Hotel company Ashford returning federal aid money

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Ashford Hospitality Trust has 117 hotels in its portfolio under several major brands, inclusing Embassy Suites.
Ashford Hospitality Trust has 117 hotels in its portfolio under several major brands, inclusing Embassy Suites.

Hospitality conglomerate Ashford said it will return all the funding it has received from the Small Business Administration’s Paycheck Protection Program (PPP).

Ashford’s related companies include publicly traded real estate investment trusts Ashford Hospitality Trust and Braemar Hotels & Resorts. Ashford Hospitality owns hotels under several major brands, including Courtyard, Embassy Suites, Hampton In, Hilton and Marriott.

Ashford came under the microscope after the New York Times published a report on the company’s attempt to apply for $126 million in taxpayer-funded PPP loans. Around $70 million in PPP funding was ultimately granted. PPP loans will be forgiven if used on payroll and other designated expenses.

The news emerged after the PPP’s initial tranche of $349 million in funding ran out in just two weeks, with many small businesses owners left high and dry.

In a statement, Ashford said the group’s decision to return the loans in full was due to the SBA’s “recently changed rules and inconsistent federal guidance that put the companies at compliance risk.”

“While we believed then and continue to believe today that we qualify for PPP loans based on the legislation and rule-making in place at the time our applications were submitted, continuous SBA rule changes and evolving opinions by administration officials have led us to conclude that we may no longer qualify,” said Ashford.

Specifically, the company highlighted two adjustments to PPP guidelines made in late April, including an addendum stating that “it is unlikely that a public company with substantial market value and access to capital markets” will be able to properly certify that a PPP loan request is necessary.

The second change dictates that “businesses that are part of a single corporate group shall in no event receive more than $20 million of PPP loans in the aggregate,” with such businesses being defined as companies that are majority owned, directly or indirectly, by a common parent.

If they are no longer eligible for aid received, the Treasury Department has ordered large enterprises to return the money by May 7.

“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,” said Ashford chairman and CEO Monty J. Bennett in a statement. “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.”

Other large enterprises returning PP funds include restaurant chains Shake Shack, Ruth’s Chris Steak House and Potbelly. Publicly traded expedition cruise line Lindblad Expeditions returned the $6.6 million in PPP funds it had received.

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