‘We have never seen this kind of devastation in the industry’: Best Western CEO
Yahoo Finance reporter Akiko Fujita sat down with Best Western CEO David Kong to discuss how the hotel industry is faring during the coronavirus outbreak.
Video Transcript
ADAM SHAPIRO: Of course, this is the first day that small businesses can apply for assistance from the federal government, the Paycheck Protection Program. It starts today. There's a whole lot in that, but there are a lot of businesses that might need even more. One of them, Best Western. Our Akiko Fujita spoke with the CEO, David Kong. Here's what he said.
DAVID KONG: We have never seen this kind of devastation in the industry. You know, previously back in 2009 the industry declined by 16%, and that was unprecedented at that time, but right now our revenue is off by almost 90%.
So it's an extremely difficult time, and many of the hotels worldwide are closed right now, and many of them are doing very poorly, and many of them are thinking about closing as well. So it's total devastation [INAUDIBLE].
ADAM SHAPIRO: Akiko, he used the term "total devastation." Can you share with us more about what can be done to maybe help some of these hotel operators?
AKIKO FUJITA: Yeah, I mean, he had the numbers for you right there, a loss of 90% of its revenue within just the last month or so. Best Western, of course, has a global footprint. So they have not just been hurting here in the US but outside where all the hot spots have been, 5,000 hotels in all. Here in the US, they've got about 2,000, and they are-- have closed 300 so far, and he said there's certainly going to be a lot more.
One interesting thing he did mention is that, look, you know, we're talking about Best Western as a big company, but all the franchisees, these hotel owners, are small businesses. And he said right now as it stands, that Paycheck Protection Program only allows for a maximum of 2 and 1/2 months of the payroll in terms of the payout on that loan. He says he believes these hotels need four times that amount that's currently offered by the government right now.
He's in direct contact with Senator Marco Rubio's office. He says he believes that he's got the ear of the lawmakers. And, Adam, it's worth noting that David Kong was among those hotel executives that met with President Trump and Vice President Mike Pence a few weeks ago when they were lobbying for stimulus for the hotels.
So, you know, as he sees it, he says this is really just kind of that bridge loan. We've heard that term used over and over. This is not meant to get them to the other side, but he said every day that goes by that lawmakers don't add that additional stimulus is time lost for these hotel owners that simply can't continue.
ADAM SHAPIRO: And the fact that we saw 459,000 jobs lost in leisure and hospitality-- and that didn't even include the last 2 and 1/2 weeks of the month of March. Akiko, thank you very much.
