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Three publicly traded Texas-based hospitality firms that collectively received nearly $59 million in coronavirus relief funding and are tied to hotelier Monty Bennett announced Saturday they would return the funds after Bennett earlier said he would not turn back the money.
Ashford Inc., Ashford Hospitality Trust, and Braemar Hotels & Resorts released a statement saying the return of Paycheck Protection Program loans under the $2 trillion coronavirus economic relief package stemmed from “the agency’s recently changed rules and inconsistent federal guidance that put the companies at compliance risk.” Among the 130 hotels in Ashford’s portfolio are Ritz Carltons and Embassy Suites.
The statement was released on the same day The New York Times ran a front page article chronicling the loan controversy and Ashford’s operations.
The trio of luxury hotel real estate firms garnered scrutiny for receiving funds, one of the largest amounts delivered by the program, at a time when tens of thousands of small businesses are still locked out from receiving government assistance. Large companies like Shake Shack and Ruth’s Chris Steak House received, and later agreed to return, PPP funding. As of Friday afternoon, the Ashford Group of Companies still maintained they would keep the funds, part of a $660 billion program meant for small businesses to maintain payrolls through the ongoing economic crisis.
The group of companies asserted the nature of the hotel industry, where smaller ownership groups typically operate under the flag of a global brand like Marriott or Hilton, qualified them for PPP funds. Since mid-March, the companies have furloughed or laid off 90 percent of their workforce due to coronavirus hindering business. The Small Business Administration has not publicly released a list of PPP loan recipients, but Ashford claimed the hotel industry received less than 3 percent of the initial $350 billion round of PPP loans.
Ashford Hospitality Trust President and CEO Douglas Kessler voluntarily stepped down this week amid the scrutiny over the funding, but no details on the executive change have been made public.
“The hotel industry has been devastated by the COVID-19 pandemic and resulting National Emergency,” Bennett, Ashford Inc. chairman and CEO and the chairman of the board of Ashford Trust and Braemar, said in a statement. “Hotel industry executives met with the Administration at the White House on March 17, 2020 to plead for help for our industry. We are disappointed that, in an abundance of caution to avoid any risk of non- compliance with the changed PPP rules, our actions mean that our employees, vendors, communities and others in need will not benefit from the PPP as Congress intended. We call on Congress, the Treasury Department and the Federal Reserve to provide assistance to the hotel industry to protect jobs and asset values that have been severely impaired as a result of the pandemic and the government’s actions that have followed.”
The promise to return the PPP funding comes after travel industry groups like the U.S. Travel Association and the American Hotel & Lodging Association Thursday called for the government to discourage unaffected businesses from applying for PPP loans. U.S. Treasury Secretary Steven Mnuchin said earlier this week the government will perform a full audit on any company taking out more than $2 million in the small business loan program.
Presumptive Democratic U.S. presidential nominee Joe Biden tweeted Saturday afternoon Bennett “should return the tens of millions of dollars he received, and we should give it to the small businesses that need it.”
The Ashford companies stated they would return all PPP funds by May 7.