Omni Hotels Accepted Millions In PPP Funds But Didn't Pay Workers

Dec 29, 2020
Originally published on December 29, 2020 9:06 am

Updated at 8:27 p.m. ET

Omni Hotels & Resorts, the international luxury hotel chain owned by billionaire Robert B. Rowling, is being accused of misusing millions of dollars in federal pandemic relief funds meant to keep workers on payroll.

The Omni William Penn Hotel in Pittsburgh is one of a number of hotels in the Omni Hotels & Resorts chain that accepted federal Paycheck Protection Program funds but did not use them to pay workers.
Bill O'Driscoll / WESA

Unite Here, a service workers union with more than 300,000 members in North America, said several Omni hotels where it represents workers took Paycheck Protection Program loans but never paid hundreds of workers.

Unite Here said 32 Omni hotels received about $76 million in loans from the program, known as PPP. About $23 million of that went to seven hotels, in cities including Chicago, Boston, Washington, D.C., and San Francisco, where the union represents more than 1,000 housekeepers, servers and other service workers.

In its application to the Small Business Administration, the Omni Providence Hotel in Rhode Island asked for a $2.6 million PPP loan, promising to retain 246 jobs.

Quilcia Moronta, a health club attendant, was laid off after working at the hotel for 21 years. She applied for unemployment benefits and food stamps and was hopeful when the hotel's loan was approved on April 13.

"As I was struggling to provide for my family, I learned that the Omni had received some PPP money," said Moronta, a single mother with two children. "I said, 'Great, at least they're gonna help us get by when it comes to basic needs.' "

Eight months later, unemployment benefits for Moronta and other workers have expired, and health coverage is long gone. And they are still waiting for PPP benefits.

"Right now, here we are in December, and we haven't heard anything about Omni using that money to help their employees," she said.

"Here in Boston, I've spoken to hundreds of workers who work at the Omni Parker House, and I know none of them have received a single dime of this money," said Carlos Aramayo, Unite Here's executive vice president. "Looking at this winter, a lot of them could really use it."

Zebedee Williams was laid off in March from his job as an overnight banquet houseman at the Omni William Penn Hotel in Pittsburgh. He said that since unemployment benefits and weekly supplemental assistance from the federal government ran out, he has struggled to feed his household, which includes a partner on disability and three daughters. To stretch the budget, he said, he has skipped meals.

"It's not right for the kids not to eat," Williams said. "I would do it 10 times again if the situation happened. I would make sure my children eat. I would make do."

In a written statement, a spokesperson for the Dallas-based chain said workers at the hotels had not been retained because the facilities were either closed or operating at greatly reduced capacity.

PPP was part of the CARES Act, the huge pandemic-relief package President Trump signed in March. Some 5.2 million businesses have secured $523 billion in PPP loans. Though the Small Business Administration program was meant to help small businesses keep workers paid — as an alternative to unemployment — it has been widely criticized for favoring large businesses and been stung with allegations of fraud.

PPP rules do permit a business to use funds for payroll even if it is closed. But the Omni elected not to do that. Instead, the chain said in its statement, "any amount of the PPP loans that are not forgiven will be returned or repaid with interest per program terms."

Quilcia Moronta (right), who was laid off from the Omni Providence Hotel last spring, with her children, Gabriela and Gabriel.
Quilcia Moronta

Critics say whether the hotels pay back the loans is beside the point. They note, for instance, that the interest rate on PPP loans is just 1% — well below market rate.

"It's disgusting if companies want to use this as a way to get a low-interest loan from the federal government," says Unite Here's Aramayo. "It's really not fair for a company to take money that was intended to help out their own workforce and use it for some other purpose."

Omni's use of the funds is "obviously really contravening the spirit of what this [program] was about," said Harry J. Van Buren, a professor of business ethics at the University of St. Thomas in St. Paul, Minn. "Even if they do repay the loan, the fact that they got awfully close to free money for some period of time is really an advantage to them as well."

"I do think about other businesses that maybe didn't get money because Omni did, either truly small businesses that were struggling or another company that might have used it to actually pay their workers," said Lisa Gilbert, executive vice president of the consumer advocacy group Public Citizen. "It doesn't seem like a great investment of taxpayer dollars, even if they pay back the money at the end of the day."

On Dec. 8, Aramayo wrote to the Small Business Administration and the Treasury Department, urging them to scrutinize PPP loans to Omni hotels, "especially if [the borrowers] apply for forgiveness." It was just weeks before Trump signed into law a new pandemic-relief package with its own version of the Paycheck Protection Program — one with new rules to help address some of the problems critics found with the first iteration.

Copyright 2021 90.5 WESA. To see more, visit 90.5 WESA.

LEILA FADEL, HOST:

A lot of hotels closed their doors in the spring, and some still haven't reopened. These hotels were able to keep their workers on the payroll because of funding from the federal Paycheck Protection Program. But one national chain, Omni Hotels and Resorts, is under fire for laying off more than a thousand workers. They used the funds for other purposes. Bill O'Driscoll of member station WESA in Pittsburgh reports.

BILL O'DRISCOLL, BYLINE: One laid-off worker is Quilcia Moronta, a health club attendant at the Omni Providence in Rhode Island. She's worked there 21 years. Moronta, a single mother with two children, applied for unemployment and food stamps, then she heard what she thought was good news.

QUILCIA MORONTA: As I was struggling to provide for my family, I learned that the Omni had received some PPP money. I say, great; at least, you know, they're going to help us get by when it comes to basic needs.

O'DRISCOLL: The PPP is the Paycheck Protection Program. The half-trillion dollar initiative was part of the huge pandemic relief package Congress passed in March. The PPP offered loans that are forgivable if employers use 60% of the money for payroll-related expenses. PPP was designed as an alternative to unemployment, at least for the eight weeks of payroll benefits it supplied. The Omni Providence applied for a $2.6 million loan and said it would retain some 250 jobs. The loan was approved in April. But eight months later, with unemployment benefits run out and health coverage long gone, Moronta and the other laid-off workers are still waiting.

MORONTA: Right now, we are in December, and we haven't heard anything about Omni using that money to help pay employees.

O'DRISCOLL: Moronta belongs to the service workers union Unite Here with 300,000 members in North America. Using government data, Unite Here says Omni hotels received a total of $76 million in PPP loans. About a third of that went to hotels where the union represents workers. Carlos Aramayo is Unite Here's executive vice president.

CARLOS ARAMAYO: Here in Boston, I've spoken to hundreds of workers who work at the Omni Parker House, and I know none of them have received a single dime of this money. And looking at this winter, a lot of them could really use it.

O'DRISCOLL: So where did the money go? In a statement, the Omni chain, based in Dallas, said it didn't use the funds to pay workers because the hotels were closed or operating at low volumes. PPP rules allow a business to use the funds for payroll even if it were closed, but the Omni chose not to. Instead, the chain promised to repay the loans with interest, at least the part of the loans that are not forgiven. But these loans carry a below-market interest rate of just 1%, which angers Aramayo.

ARAMAYO: It's disgusting if companies want to try to use this as a way to get a low-interest loan from the federal government.

O'DRISCOLL: Critics say repaying the loans is beside the point. Lisa Gilbert is executive vice president of watchdog group Public Citizen.

LISA GILBERT: I do think about other businesses that maybe didn't get money because Omni did, either truly small businesses that were struggling or another company that might have used it to actually pay their workers.

O'DRISCOLL: As for Omni's workers, many feel betrayed. Again, Quilcia Moronta.

MORONTA: Omni call us family. They always say that we are family. So where is the family treatment when it comes to the employees?

O'DRISCOLL: The Unite Here union has asked the Small Business Administration, which administers the PPP, and the U.S. Department of the Treasury to scrutinize the Omni loans. Whether they are forgiven remains undetermined, even as Congress approves a new round of pandemic relief.

For NPR News, I'm Bill O'Driscoll in Pittsburgh.

(SOUNDBITE OF OATMELLO'S "GOOD NIGHT (FEAT. LATE ERA)") Transcript provided by NPR, Copyright NPR.