American Rescue Plan: Opportunities for Hospitality Industry Relief & Recovery Policy Options

OPPORTUNITY

The American Rescue Plan was signed into law by President Biden on March 11, sending $350 billion to states, local and tribal governments to address the fiscal impacts of the COVID-19 pandemic. The ARP stipulates that 25 percent of those funds be devoted to hospitality industry relief efforts, but the legislative text is not specific in how states and local governments should meet that goal.  This represents a once-in-a-lifetime opportunity for the hotel industry to tap into significant pool of federal funds to help alleviate the economic losses sustained through the pandemic.

According to the American Hotel & Lodging Association’s State of the Industry Report, the hotel industry and its employees will continue to feel the adverse effects of COVID-19 for years to come.

• Hotel employment is not expected to rebound until 2023 
• Business travel is not expected to return to pre-pandemic levels until 2024 
• State and local tax revenue generated from hotels fell by one-third in 2020 and will not rebound until at least 2023

The impact of the pandemic on hotel jobs in South Carolina has been devastating. Click here to view the data.

NOW IS THE TIME TO ACT

It is incumbent upon state and local leaders to place a high priority on the lodging industry as ARP funds are applied to public policy solutions. Below you will find several examples of hospitality-specific provisions implemented by state and local governments to provide relief to our industry.

Direct Financial Relief

Maryland Grant Program – Governor Hogan has announced a $50 million grant program for hotels. The funding will be distributed by local jurisdictions to go toward payroll expenses, rent, and utilities in order to keep operations going while travel is restricted.

North Carolina Hospitality Assistance  - Providing direct stimulus to NC restaurants, bars, and hotels that have experienced a 15 percent decline in annual taxable sales revenue for at least one quarter in 2020 (compared to 2019)

District of Columbia Hotel Bridge Fund, which resulted in payments to hotels of approximately $1,400 per room) The Hotel Relief Fund was open to businesses that met the following criteria:

• Operators must have a current Hotel, Bed and Breakfast, or Inn and Motel Business License
• 80 percent of the award must go towards payroll and benefits including healthcare
• Temporarily closed hotels are eligible but must commit to reopen by March 31, 2021.
• Montgomery County, Maryland Hotel Relief Grant Fund - Eligibility requirements for local assistance included the following:
•  Except as provided below, have at least 10 sleeping rooms.
• If the accommodation is a bed and breakfast establishment, have at least 5 sleeping rooms.
• Demonstrate a reduction in year-over-year gross revenues of at least 25% for the period of April 2020 – November 2020 compared to the gross revenue of April 2019 - November 2019.
• Be open to the public for the provision of accommodations by no later than March 31, 2021.

Florida provided short-term loans up to $50,000 to any small business with two to 100 employees affected by COVID-19. These loans were interest-free for up to one year and were designed to bridge the gap to either federal SBA loans or commercially available loans. To be eligible, a business must have been established prior to March 9, 2020 and demonstrate economic impacts as a result of COVID-19.

The Hospitality Emergency Loan Program (H.E.L.P.) in Delaware offered assistance to businesses that had been in operation for at least a year and had annual revenue below $2.5 million.

Other relief concepts:

• Rent or mortgage payment forbearance/abatement
• Bans on commercial evictions
• Business insurance relief

Job Protection and Labor

• Move hotel workers to phase 1c (or the corresponding “essential worker” phase) for vaccine distribution
• Replenish Unemployment Insurance trust funds
• Employee Reinstatement Credit – to expedite the process of bringing associates back onto the payrolls (adapt from federal employee retention credit language)
• Deferred implementation of new business mandates (e.g. predictive scheduling)
• Workforce development

Recovery Incentives

• Meeting and events incentives – Colorado legislature recently passed a $700 million stimulus package that included $10 million for a “meeting and event incentive.” This incentive would include a 10 percent credit against the hard costs of hosting a meeting or event through 2021. Hard costs could include hotel rooms, food and beverage, and audiovisual expenses.
• Health Workplace Tax Credit (adapt from bipartisan federal legislation)
• Temporary travel tax credit for both business and leisure travel
• Sales tax exemption for purchase of Personal Protective Equipment (PPE) and Structural Enhancements
• Destination marketing fund enhancement
• Expand broadband access

Legal

• COVID-19 exposure liability protection
• Indemnification for hotels (owners, operators and brand franchisors) used for alternative uses as well as other tort protections vis a vis coronavirus