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AAHOA
AAHOA Members,

As we are all well aware, the coronavirus (COVID-19) is seriously impacting the businesses of hoteliers across the globe. In these forthcoming updates, AAHOA will communicate the latest information available that will be helpful to you.

AAHOA is currently meeting with brand leaders, members of Congress, and Trump Administration officials to see what can be done to mitigate some of the damage this virus has already done to your business. In this eNewsletter, you will learn more about AAHOA's efforts. 

Help AAHOA help hotel owners by sharing this update with owners in your network, and turn to AAHOA's
Facebook, LinkedIn, and Twitter accounts for the latest. During times like this, we are tested as entrepreneurs, as families, and as a community, and the more we can work together, the more we can keep our guests, employees, and properties safe.

CONTENT FOUND IN THIS UPDATE
  1. Brand updates: Actions taken in response to COVID-19
  2. Call to action: Share your perspective in our COVID-19 AAHOA Member survey
  3. What AAHOA is fighting for right now: A list of policies AAHOA is actively advocating for at the federal level
  4. Action items: Three things you can do right now to help protect your business
  5. AAHOA resources: What to expect in the coming weeks and links to AAHOA resources

AAHOA Chairwoman Jagruti Panwala and AAHOA President & CEO Cecil P. Staton issued the following statement regarding actions taken by several hotel brands in response to the unprecedented economic effects of COVID-19 on the hospitality industry:

“On behalf of America’s hotel owners, we are grateful for the conversations and communications we’ve had with the brands and for their response to the concerns of our mutual members/owners that we related to them. We feel that the brand initiatives emerging from these discussions will help mitigate the economic hurt that COVID-19 is inflicting on hotel owners.

“We are impressed with some of the responses, such as Hilton Hotels hitting the pause button on the enforcement of brand standards, PIPs, and policy rollouts. This will allow owners more flexibility in areas such as limiting hours and food and beverage service in addition to allowing them to focus on the fundamentals of hotel operations. Our members’ first priority is keeping their guests and employees safe. Steps such as these taken by Hilton, Choice, Wyndham, G6, RLH Corporation, Radisson, and other brands will not only help owners do just that but also reduce the cost pressures associated with the implementation of these standards.

“In these uncertain times, it is imperative that we come together as an industry so that we may continue to thrive, and we appreciate these initial steps some brands are taking in response to the concerns of hotel owners. We are a resilient industry, and I am confident that, by working together, we will persevere in the face of this crisis.”

As we meet with these officials and leaders, we need to be equipped with the data on how coronavirus is affecting your business. We encourage you to take the Business Impacts on Hoteliers Due to COVID-19 survey, where you can share how this crisis has impacted your business and ideas on how government officials and brands can help our industry during this uncertain time. Please ask hotel owners in your network to do the same. No one knows the hotel business better than you.

Your contributions and unique perspective will help us as we continue discussions with brands and officials. Responses to the survey are voluntary and will be kept strictly confidential.

Next week, AAHOA will meet with Larry Kudlow, Director of the United States National Economic Council, to represent the voice of hoteliers during a discussion of the havoc this virus is wreaking on the global economy and how to mitigate the damage.

Below, you will find some policies AAHOA is actively advocating for at the federal level that will help put more money in your pockets as soon as possible.

Employee Retention Credit

Objective: Help hoteliers keep employees on the payroll.

Justification: The sudden decline in travel spending due to the COVID-19 virus is making it hard for local hoteliers to meet their payroll obligations.

Details: This would provide a temporary business tax credit worth 40 percent of wages (up to $6,000 of qualified wages per employee) paid by a qualified employer to an employee, for a maximum credit of $2,400 per employee. Similar relief was provided after Hurricanes Harvey and Irma.

Five-Year Carryback of the Net Operating Loss (NOL) Deduction

Objective: Help hoteliers mitigate the harm of declining revenue.

Justification: COVID-19 is depressing business spending across the board, which could cause hoteliers to have a net loss this year, making it harder for them to meet their obligations and stay open. Business closures due to sustained losses could have a cascading effect on credit markets and the larger economy.

Details: Temporarily allow taxpayers to carry back net operating losses over the previous five years. A business incurs a net operating loss (NOL) when its taxable income is negative. The year in which the NOL is realized is referred to as a “loss year.” Businesses have no tax liability in a loss year. Before 2018, business could carry back a NOL to obtain a refund for taxes paid in the prior two years of the loss or carry it forward for 20 years to reduce taxes owed in the future.

Delay Deadline for Estimated Quarterly Tax Payments and Filings

Objective: Help affected hoteliers manage cash flow challenges.

Justification: As hoteliers experience financial volatility due to COVID-19, the current quarterly payment schedule may make it difficult for them to manage cash flow for operational demands.

Details: Delay the April 15 tax payment and filing dates for at least two months for hoteliers. In the past, the IRS delayed payment and filing deadlines for businesses affected by major disasters, including Hurricanes Irma and Maria. Interest and any potential penalties should not apply to these delayed payments.

Allow Corporations to Defer Tax Liability

Objective: Assist hoteliers financially affected by the COVID-19 virus.

Justification: This outbreak is severely impacting business in the travel and hotel industry due to forced or voluntary travel restrictions. Hoteliers may even materially reduce their workforces as well as reduce or halt planned capital investments. Deferral of income tax will reduce the adverse financial impact of the virus and likely reduce loss of employment as well.

Details: Allow corporations to defer a portion of their 2020 federal tax liability, to be paid over the following five tax years. The percentage of deferrable tax would be based on the percentage gross income declined in 2020 compared to 2019, multiplied by two – but not to exceed 100 percent.

Optimize the SBA 7(a) Loan Program to Support Small Businesses and their Employees

Objective: Help small business owners such as hoteliers generate cash flow, continue to make investments, and keep employees on the payroll.

Justification: The sudden decline in consumer spending due to COVID-19 is making it hard for hoteliers to meet payroll obligations and debt payments.

Details: In the wake of the Great Recession, Congress optimized the SBA 7(a) loan program by eliminating loan fees entirely and providing a higher loan guarantee percentage. Congress could also consider increasing the maximum loan amount in the SBA 7(a) program.

Provide Temporary Payroll Tax Cut

Objective: Boost general economic activity.

Justification: Outbreak could have lasting effects on the U.S. economy. General economic stimulus could reduce the likelihood of continued economic tightening.

Details: Cut the employee and self-employed shares of Social Security payroll taxes by two percentage points. A temporary payroll tax cut was provided in the wake of the 2008 financial crisis.

Create a Temporary Travel Tax Credit

Objective: Encourage near-term business and leisure travel spending.

Justification: International visitation and spending in the U.S. has plunged, while domestic travel has also decreased significantly. Incentives are needed to decrease the time it takes to restore travel spending in the United States.

Details: Create an entirely new tax credit to incentivize domestic business and leisure travelers to travel within a specified time frame, similar to what was done through the homebuyer tax credit in the wake of the 2008 housing crisis. Specifically, the tax credit would be worth 50 percent of qualified travel expenses incurred in the U.S. between May 1 and December 31, 2020, up to a maximum tax credit of $2,000 per household. Qualified travel expenses would explicitly include lodging, among other activities.

Here are three things you can do today: 

  1. Ask lenders if they are open to accepting interest-only payments on loans until revenues return to normal ranges. They have been amenable to these requests before.
  2. Meet with your state legislators, county commissioners, and other local officials. Explain to them, in detail, how this virus is affecting your business. Aim to create a lasting impression of the damage this downturn is having on the community they were elected to serve.
  3. Ask your local tax collector if they are willing to waive gross receipt taxes or any other local taxes applicable in your community. There is precedent for this, and tax collectors are often more sensitive to the unique needs of businesses than you might expect.

Please know that AAHOA is acutely aware of the impacts of this virus and is working overtime to mitigate the damage it is causing. Visit AAHOA’s COVID-19 resource page at www.aahoa.com/covid-19 for more information, updates, and resources as they become available. In addition, please reference these resources below.

In the coming days, AAHOA will be releasing a series of resources, updates, and webcasts related to COVID-19 that will help you during this time. Please check our website often for updates.