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
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.