Dallas hotelier, biggest recipient of coronavirus loan program, says it's keeping aid
Ashford Inc., the publicly traded hotel management chain owned by Monty Bennett that has received tens of millions of coronavirus relief aid, says it plans to ignore critics and keep the money it's getting from a federal loan program meant to assist small business impacted by the coronavirus.
In a statement posted on its website Saturday, Dallas-based Ashford said it and its affiliated companies, which manage hotel sites for luxury hospitality brands including Ritz Carlton, plan to keep all of the funds the companies receive — nearly $60 million so far — under the Paycheck Protection Program.
The Ashford statement said the government had specifically designated the relief program for hotels and restaurant chains with numerous outlets, and called media criticism of the company tapping the money "misplaced."
Ashford also revealed in the statement that the company and its more than 100 hotel affiliated hotel properties have applied for far more money through the Paycheck Protection Program than was previously known —up to $126 million in forgivable low-interest loans. That would make Ashford the country's largest known beneficiary of the small business rescue fund if it were to receive all the loan money for which it has applied.
Car dealership chain AutoNation, a Fortune 500 company with $21 billion in revenue, said it had been approved to receive nearly $80 million from the Paycheck Protection Program to hire back 7,000 laid-off employees at local dealerships before the Florida-based company announced Friday it would return the money.
Ashford and its hotel affiliates have received nearly half the amount applied for as of Friday, according to financial filings. That roughly $60 million received is far larger than the recent average small business loan amount of $206,000 lent by the Paycheck Protection Program before it ran out of nearly $350 billion in initial funding after just two weeks. It is also nearly 13 times the $10 million maximum that each borrower was allowed to receive from the fund.
But hotels, restaurants and other franchisees were allowed to apply for the loans for their individual locations, as long as those locations had less than 500 employees each. That exemption is still allowed in a second tranche of $310 billion in small business loans that Congress voted this past week to replenish the Paycheck Protection Program.
Hundreds of thousands of business borrowers ended up getting shut out of receiving funds from the first round. The PPP is expected to restart lending on Monday morning.
AutoNation, Shake Shack, Ruth's Chris Steak House and several other large companies facing withering public criticism have announced they will give back the money they received from the Paycheck Protection Program.
On Thursday, the Treasury Department issued new guidance for the program strongly discouraging public companies from applying for assistance. The guidance said PPP loans were not intended for companies that have been able to raise money elsewhere. It said public companies that had already received PPP loans and would not be eligible under the new guidance had until May 7 to return the money and not face any penalties.
Ashford, however, said in its statement Saturday it believes it still qualifies for the program. It said other government assistance, included an emergency lending program from the Federal Reserve, were not available to it because of its previous borrowing.
Still, Ashford said it will review any loans it had received and return any money from loans that no longer qualify by the Treasury's May 7 deadline.
The company said 32 of its 130 hotels have been completely shuttered during the coronavirus crisis. Its top executives, including CEO Bennett, have taken pay cuts. Bennett told CBS MoneyWatch last month that his company, which was started by his father, had been forced to lay off or furlough nearly 6,500 workers.
"There is no money to make our debt service," Bennett told CBS MoneyWatch at the time. "We can't make the numbers work. No one can."
Ashford said it plans to use the majority of its PPP money bringing back its thousands of furloughed workers. But Ashford said in another part of the statement on Saturday it expected only a small portion of the loan money it had received from the Paycheck Protection Program would end up being eligible for forgiveness. Companies that use at least 75% of the money lent through the program on paying workers for eight weeks rather than letting them go can have their entire PPP loan forgiven, as well as the low 1% interest.
"Our singular focus is to get back to the business of hosting guests at our hotels and helping the nearly 14,000 employees who work at our 130 hotels and related businesses return to work as the economy emerges from this terrible crisis," the company said in the statement.