Hotels Seek $150 Billion in Aid as Travel Plummets

Mounting economic damage from coronavirus has created busy days for Washington lobbyists and trade groups; small players fear getting frozen out

The U.S. hotel industry asked the Trump administration for a $150 billion bailout Tuesday, joining the growing ranks of businesses appealing to the federal government to stave off insolvency after getting hammered by the fallout of the coronavirus.

In a White House meeting with Mr. Trump and Vice President Mike Pence, hotel industry groups requested a massive cash infusion—$100 billion to retain workers and $50 billion to service debt—as they warned that half the hotels in the country could close this year.

The $150 billion request comes in addition to a $100 billion request for aid to related businesses, such as rental-car companies and travel agencies, and just a day after the airline industry formally requested more than $50 billion in grants and financing to help keep passenger carriers from going insolvent.

Amid ballooning public-health concerns, the mounting economic damage from the virus has created some of the busiest days in years for Washington lobbyists and trade groups. Lobbyists say they have been signing up new clients and consoling agitated CEOs as industries battered by the pandemic’s side effects try to win a spot on what will be the largest legislative rescue package in more than a decade.

After the meeting, Mr. Trump told the industry leaders he understood the sacrifices they are making and pledged his support.

Treasury Secretary Steven Mnuchin briefed Republican senators Tuesday on Capitol Hill about the contours of the administration’s expected $850 billion stimulus package, of which the travel-industry aid would be a part.

But lobbyists working on the issue said later in the day that some basic elements are still being sorted out, including whether the entire tourism industry would be dealt with in one bill, or the airlines would first be rescued before Congress turned to addressing other affected industries.

Mr. Mnuchin has deferred much of the details to Senate Majority Leader Mitch McConnell, one person briefed on the discussions said.

“This administration does not transmit legislation,” this person said.

Industry leaders say aid to their members will help owners keep employees on payrolls and preserve large swaths of the American economy.

“The coronavirus has already had a more severe economic impact on the hotel industry than Sept. 11 and the 2008 recession combined,” said Chip Rogers, CEO of the American Hotel and Lodging Association, after the group met with Messrs. Trump and Pence to argue their case for a bailout.

The industry predicts that American travel spending, including domestic and international flights, will fall by $355 billion because of the virus.

“However the Congress wants to package it and the president wants to sign off, we’ll take it,” Mr. Rogers said.

The lobbying frenzy is reviving old debates about when the government ought to rescue private companies from distress. That has brought immediate criticism from some who believed funding should be used to help workers and the unemployed directly, not to bail out the bad bets of investors in companies like hotels, casinos and cruise lines.

“This is one of those unforeseen events that if you’re a shareholder, you’re taking the risk of,” said Severin Borenstein, an economics professor at the University of California, Berkeley Haas School of Business. “Bankruptcy does not mean you stop flying. It does not mean you cease to exist as an airline. it does mean your creditors take a hit.”

Even a government bailout won’t prevent airlines and hotels from downsizing if demand remains depressed, Mr. Borenstein said. If the government wants to provide more support for workers, it could do that directly, he said.

“I think that if they think that hotels are not going to lay off their workers because they get a cash infusion, I think they’re going to be very disappointed,” he said. “The money is mostly going to go to bailout shareholders.”

Meanwhile the virus itself is complicating efforts in Congress, including in the Senate Commerce Committee, to begin drafting a bailout bill, which industry and congressional leaders hope to see voted on by early next week. People involved in the discussion said social-distancing guidelines have rendered impossible one of the customary final steps in crafting complicated legislation: long hours with Congressional staff and career executive branch experts crammed together into meeting rooms in Washington.

Others are just trying to get noticed, worried that their own niches of the virus-hit economy could be left behind in a government rescue.

Jim Jalbert, whose company C&J Bus Lines provides intercity bus service in the northeast, said small firms like his need help too. Passenger volumes have dropped 70% in the last week, he said.

“We are concerned that the powerful lobbying efforts of the airlines will mean that those small businesses like ours will be ignored or forgotten,” he said. ‘Will companies like ours get left by the wayside?”