LOS ANGELES (CN) – Six franchise operators of Southern California’s bankrupt Hotel Brands Inc. claim in court that Congress shouldn’t let the company tap a $700 million federal bailout for business operating-passenger hotels, because the disaster damage has “virtually destroyed” the hotel industry.
Atty. Gen. Jeff Sessions, the committee of Republican members of the House and Senate to oversee investigations into abuses of federal financial overseers, pressed hotel chain executives to accept the bailout on Aug. 27, the day he cancelled President Donald Trump’s summit with North Korean leader Kim Jong Un in Singapore.
But Hotel Brands owners Xavier Tabah of Temple City and Lincoln Beste of San Diego claim a supply of livery and chauffeur services declined to the requested 50 new auto trailers, and Marriott, Hyatt and Hampton Suites employees told them not to advertise or make purchases in the local media.
The FDA is slated to implement “onerous and impractical” regulations to stop hotel operators from renting for pleasure rides, Beste claims in his federal complaint in Los Angeles.
“The confusion in the distribution channel certainly has damaged the travel industry,” Beste says.
The U.S. Department of Transportation, Department of Labor and Department of Homeland Security agreed to provide $700 million to cover the destroyed hotel and motel occupancy tax.
Hotel Brands filed for bankruptcy in July 2016, with the government to be fully involved. Court-appointed bankruptcy attorney Louise Meryon noted the retailer’s bonds were down $385 million and three hotels had fallen into receivership.
Three days before the bailout announcement, hotel owners found out that a 2,000-square-foot refrigerator had failed. Two air-conditioning units were destroyed. They went from having 100 percent occupancy to less than 10 percent. More than 1,000 employees were laid off.
The Trump government’s top economic official, Secretary of Commerce Wilbur Ross, called the hotel operators “pathetic” and threatened to terminate the bond guarantees and liquidate the company.
The case is in Whittier Superior Court.
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