Locals representing British Columbia, Southern California, and Arizona write to Small Business Administration requesting investigation of $34 million in PPP loans tied to Westmont Hospitality Group

UNITE HERE Local 11, which represents 32,000 hospitality workers in Southern California, and UNITE HERE Local 40, which has over 5,000 members in British Columbia, wrote to the U.S. Small Business Administration calling for an immediate halt to loan forgiveness for $34 million in Paycheck Protection Program (“PPP”) loans connected to Westmont Hospitality Group. Although Congress intended PPP loans be used by small businesses, Westmont claims to be one of the largest privately-held hospitality organizations in the world, holding an ownership interest in and operating over 500 hotels.ⁱ

Westmont took advantage of a loophole that enabled large hotel chains to apply for loans originally intended for small businesses, and the U.S. Small Business Administration, which oversees the PPP, has already forgiven one loan tied to the firm’s corporate office in Houston. PPP borrowers were required to spend 60% of PPP loan proceeds on payroll costs to qualify for full loan forgiveness,ⁱⁱ but the SBA has not disclosed how Westmont has used its PPP loans.

The letter requests an investigation of the 35 Westmont-connected loans and asks how many of the 4,024 reported employees tied to the loans have been terminated or furloughed without employment benefits. Two loans for a total of $5.49 million listed the address of the Hyatt Regency Jacksonville hotel in Florida, which an entity tied to Westmont’s Houston headquarters purchased in 2017. WARN notices filed by the hotel in 2020 indicate 121 employees were “affected by permanent separations” and 92 employees were “affected by conversions of furloughs with employment benefits to temporary layoffs without employment benefits.”

In total, a UNITE HERE Local 11 analysis (available here) shows that hotels collected $13.9 billion from the PPP, $3.3 billion of which came through loopholes enabling large chains like Westmont to receive loans, and giving hotels 40% larger loans than other borrowers in 2021.ⁱⁱⁱ

As of July 1, the SBA has forgiven a total of $4.2 billion in PPP loans to U.S. hotels, converting them into grants without disclosing how they were spent. Although Congress intended PPP funds be used to return workers to payroll, the number of U.S. hotel jobs from May 2020 to June 2021 averaged only 20% greater than the number of hotel jobs in April 2020 after the pandemic caused a sharp drop in hotel employment.^iv

The letter also asks whether Westmont received any loans connected to the Pan Pacific Hotel in Vancouver, British Columbia. The Westmont-owned hotel fired approximately 100 long-term laid-off workers, without cause, in the middle of the pandemic. The hotel also allegedly urged workers to sign away their full-time status and their severance rights – then fired some of them anyway. Two class action lawsuits has been filed against the hotel on behalf of fired workers.

UNITE HERE Local 11 represents hundreds of workers at the Westmont-operated Hilton Hotel & Suites in Santa Monica, California and westdrift Manhattan Beach in California.

UNITE HERE Local 11 is the union of more than 32,000 workers in hotels, restaurants, airports, sports arenas, and convention centers in So. California & Arizona.

UNITE HERE Local 40 represents more than 5,000 workers in hotels, restaurants, airports, sports arenas, and convention centers in British Columbia.

ⁱ Westmont Hospitality Group website, https://www.whg.com/.

ⁱⁱ “PPP loan forgiveness,” Accessed June 21, 2021, https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/ppp-loan-forgiveness

ⁱⁱⁱ The Local 11 analysis used May 2021 data released by the SBA. As of July 1, the amount of PPP loans to U.S. hotels increased to $13.9 billion.

^iv Data for the “Accommodation: NAICS 721” sector from the Bureau of Labor Statistics, available at https://data.bls.gov/timeseries/CES7072100001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true

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