Senate’s Coronavirus Relief Package Draws Some Industry Praise: Business Travel News

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Details on the effect on the business travel industry of a
proposed $2 trillion relief package passed by U.S. Senate late Wednesday night
weren’t fully clear this morning, but a handful of industry leaders praised the
deal that would offer suppliers direct grants and access to loans to help
counter the ruinous coronavirus pandemic. 

The bill, dubbed the Coronavirus Aid, Relief, and Economic
Security Act, or the CARES Act, now moves to the U.S. House of Representatives for
approval, then to President Trump to sign it into law. Congressional leaders
and Trump administration officials have indicated those steps are likely. 

The New York Times and other outlets on Wednesday reported
the bill would allow U.S. passenger airlines access to about $25 billion in
direct grants and an additional $25 billion in loans or loan guarantees, provided the airlines
use the funding to maintain current staffing levels and agree not to buy back
stock, issue dividends or increase executive compensation.

According to the Washington Post, the bill also
contains $17 billion in additional relief funds not specifically earmarked for
Boeing, but ostensibly created for the defense and aerospace manufacturing company
as a business “critical to maintaining national security.” It is not
clear whether Boeing would tap into the funds. CEO David Calhoun told Fox News
on Tuesday that the company, whose financial difficulties were mounting due to issues
surrounding the Boeing 737, would reject federal assistance if it came with
requirements for a government equity stake. 

Neither the amount of aid for other business travel
industries, including hotel companies and ground transportation suppliers, nor
the forms it would take, were fully clear on Wednesday. But some industry
leaders praised what they said were the federal commitment to the
small-business sector of the travel industry, which will have access to the $349
billion in Small Business Administration funds provided in the bill. 

“The bill expands what is considered a small business, particularly
for hotel owners, American Hotel & Lodging Association president and CEO
Chip Rogers told BTN on Wednesday. “It originally stated that SBA lending could
only go to companies that had 500 employees or less,” he said. “In
our industry, you might have a single company that owns multiple hotels and
they have more than 500 employees; therefore, those employees and hotels would
have been out of luck. We got [legislators] to change the definition to treat
every hotel as an individual business unit, so as long as an individual hotel
doesn’t have more than 500 employees, that hotel could qualify for lending up
to $10 million.” He added, “If the funds are used for payroll and for
interest on debt for rent or utilities, then those funds would be forgiven. In
that case, the money acts more as a grant than a loan.” 

 

 

The American Society of Travel Advisors in a statement said
that travel agencies would be eligible to access the airline relief funding the
bill would make available, citing what it said was a clause in the bill that
indicates the U.S. Treasury Secretary could make loans, loan guarantees and
other investments in “ticket agents.”

“The fact that travel agencies are included in the
airline assistance portion of the bill is a huge win and means that Congress
heeded our call to include our members in any targeted travel industry relief,”
ASTA president and CEO Zane Kerby said in a statement.

Meanwhile, both ASTA and the U.S. Travel Association praised
the loan provisions for small businesses, including independent contractors and
the self-employed. According to USTA, the loans would be “made available
quickly through community banks” and recipients could “receive
tax-free forgiveness on a portion of the loan, equal to eight weeks of payroll
and other expenses.”

AHLA’s Rogers told BTN his organization was still working on
legislators to tweak to those details. “We’re not sure how long this is going
to last so we’re working on two areas: the length of coverage for paying
employees and then the limits on the loans,” he said, acknowledging likelihood
of another piece of legislation as the bill moves to the House. “We’ve
already begun laying out our concerns for the next go around, but I don’t want
to sound ungrateful. I’m very happy with a large part of what is in here.”

USTA
president and CEO Roger Dow sees hope in the bill to provide a financial backstop for the industry. “With this bipartisan deal, Washington is providing a
vital lifeline to protect millions of travel workers and help businesses of all
sizes keep their lights on through the worst of the health crisis,” Dow said in a statement.

Other industry players were setting their sights
on the next step and urging Congress to act quickly to get monies flowing to travel
businesses that desperately need it. 

“[Congress] needs to get past partisan politics, and we
need to get the money into the marketplace fast,” said Travel Leaders
Network president Roger Block, who underscored the fragility of the agency
community in the crisis and the likelihood of mass layoffs without immediate
and uncomplicated government support. “If it’s not interest free loans … or outright grants, our fear is
that a number of small business people will give up, fire their staff and their
wealth will get wiped out in a matter of months.” 

AHLA echoed those concerns.

“Can bill pass quickly enough? No, because
we’re already passed that time,” said Rogers. “We also understand
that nothing like this has ever been attempted before. Lawmakers had a very
difficult task. How this happens from here is the key to if this is successful
or not. We need to make sure money gets into marketplace as quickly as
possible. If this gets bogged down into government bureaucracy and people can’t
access these resources for another six weeks, you’ll have a number of [businesses] that just can’t make it and will close their doors for good.”

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