NH hospitality industry tells state panel it needs $1 billion in support
Retail, auto dealers, manufacturers also paint grim pictures to GOFERR advisory committee
Representatives of New Hampshire’s hospitality industry told state officials Wednesday it might need $1 billion to survive the coronavirus crisis.
New Hampshire has received $1.25 billion from the federal government to address the economic and health needs of the state. Last week that seemed like a lot of money. Now it looks as if the full pot of funding could be stretched very thin, especially since healthcare providers on Monday testified that it alone was hemorrhaging $200 million a month.
The legislature’s advisory committee to the Governor’s Office for Emergency Relief and Recovery also heard Wednesday from representatives of other economic sectors – retailers, auto dealers, contractors and manufacturers. But none seemed in as bad shape as the hospitality industry, and none put a price tag on its needs.
The coronavirus pandemic has been “catastrophic,” said Mike Somers, president of the New Hampshire Lodging & Restaurant Association, who estimated a loss of 40,000 to 60,000 jobs. Somers himself didn’t make the ask. He left that to two representatives of his trade association, Tom Boucher, owner and CEO of Great NH Restaurants and Steve Duprey, president of Foxfire Property Management and The Duprey Companies,, a developer and operator of hotels, to fill in the numbers and make the ask.
Both said the federal loan programs were not adequate and were hoping that the extra pot of money received by the state would fill in the gap. Meanwhile, the state is still waiting for federal guidance on how to spend the money, and courts are still deciding on who has the right to spend it, GOFERR or the Joint Legislative Fiscal Committee. (Round one went to the governor on Wednesday, when a Superior Court judge dismissed the legislative suit on technical grounds.)
Boucher extrapolated from his own situation. His restaurants took an 81% dive in business after he closed his dining rooms and shifted to all take-out and curbside pickup. That translates into a cash burn rate of $140,000 a week. Opening up at 50% capacity would be even worse, he said, since fixed costs would be higher – a $6.8 million lost over six months.
Boucher was able to get Paycheck Protection Program funding for his restaurants, but other restaurateurs have not, and even that funding only covers payroll, rent and utilities for eight weeks, and not such costs as insurance and property taxes, which he estimated at $760 million for all of the state’s restaurants.
Restaurants have pickup and delivery. Hotels don’t have that.
The PPP loans are worthless, said Duprey because for banks to forgive them he has to bring back workers before they are needed. As for federal emergency loans, the “SBA doesn’t have the horsepower,” he said, meaning the loans are too few, too small and two slow.
Duprey said that his hotels’ occupancy rates – they’re now restricted to essential workers – are down 80%, with events down 100%. They are already getting cancelations for September and October.
The summer? “There isn’t going to be a summer tourism season on any level to be worthwhile to be open,” Duprey said.
He figures that his five hotels will lose $2.7 million over the balance of the year. And even if the stay-at-home order is lifted by summer, he doesn’t expect hotels to break even until the summer of next year.
Duprey proposed the state set aside $250 million to institute an emergency loan program for hotels that the federal government should have offered, with seven-year loans at a .50% interest rate, with payments deferred over the first year, and run by banks so the money gets out the door.
But he was not adverse to a suggestion that it could be handled by the New Hampshire Business Finance Authority. Either way, even if a third of the hotels default, the state will get some of the money back and could use it to help struggling nonprofits, he said.
Boucher and Duprey also proposed that $50 million be spent on tourism.
The picture painted by Nancy Kyle, CEO of the New Hampshire Retail Association, was almost as grim.
“It has been a nightmare,” she said.
Sales have fallen drastically – particularly at stores that don’t sell groceries or medicine or online – plummeting anywhere from 60% to 100%.
While grateful that the governor is allowing businesses to sell curbside, business has been a “trickle,” she said.
Besides, with the stay-at-home order in place, “nobody is even walking by their business, let alone coming to shop.” For a remedy, Kyle did not suggest a specific amount but mainly asked for regulatory relief.
Automobile sales count for a third of retail sales when it comes to dollars, and that sector also has taken a hit, reported Peter McNamara, president of the New Hampshire Automobile Dealers Association.
A dealership survey indicated 70% reported lower sales, though there have been relatively healthy sales of heavy-duty trucks.
Dealers had more success in getting PPP loans. Nearly all applied, with 88% getting approved and 60% seeing the money in their accounts.
With that cash in hand, most said they could last as long as four months, but a little more than half had to lay off employees or reduce hours, and based on the last recession, McNamara didn’t expect sales to bounce back for two or three years.
As for the construction industry, roads are still being built, and there were only a few “hiccups” at the moment, said Gary Abbott, executive vice president of Associated General Contractors of New Hampshire.
But with traffic down, so are tolls, and Abbott said he is more concerned about funding for infrastructure in the future.
As for building construction, there has been a 40% to 50% drop on the public side and private construction is now being held up. “What scares me is if foreclosures begin to happen,” said Abbott
The Business and industry Association of New Hampshire, which represents manufacturers as well as other businesses in the state, provided preliminary results of a membership survey.
Some 11% of respondents said they were shut down, 22% cut staff and another 16% thought they would. Another 44% said that workers were either unable or unwilling to go to work, partially because they were competing against federally enhanced unemployment benefits. So 13% said they are offering “hazard pay” to get them to come to work.
The survey found that 82% of respondents reported a downturn in revenue – 42% percent by less than a quarter, but 13% said their loss was over 50%.
BIA President Jim Roche did ask for some financial help to keep essential businesses open – chipping in for testing, safety equipment, thermometers and perhaps helping with property taxes. But he did not attach a figure to that request.
Roche was also more specific in his request for regulatory relief, asking for some kind of liability protection if a business brings back workers who later get sick. He also hoped to avoid two tax increases. Business taxes are due to go up to previous levels should state revenues fall short by a lot (which they are now expected to). And unemployment taxes are expected to go up if the surge in unemployment claims drains the trust fund (which is what is happening.)
“The businesses that are deemed essential are not asking for that much support,” said Sen. Chuck Morse, R-Salem, sounding almost relieved.
As for the request from the hospitality industry, “that would use most of the funds we have.”
He also said that current guidance indicated that the state has to spend all the money by the end of the year, so some kind of revolving loan fund wouldn’t seem to meet that requirement. But the state was awaiting further guidance and was hoping to have greater clarity by Monday.