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US government unlikely to take stakes in hotels coming out of COVID-19 pandemic: Hilton CFO

Brian Sozzi
Editor-at-Large

Hilton’s top two executives have been lobbying the U.S. government hard for some form of liquidity relief for the small business owners that typically pay for the right to operate the company’s hotels in the U.S.

One of those Hilton executives — CFO Kevin Jacobs — says investors shouldn’t be concerned about the U.S. government taking stakes in hotel chains as a condition for liquidity relief. That would be unlike what has happened with the major airlines, where the U.S. government was given warrants as part of a $50 billion aid package for the industry.

“We’re lobbying on behalf of the front line team members to make sure there’s relief overall available for the industry so people can remain employed,” Jacobs said on Yahoo Finance’s The First Trade. “We are not lobbying for anything on behalf of ourselves and don’t expect anything like the government taking stakes in capital light hotel companies.”

Photo by: John Nacion/STAR MAX/IPx 2020 5/9/20 A view of Hilton Hotel in Times Square in New York City USA during the coronavirus pandemic on May 9, 2020 in New York City. COVID-19 has spread to most countries around the world, claiming over 270,000 lives with over 3.9 million infections reported. Hilton CEO says hotels more likely to recover faster from coronavirus.

Jacobs says the Paycheck Protection Program (PPP) hasn’t been too successful in keeping jobs in a lodging industry battered by closures and stunted travel from COVID-19. Employment in the leisure and hospitality industry plunged 7.7 million in April, according to recent data from the Bureau of Labor Statistics.

The near-term outlooks for employment — and revenue generation — in the lodging sector remain bleak as states slowly reopen and people shun travel until they feel 100% safe.

Hilton hasn’t waited around for the government to hand out checks to help get through the crisis.

The company has moved swiftly to raise liquidity by tapping credit lines and selling $1 billion in rewards points to American Express. Hilton had $3.8 billion in total liquidity as of March 31.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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