representatives of the three companies could not be reached for comment.
In a July 14 letter to the SBA administrator, representatives from Unite Here Local 11 and Local 40 wondered if Westmont had exceeded the SBA’s $ 20 million limit on “one corporate group” PPP loans.
SBA data released on June 8, 2021 shows 14 loans to Westmont headquarters in Houston. The loans totaled $ 13.5 million and were associated with 1,778 jobs, of which $ 13.1 went to pay wages, the union said.
The same data shows 21 additional loans to various hotels connected to Westmont, Unite Here reported, adding that the loans totaled $ 20.5 million and were associated with 2,246 jobs, of which $ 16 million was set aside for payroll. …
“Based on the results of your investigation, we hope that the SBA, in partnership with the Department of Justice, will take all necessary steps to ensure that Westmont Hospitality Group and its affiliates are in full compliance with the law,” the union said in a letter.
Unite Here Local 11 applied a complaint with the U.S. Small Business Administration earlier this year, alleging that the owner of the Four Points by Sheraton at Los Angeles International Airport may have misused federal funds earmarked for staff retention.
The union stated that the owner of Rui Gao Inc. closed the doors of Sheraton a week after receiving approval for a second round of PPP funding.