Hospitality Industry Gets Help, But Everyone Says More Is Needed

MADISON, WI—Wisconsin is doling out more than $75 million in new aid to help the hospitality industry cover losses brought on by the COVID-19 pandemic, but restaurants, hotels and entertainment venues will need still more to tide them over. And both Gov. Tony Evers and members of those industries agree: It will have to come from the federal government.

“At the end of the day, the federal government’s got to step to the plate,” Evers told the Wisconsin Examiner Thursday during a media briefing with the Department of Health Services (DHS).

With money from the state’s allotment under the Coronavirus Aid, Relief and Economic Security (CARES) Act, Wisconsin is giving $45 million primarily to restaurants, along with $18 million to hotels and other lodging establishments and $15 million to live entertainment venues, Evers announced Thursday.

Hospitality and related industries such as tourism represent the part of the economy that “has suffered the most,” Evers said. “There are restaurants closing every day across the state, there’s lots of people that are hurting in this business. That’s why we made the decision we made to focus on hospitality” with the grants announced Thursday.

The $45 million allotment will go to 2,000 businesses in the state, about 95% of them restaurants, in the third round of the state’s “We’re All In” program. It’s aimed at firms with revenues of $1 million to $7 million.

Recipients won’t apply for the grants. Instead, the state Department of Revenue (DOR), which is administering the program along with the Wisconsin Economic Development Corp. (WEDC), will review business tax records to identify the beneficiaries. The grants will be about $20,000 each.

“For us that covers one month’s rent and utilities,” said Omar Shaikh, a partner in Carnevor Steakhouse in Milwaukee, speaking during a Milwaukee Press Club Zoom forum Thursday on the hospitality industry and the pandemic. Shaikh said he’s grateful, but by itself the money won’t be enough to power a restaurant through the next six months.

Without more help, “I think that 30% to 40% of restaurants will close by the end of the winter,” Shaikh said. “We need the feds to come out and get some real help for our industry, and they’re failing us.”

Wisconsin’s hospitality industry will need federal aid “at least one more time, and likely two or three more times,” Evers said. “At the end of the day, this is a national emergency — not just for bars and restaurants and other hospitality entities, but it is a situation where we need all hands on deck from the federal government. They are the ones that can make it happen.”

Two “We’re All In” rounds paid out 50,000 grants totaling $185 million to businesses with revenues of less than $1 million a year, many of them restaurants as well.

Low-income service employees who make up much of the hospitality industry’s workforce have continued to be hardest hit by the pandemic, according to Gary Witt, who leads the Pabst Theater Group, which operates concert venues in Milwaukee.

“If you make less than $40,000 a year, 40% of those people have lost their jobs and less than 10% of them can work from home,” said Witt, who took part with Shaikh in the Press Club hospitality industry discussion. “A lot of the stimulus hasn’t been about arresting the pandemic and helping the neediest — it’s been more about flattening the curve for wealthy people.”

Early in the pandemic, Witt and other venue operators formed the National Independent Venue Association, which helped secure the $15 million in entertainment grants the state announced on Thursday. Like Shaikh — and Evers — he said the federal government needs to support the broader hospitality industry.

The federal government is the first resort for support for one simple reason: fiscal flexibility.

“The federal government doesn’t have any limitations on its ability to deficit spend in this environment,” says Chad Cotti, an economist at the University of Wisconsin-Oshkosh. “So it’s just literally what they’re willing to do.”

Government limits on crowds aren’t why hospitality providers have been suffering through the summer and into the fall. Since the Wisconsin Supreme Court ended the state’s Safer at Home order May 13, only Milwaukee and Dane counties have had strong limits on gatherings; the Evers administration’s attempt to impose a statewide restriction in October foundered on a court injunction.

Instead, fears of the virus have tamped down business. By the end of July, “we were still only seeing businesses at 65% to 70% of their normal traffic flow,” Cotti says. “And while 65-70% is OK, a lot of these businesses operate on small enough margins that that’s just not enough for them to survive for long.”

An alternative strategy might have enabled the industry to better survive the pandemic — and could have held down the spread of the virus, he says. That would have been a much tougher shutdown early, combined with ample financial support to make up for the losses.

“The right move in the summer was to strongly fund these businesses to not be open, for them to get the virus to a low level so that people would then be willing to go frequent them,” Cotti explains. “If we would have invested in them to be closed for in-person dining for sustained periods of time, then it could have helped keep transmission low enough to where, when we come out of that period of time, the level of risk isn’t nearly as high, and you get traffic into these establishments that’s something closer to normal.”

That would have required a long-term strategy, however. “But because we’ve never gotten there,” Cotti says, “you have to go back to support them.”

Lashing out at the Legislature

The need for new federal aid doesn’t stop with the hospitality industry, according to Evers.

With the CARES Act funding ending by New Year’s Day, the governor said Thursday that Wisconsin alone will need at least $466 million through the first three months of 2021 to maintain its response to the pandemic, with testing for the virus and contact tracing, but also support for rolling out a vaccine, which could be available by the end of this year.

Evers sent a letter Wednesday calling on the state’s Congressional delegation to swiftly support more federal aid. In a second letter, he asked U.S. Health and Human Services Secretary Alex Azar to make Wisconsin a top priority state to receive the new vaccine “in quantities sufficient to vaccinate our healthcare workforce and with additional doses to be able to distribute to high-risk populations.”

Pointedly, in both letters Evers took direct aim at Republican lawmakers, blaming leaders of the state Legislature for the surges that have made the state a COVID-19 hot spot.

“A significant contributor to the crisis we are facing is that most of our statewide mitigation efforts have been struck down, enjoined, or are currently the subject of ongoing litigation — including even a public health emergency declaration and order requiring face coverings in public places — and a legislature that has not convened in more than 230 days,” Evers stated in his letter to Lazar.

In his letter urging the state’s members of Congress to support new federal aid, he said: “It remains clear in my conversations with Republican leadership that it is unlikely a bill with the support and resources our state requires to maintain our current response efforts will reach my desk by the end of the year, if ever.”

This story was originally published by the Wisconsin Examiner. For more stories from the Wisconsin Examiner, visit WisconsinExaminer.com.