Hotel owners, who spent years loading up on a cheap type of debt, are now faced with the potential for default as the pandemic saps revenues, the New York Times reported. Billionaire investor Thomas J. Barrack Jr. has run into an unexpected patch of red ink thanks to the pandemic: He has struggled to keep up with payments on $1.97 billion in Wall Street debt he used to buy a collection of more than 160 hotels. Monty Bennett is in a similar tough spot after he recently halted payments owed on the $2.6 billion worth of Wall Street debt used to acquire his own hotel collection. “Imminent monetary default” is the term a Wall Street research firm used this summer to describe more than $300 million in debt on a luxury hotel in Austin, controlled by Doug Manchester. The precarious financial position that some donors to President Trump and other hotel executives are now in has fueled an intense lobbying campaign aimed at persuading the Trump administration, the Federal Reserve and Congress to rescue hundreds of hotel industry players that relied on riskier Wall Street debt to finance their lodging empires before the virus hit. Industry executives and their lobbyists say that a federal rescue will save thousands of jobs and help local economies, and are hoping their argument resonates with a president who is a hotelier himself. They are making the case that Treasury Secretary Steven Mnuchin has the power — and access to the billions of federal funds he needs — to extend existing coronavirus relief efforts to the commercial real estate sector, which so far has been cut off from most of the stimulus money. But Congress prevented Mnuchin from tapping the main pot of $454 billion in coronavirus relief funds on his own, and doubts exist in the Treasury Department about the economic case for propping up a relatively small slice of the market that would primarily benefit wealthy investors who knowingly made high-risk bets. One industry lobbyist involved in the negotiations said that department officials remained concerned that some of the borrowers — which include hotels, shopping malls and other commercial real estate — might be “zombies” that are not going to survive, and taxpayer money sent to help them out would be lost.
