If US airlines looked like criminals asking for $54 billion in bail outs earlier in the week, the hotel industry looks like bandits in the wild west right now, particularly if they get what they’re asking for. The lobbying group of the world’s largest hotels are seeking a mere $250 billion dollars to alleviate their “woes”, despite years of record breaking demand.
Alternatively, you could give every single person living on earth $32, using the same amount.
These are the groups who brought you mandatory resort fees at times of record occupancy, all while devaluing loyalty programs and raising the cost of nightly stays, and now they want your taxpayer dollars, or else. With all signs pointing to a bailout in the works, shouldn’t we get something good in return?
Whatever side of the political spectrum you fall under, there are realities which cannot be classed as alternative facts. Among them, the current US administration is very keen to boost business interests and hype the economy back into shape, at any cost.
Members of congress report that the proposed $54 billion airline bailout is being fast tracked for approval by the president, at an almost unmatched pace. As View From The Wing eloquently notes, when everyone is bailed out, no one is.
Knowing that the administration is hawkish to press the restart button, industries are lining up to get the lions share of the proceeds, before any logical arguments are made for small business relief, help for homeowners, everyday people, or other essentials in the increasingly “gig” economy world.
Seeing that the administration didn’t bat an eye at a $54 billion bailout for airlines, which provide essential connectivity to the world, the people who bring you rooftop pools and overpriced breakfast are now lined up for theirs, and they want a lot more of the pie. Swing for the fences, right?
The heads of Best Western, Choice Hotels, Hilton, Hyatt, InterContinental Hotels Group, Marriott, MGM, Pebblebrook, Universal and The Walt Disney met with the White House yesterday, as part of the American Hotel & Lodging Associations attempt to extract $250 billion of taxpayer funds to weather the current storm.
Should they get $250 billion, when they’ve had every opportunity to save cash during unprecedented years of travel demand? The question is complex and there isn’t a simple answer, but there are key considerations.
Of course, the first argument in favor of their bailout is employment. The hotel industry employs an incredible number of people, and no one wants to see a friend, neighbor, family member or loved one out of work, but it’s unclear from the bailout whether employees really would be protected or jobs preserved.
@godsavethepoint you should write about this
— Dominicus (@DominicusHKG) March 18, 2020
If I knew the money would preserve jobs, I’d be a lot more inclined to think government help would really help. This tweet, which went viral yesterday does not help with that sentiment.
In my opinion, this also creates a strange argument within the scale up economy. If anyone can just raise enough capital to hire an insane number of people, for any job of any kind, can they then just expect to exist forever, since the government will always come preserve those jobs?
If so, I’ve got a great business idea centered around relaxing by the pool and playing tennis, where anyone who shares that mindset gets paid, so just give me a few billion, we’ll pay a bunch of people to lay by the pool and play tennis, and then if the world ever turns, we can just demand a government bail out, because so many people depend on my business.
Make no mistake: Hilton, Marriott, IHG, Hyatt and many of the world’s most famous brands don’t own a vast majority of the properties bearing their names, which you find yourself staying in. Most hotels simply have management contracts with these big players, and are owned by small groups of people, private equity or some combination of it all.
In other words, lots of individuals who own hotels big or small, famous or unknown, would benefit from the relief – not just the corporations. That still doesn’t mean they inherently should get it. Why not just create support for the small business owners – aka hotel owners – directly.
Private equity groups and the chains themselves have far greater opportunity and access to cash, or at least their balance sheets in recent years sure indicate that they should, so it feels a bit cheeky to funnel all that cash into these larger entities, in hopes that they dish it out appropriately.
$100 Billion To Suppliers
The lobbying group has noted that $100 billion of the $250 billion they’re asking for will go toward suppliers. This feels like a very broad term, which could mean anything from the people they buy their overpriced eggs from, to the mattress companies.
This is where I see real issue with cutting such blanket checks, without anything gained for the consumer. Will executives somehow become part of the “supplier” group, as a bonus for getting them the money they need to keep business as usual, while it’s anything but business as usual for the rest of the world?
When airlines asked for their $54 billion bailout, I argued that they should get it – but not without concrete stipulations which are friendly to the public at large. In the case of airlines, I thought it only fair that we consumers pick up guaranteed protections and rights during overnight delays, and in some cases even cash – like the EC261 rules in Europe.
Why should hotels be any different?
I honestly am blown away that less than 2 months into the western world grappling onto this crisis, that the hotel industry is asking for more money than the entire GDP of many successful nations. Where did all those resort fees, or fat commissions on the bookings go?
What’s next, Expedia, who take circa 20-30% of every hotel reservation needs a hand out? And then there’s Disney. Talk about a company which has practically taken pride in extracting every possible iota of cash out of handcuffed parents.
For taxpayers to fund a business which has exploited parents in ability to disappoint children to the wildest extremes seems… rich. Should we all get a one day pass, in exchange?
For a start, if the hotels were to get this massive finance package, resort fees need to be banned, upfront, and all inclusive pricing needs to become legally mandated. Find me a person who says, “I love seeing two nights at $200 a piece, only to find out that the stay costs more like $600 by the time resort fees and taxes and fees are added”, and I’ll find you a liar.
Just like airline tickets, people want to see the full price from the start, and anything less is deceptive business. Resort fees… don’t even get me started. If the hotels are going to get even a slice of this unfathomable amount of money, these are the minimums we should expect in return. Anything else would feel like a great train robbery.