Federal government's new bailout program for hospitality sector may benefit banks, not laid-off workers

New report details how lack of conditions on HASCAP hurts Canada's hotel workers

VANCOUVER, BC, Dec. 10, 2020 /CNW/ - UNITE HERE! Canada, the hospitality workers union, announced the release of a new report, Demystifying Canadian Hospitality Bailouts: Who Benefits, Big Banks or Working People?  The report details how the federal government's new bailout program for hard-hit sectors, the Highly Affected Sector Credit Availability Program (HASCAP), will funnel millions of dollars to private equity companies, high net worth individuals, real estate developers and foreign investors, and through them to Canada's biggest banks, while leaving thousands of hotel workers at risk of being permanently fired. 

The hotel industry has lobbied extensively for sectoral relief by highlighting the potential threat to thousands of jobs of the country's most vulnerable workers.  Yet, more than $30 billion in Canada Emergency Wage Subsidy (CEWS) funding remains untapped as many hotels either ignored the program or used it for management and skeleton crews, rather than their entire pre-Covid workforce.  Still, hotels have terminated large portions of their workforce.

Hotel owners are often real estate investors heavily financed by debt and frequently contract with management companies, like Hyatt, Marriott, and Fairmont to run daily operations.  Much of the HASCAP spending will be funneled to large financial institutions, including Canada's six largest banks – BMO, RBC, CIBC, Scotiabank, TD Bank and National Bank - which have remained profitable during the pandemic. These banks earned a combined $41.2 billion in net income for fiscal year 2020, while increasing their dividend payments to shareholders.

Lessons can be drawn from the U.S. Government's Paycheck Protection Program which was created to provide hard-hit small businesses with low-interest loans.  Large hotel chains were able to get millions of dollars in loans because each hotel was treated as a separate business, without disclosing their parent company – Westmont Hospitality Group, which operates in Canada, received $32 million in 22 separate loans through that program.   The Canadian hotel industry is lobbying the government to provide loans on a similar basis under HASCAP.

Unless the Canadian government requires hotel employers to put their pre-Covid workforce on CEWS and grant up to 24 months of recall protections to workers, big hotel investors and big banks will get bailed out, while hospitality workers will lose their jobs. 

SOURCE UNITE HERE Canada

Michelle Travis, 778-960-9785, [email protected]