Monty Bennett, Founder, Chairman and CEO of Ashford Inc, joins Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss how the hotel industry is faring amid the coronavirus outbreak.
- We know this pandemic has hit to the hospitality industry especially hard. Joining us now is the CEO of the hotel operator Ashford, Monty Bennett. This company runs and owns about 130 properties around the country. They've had to lay off nearly all or Furlough nearly all of their workers. Monty Bennett, thanks so much for joining us this morning. Put into numbers for us what this pandemic has meant for Ashford.
MONTY BENNETT: It has been an absolute disaster, it is terrible. Never after the financial crisis did I think we'd see a calamity hit our industry worse than the financial crisis. And in this case, it's worse than the financial crisis, 9/11, the '91 recession, all those events combined by several factors. We've laid off or furloughed about 6,500 of 7,000 workers. It's just been absolutely devastating.
These are people that have worked for me, many of them for 30 years or more, their friends, their family, it's just absolutely heartbreaking for me.
- Monty, we had a release this morning from Marriott, another business update. And just going through their release, you don't get the sense that the stimulus or the relief package from the government is helping them in any way, shape, or form. Has it helped you or is it going to help you?
MONTY BENNETT: You're exactly right. The Cares Act has been a disaster, as far as I'm concerned. There's nothing that's helped us from it, there's nothing that's helped any other hotelier that I know from it. It's supposed to provide all this money. We all put in applications, no one's received any money yet. The amount they've even offered is just not nearly enough. They have a forgiveness program that you can't even qualify for because they haven't forgiven. You had to hire all your workers back by June 30.
Well, after the financial crisis it took eight years for our industry to recover. The idea that we can recover by June 30 is ridiculous. And the list just goes on and on. There is no prohibition in the documentation, the legislation, to stop existing lenders from coming after borrowers. And some of these lenders are being just absolutely predatory already and coming after borrowers, despite the fact that this is such a national pandemic. Some of them are just ruthless. Many of them are great to work with, some of them have been horrible.
- Monty, what do you want to see? The government is reportedly looking at a fourth stimulus package. What do you need to see to protect your business?
MONTY BENNETT: We need all kinds of things. First, we need the first package to actually work the money to come through. We need a lot more money from that package. We need a forgiveness program that actually works so that we can take advantage of. We need some liability protection because we don't want to be sued by all these trial lawyers of people getting coronavirus coming back at hotels.
We need legislation that holds back lenders from being predatory and give us time to recover. The list goes on. And we're just very, very disappointed as an industry with what has happened. And Congress is not even in the session. And we're just dying on the vine, all of us hoteliers are. We're in better shape than most because our debt levels are lower than most in the industry. But the small guys with 70%, 75% of debt on the properties are just getting crushed. And there's no one there to help them. And it's just very, very sad.
- Monty, when we talk about these predatory lenders, can you be more specific? Are you talking about real estate that Ashford has outstanding and that there are payments due on that. What are you talking about?
MONTY BENNETT: Sure. We've got a number of hotels and loans against them. And the loans we have with traditional banks, those banks are doing great with us. They're working with us. They understand that this is a once in a lifetime event. But there's some lenders that are bank lenders especially. We have a loan out with a company called Brookfield which is a big asset manager, and they are just absolutely hostile with this.
Two days after we missed our payment, we'd been reaching out to them to try and restructure it. They sent us a nasty legal letter threatening us with all kinds of horrible things, threatening my directors, just nasty. It's sad because it's the kind of behavior that Wall Street gets a bad rap for. And there's only a few players that are like that, but so many people get the rap for it. And it's just a very unfortunate.
So we're having to fight these guys off as we're trying to bring people back to work, trying to take care of our people. In the hotel industry, we're doing our part. We are hosting COVID patients, we are hosting people suspected of having it, we're hosting doctors, we're hosting nurses, we're really, really helping. And we're hardly getting paid anything for this. But we feel like it's what we need to do to help.
And in the midst of that, we've got these predatory guys that are just chomping at us. And what we need, there's nothing we can do as far as appealing to their conscience. We need legislation to help us.
- Monty, when we come out the other side of this pandemic, is it impossible to think that you're going to be able to keep the same footprint? Will Ashford just be a much smaller operation?
MONTY BENNETT: It's hard to say, if lenders work with us like most of them are, then things will be fine because we'll get back on our feet and we'll recover. But if lenders behave like Brookfield has and even Prudential have just been really, really tough. I don't know if that's going to be the case.
I think it's going to depend for each company how many non-bank lenders they have versus how many bank lenders. The non-bank lenders are the ones that are just being way, way too tough. And it'll dramatically affect the industry for a long time.
- All right. Monty Bennett, CEO of Ashford. Thanks for your time this morning and best of luck to you and your team.
MONTY BENNETT: Thank you very much. Appreciate it.