Thank you very much.
Madam Chair and members of the committee, thank you for the invitation to testify today.
The hotel industry represents more than 8,000 hotels, motels and resorts. We employ more than 300,000 Canadians. We play an essential role in the Canadian economy, and we contribute taxes to the tune of $10 billion to all three levels of government.
Hotels in Canada are mostly small and medium-sized businesses with owners who are usually located in the community they serve. These are local entrepreneurs of often family-run businesses who have invested their entire livelihoods into a hotel or a local inn.
Our industry has been there for our communities throughout the COVID-19 crisis. We made our rooms available to front-line workers and Canadians to self-isolate. We assisted public health in the mandatory quarantining of returning Canadians. We allowed vulnerable Canadians to take shelter and prepared several hotels to welcome post-surgical patients to assist with hospital overflow. We helped flatten the curve.
Our 300,000 employees are made up of some of Canada's most vulnerable people—women, immigrants, visible minorities and young people—and they have been seriously impacted by the pandemic and the economic slowdown.
The hotel industry has been devastated by this pandemic. We were hit first, hit hardest and will be the last to recover. The limits on international and domestic travel, as well as restrictions on mass gatherings, are appropriate and necessary, but they do put us on the edge of survival. Most hotels in Canada have been operating at a revenue loss of between 70% and 90% since mid-March. If government support is not received, we will have bankruptcies and thousands of permanent job losses in the industry. According to our latest member survey, 40% have only four weeks left before cash runs out to cover fixed costs.
We are at a crossroads. That is why our association has issued a five-point plan to keep the hotel sector alive and transition it to recovery. A copy of this plan was circulated to members in advance of this meeting.
However, for the purposes of our dialogue here today, I'm going to focus on two key critical recommendations: One is liquidity that works, and the second is an increase to wage subsidy support for hard-hit businesses.
Our industry has been cut out of the government's loan program, BCAP. Banks are not willing to loan additional debt to businesses with heavy assets and an unclear line of sight to recovery. Unfortunately, our entire sector falls into that category. Hotels have had only a 6% success rate in accessing BCAP. Most hotels are being told not to apply.
Our recommendation is that the government fix this gap immediately and create a new loan program for hotels. It should include streamlined access with a 100% loan guarantee, a loan value of up to 20% of the annual revenues, a component equivalent to the commercial rent assistance program to cover three months of fixed mortgage payments, low interest, no hefty bank fees, repayment terms that make sense and no personal guarantees.
The CEWS program, on the other hand, is not just working; it has been a critical lifeline for hotels to keep employees on staff during the pandemic. The recent extension, and the addition of the top-up for hard-hit businesses, were most welcome, and they are in line with the recommendations HAC made during the CEWS consultation process. However, the drastic phase-out, which will begin in September, coincides with the exact moment when our occupancy levels from summer travel will drop and then flatline.
In September we will be forced to make the difficult decision to sever ties with the very employees we will need again in a few months' time. However, if the government maintained a 75% wage subsidy coverage, we could keep our employees on payroll and quickly ramp up when travel resumes. If the government is going to support these vulnerable Canadians either way, why not extend the subsidy further to hard-hit sectors and avoid the anxiety, uncertainty and expense of mass layoffs?
We are recommending the government maintain the 75% subsidy coverage until December by applying the safe harbour principle, as designed by finance, to periods seven, eight, nine and 10. This should apply only to businesses with severe and sustained revenue declines of 50% or more.
Our future is in your hands. The government will be making life and death decisions for many hotels. We hope you will recognize that not every sector is alike. It is time to transition into sector-specific support measures in order to bridge hard-hit industries like ours to the other side.
Thank you for your time today.