U.S. Representatives highlight loans to hotel chain Westmont Hospitality Group in letter to Small Business Administration calling for “vigilant oversight” of loan forgiveness process.
Vancouver, B.C. – Members of U.S. Congress are raising questions about U.S. Paycheck Protection Program (PPP) loans received by the hospitality industry and highlighting Canadian hotel owner, Westmont Hospitality Group, which received $48 million in PPP loans. Westmont affiliates own or operate more than 20 hotels across Canada, including Pan Pacific Vancouver.
On Tuesday, U.S. Representative Ruben Gallego (AZ-07) along with 17 other co-signers, sent a letter to the Administrator of the U.S. Small Business Administration to call for greater transparency in light of concerns whether PPP loans were used in accordance with congressional intent to protect hospitality workers’ jobs during the COVID-19 pandemic. The letter urges the SBA to provide increased oversight regarding forgiveness of the loans before they are forgiven.
The letter highlights Mississauga-based Westmont Hospitality Group, an international hotel company that owns and operates over 400 hotels around the world, as an example of the need for “vigilant oversight” and improved transparency. According to data provided by the SBA, Westmont affiliates received $48 million through 44 PPP loans that were tied to approximately 5,300 jobs. Despite this, the letter states, a lack of transparency by the SBA has made it “impossible” to determine whether those 5,300 jobs were actually retained, yet over $28 million of the Westmont-connected loans have already been forgiven.
The Paycheck Protection Program (PPP) was passed by Congress as part of the CARES Act of 2020 in an effort to support small businesses and save jobs in the midst of the COVID-19 pandemic. PPP borrowers must spend at least 60% of their loans on payroll costs in order to receive full loan forgiveness.
UNITE HERE Local 11, the labor union that represents hospitality workers in California and Arizona, presented evidence to Congress Members regarding one hotel connected to Westmont that received a PPP loan but issued WARN Act notices that it had permanently separated 122 workers, raising the question whether PPP had really served its purpose of protecting jobs.
On Wednesday, UNITE HERE Local 11 submitted testimony to the House Small Business Administration’s Small Business Oversight, Investigations and Regulations Committee hearing titled “An Empirical Review of the Paycheck Protection Program.”
Among the entities that received loans listing Westmont’s Texas office address, seven listed “Red Roof Inn” but did not indicate which specific hotel properties were recipients of PPP funds or whether workers benefitted from the loans.
Westmont owns and operates dozens of Red Roof Inn properties in the United States. The company is also affiliated with R&R Real Estate Investment Trust (TSXV: RRR-UN) which owns a portfolio of Red Roof Inn hotels in the United States that are managed by the family company that owns Westmont. Westmont president, Majid Mangalji, serves as the Executive Chairman and is the largest shareholder of R&R REIT. According to public filings, R&R REIT received loans worth $1.3 million under the U.S. CARES Act. They have since been forgiven.
Congressional letter available here.
UNITE HERE Local 40 is a labour union representing hospitality workers throughout British Columbia. UNITE HERE Local 40 and UNITE HERE Local 11 are affiliates of UNITE HERE International Union. The union represents Westmont workers in certain hotels across Canada and the United States.