By Daniel Donovan
As it stands today, our current industry outlook may look bleak and at its worst point in years. However, this does not mean hotel owners, operators, and other stakeholders are without options or relief. We are seeing lenders more than willing to work with debtors to modify loan terms and defer payments to reach a mutually beneficial agreement in the new paradigm.
Franchisors have also proved willing to work with franchisees. On March 25, Best Western took steps to lower the cost of its franchise affiliation through May 2020. This included waiving one-half of monthly fees, waiving one-half of property revenue management fees, reducing Best Western Rewards® loyalty point fees charged to members by one-half without lowering points awarded to loyalty program participants, increasing by 50% hotel redemption compensation for BWR loyalty guest stays, and waiving in entirety BWHR co-op marketing fees. “The impact of this global pandemic has been devastating to the livelihood of our hoteliers, their families, and the employees who depend on them,” said David Kong, Best Western president and CEO, in a statement. “At Best Western, we are truly a family that stands together, shoulder to shoulder, during a time of crisis. In coming together, not only will Best Western weather this storm, but our nation and industry will emerge stronger than ever.”
Wyndham has also provided assistance to franchisees, allowing them to defer fees accrued in March, April, and May until September 1, 2020. They have also allowed Wyndham hotels that were restricted from the Wyndham reservation system to be reconnected without a fee until the end of September, and there will not be any new restrictions due to non-payment until September 1, 2020. All brand standards, except those health and safety-related as well as property improvement plans ,have also been deferred until at least the start of 2021.
Other franchisors are stepping up to help owners in different ways, according to Ritesh Patel, president of RAM Hotels in Columbus, Georgia. “They’re coming right out and saying, ‘Hey, you have flexibility on your brand standards if there are variable costs that you feel like you’re not going to be needing right now feel free to eliminate it,’” Patel told AsianHospitality.Com. “Some brands are going further and sending checklists on how you should be doing your partial closures; this is how you should be doing your complete closures.” Franchisors understand their biggest stakeholder is their franchisees, and we need to be working together in these extraordinary times so hoteliers can find some relief.
These efforts are being encouraged by the federal government. On March 10, the SBA sent Information Notice # 5000-20004 effective immediately to all SBA 7(a) lenders, 504 program certified development companies, and microloan intermediaries to remind them of their authority to provide temporary relief in the form of deferred payments to existing borrowers. These deferred payments will be added on to the backend of the loan but allow owners time to adjust and use what money may be coming in to maintain their business. In addition, hotels in eligible areas can apply for an SBA Economic Injury Disaster Loan, which can offer up to $2 million in cash assistance at a 3.25 percent interest rate. This loan can provide critical funds at a time of crisis to help keep properties afloat.