Thank you, Mr. Chair.
The hotel industry in Canada has been decimated by the COVID-19 crisis. We were hit early, and we have been hit hard. In a 48-hour period, our occupancy dropped by 80%. In the weeks that followed, we laid off 80% of our workforce, representing more than 250,000 workers.
Most hotels in Canada today are closed. The ones that remain open are doing so for humanitarian purposes, serving as shelters, as safe places to self-isolate, as quarantine facilities for public health, and as a refuge for front-line and essential service workers. Some hotels in specific regions are preparing to serve as overflow for hospitals as the pandemic worsens.
The majority of our hotels in Canada are owned by small businesses in the community, despite the fact that their property might carry a recognizable brand name. In fact, 60% of the industry does not carry a brand at all. They are small, independent mom-and-pop operators whose businesses are severely at risk.
We commend the Government of Canada for its determination, speed, innovation and boldness in the implementation of the economic measures announced to date. We are here to help the government expedite and maximize the impacts of these programs, and I would like to provide feedback on the gaps and challenges we have experienced.
Our immediate need is liquidity. The government's small and medium-sized business loan and guarantee program is critical, but there are three main problems with its design.
Problem number one is that the systems are being overloaded, and it is very difficult to get access. Our solution is to create a priority structure so that the most vulnerable businesses get access first. This could be achieved by giving priority to those businesses that have experienced the same 30% revenue drop—the approach that's being used in the wage subsidy program—or it could even be as high as a 50% drop.
Problem number two is that when we do get through to the banks, our members are being denied because of the risk, yet we are the sector that needs the loans the most. As our solution, we recommend a full government guarantee for loans to those businesses that were hardest hit and were otherwise solvent before COVID-19.
Problem number three is that the definition of a medium-sized business fails to account for varied ownership structures, which are commonplace in our industry. For example, if a community owner of a hotel has multiple franchises, the loan has to be split among these properties, but if the owner had set up a different corporation for each hotel, each property would qualify for the loan. Our solution is to treat each hotel as a separate business, as has been done in the U.S. for the hospitality and food service sectors to address this very issue.
The wage subsidy program was welcomed with open arms. It will be a lifeline for many hoteliers, and we're delighted to learn that Minister Morneau, just an hour ago, announced that the government will be covering the additional costs of CPP and EI, etc. Our recommendation is to extend the duration of the wage subsidy for businesses that will take longer to recover. The extension could be, for example, until revenue losses are below 30%. This will expedite the rehiring of staff.
Let me leave you with one new idea that would be easy to administer, not add a nickel of government debt and carry negligible risk.
Last year, our members were profitable, and we paid corporate income tax. When our members file their corporate tax returns this year, they will be claiming heavy losses and will carry these losses back to generate a refund of previous taxes paid. The Government of Canada could expedite this process by letting us file a loss carryback today, rather than waiting until corporate year-end and the time to prepare financial statements and file tax returns. An attestation could be provided on a single sheet of paper and be implemented in a matter of weeks, if not days. This would get much-needed liquidity into the hands of those who need it most.
In looking ahead, to stand this industry back up, we will need stimulus measures, as we did with SARS, to encourage business and other travel. We look forward to those discussions when we can see light at the end of this tunnel.
I want to thank you for your time today.