Ashford Incorporated, a hospitality real estate business with several luxury hotels in its portfolio, has skimmed $59 million from the PPP while laying off 95% of its staff and paying its leaders millions in dividends.
Ashford, Inc. owns luxury hotels in the United States including the Marriott Beverly Hills and Ritz Carlton Atlanta. Thus far, it has received more than $30 million US Paycheck Protection Program (PPP) via 42 smaller loans to its many subsidiaries. It is expected to receive another $29 million, even as funds have been exhausted for thousands of eligible small businesses.
At the same time, Ashford has laid off 95% of its 7,000 employees according to the Wall Street Journal. One of its affiliate companies, which owns over 100 hotels, also stopped making debt payments (totaling $4 billion).
Monty Bennett, the CEO and Chairman, has also reportedly received millions of dollars in preferred dividends as COVID-19 rages on and most of his employees are laid off. Bennett claims he has sacrificed as well by taking a 20% pay cut and deferring 25% of his cash bonus. Dividends have been halted for regular shareholders.
Wait just a moment, you might be asking. Doesn’t the PPP have a $10 million limit? Indeed it does, but large companies like Ashford have been able to spread claims over multiple subsidiaries to skirt that rule. The only limitation: each subsidiary must not have more than 500 employees.
With receipt of the funds, Bennett now plans to hire back some staff:
“75% or more of the proceeds will be used to bring our employees back to work with the balance to be used to pay utilities, rent, and debt service to lenders.”
But Brookfield Asset Management Inc., a lender to Ashford, is suing. It contends that Ashford engaged in a “fraudulent scheme” by transferring money back to the parent organization from individual hotels last month. Bennett calls Brookfield a bully.
Ashford likely did not engage in illegal conduct. But $59 million…seriously? While employees hope for crumbs and creditors are told to pound sound, Bennett cares for his personal wild animal park in the backyard of his Dallas home with lavish dividends during a time of crisis. Meanwhile, tens of thousands of small business have been told there are no PPP funds left. Something is not right in this picture.
image: Marriott Beverly Hills