Economists have applauded the U.S. federal government’s response to the economic crisis, saying it was faster and more substantive than during the Great Recession. That might not matter though if the aid ends as the crisis continues.
This is a concept I’ve heard repeatedly listening to economists’ analysis of how quickly the hotel industry might bounce back: The depth and speed of the U.S. government’s response to the COVID-19-induced economic downturn was orders of magnitude greater than the response to the Great Recession, therefore the rebound will be that much better.
It’s undeniably true that the initial response was so much more substantial. At the same time, it’s fair to ask if it will matter.
What has ended at this point is substantial portions of the government’s aid. What hasn’t ended is the economic downturn itself.
The American Hotel & Lodging Association sent out a warning earlier this week about a “historic wave of foreclosures” for the hotel industry. Citing the latest Trepp report on the industry, AHLA notes that nearly a quarter of hotel CMBS loans are currently delinquent.
That seems like a widespread situation in dire need of some federal intervention.
There’s also the expiration of expanded unemployment benefits, which obviously impacts significant numbers of furloughed and laid-off hotel industry workers. Economists had repeatedly warned that letting that benefit end will result in disaster for the U.S. economy. Yet here we are with the U.S. Senate and White House unwilling or unable to take action.
The AHLA announcement came in the context of that group’s lobbying efforts for some industry stimulus, specifically in the form of the HOPE Act, which would aid commercial real estate businesses, but that has similarly not been made into law.
All of this is extremely depressing. A great initial response doesn’t seem like that big of a factor if you just ignore the problem after that point.
Think of like this: If you are with someone who goes into cardiac arrest and you manage to successfully perform emergency first-aid and CPR to get them to the emergency room still alive, it won’t make a difference if the doctors there just say they don’t feel like dealing with it right now and send them home.
Don’t let a great response turn into no response.
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