How has this hotel firm spent its PPP money? Eight members of Congress want to know

Eight members of Congress are calling on the Small Business Administration to investigate whether the operator of a luxury Santa Monica hotel and dozens of other properties properly spent tens of millions of dollars in pandemic relief funding.



a group of people that are talking on a cell phone: A group prays during an August demonstration supporting Margarita Santos, center, who was fired from her housekeeping job at the JW Marriott Santa Monica Le Merigot hotel. The hotel's operator, Columbia Sussex, received tens of millions of dollars in PPP loans. (Genaro Molina / Los Angeles Times)


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A group prays during an August demonstration supporting Margarita Santos, center, who was fired from her housekeeping job at the JW Marriott Santa Monica Le Merigot hotel. The hotel’s operator, Columbia Sussex, received tens of millions of dollars in PPP loans. (Genaro Molina / Los Angeles Times)

Rep. Katie Porter (D-Irvine) and seven of her Democratic colleagues issued a letter Tuesday urging the SBA to investigate how a hotel conglomerate that owns or operates at least 50 hotels spent the money it received — as much as $63 million — from the Paycheck Protection Program.

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The group of lawmakers said in the letter that the PPP was designed to keep workers employed but that the hotel company, Columbia Sussex, accepted the funding through multiple affiliates and still laid off thousands of workers.

“Columbia Sussex appears to have taken advantage of these policies — borrowing taxpayer money at artificially low interest rates through multiple entities while laying off workers,” their letter to SBA Administrator Jovita Carranza says.

Phone calls and emails to the Kentucky headquarters of Columbia Sussex were not returned Tuesday.

The PPP, part of the $2-trillion stimulus funding package approved by Congress in March, was promoted as a tool for keeping workers employed during the economic crisis. But experts, academics and union leaders told the Los Angeles Times that loopholes and flaws in the program allowed businesses to accept millions of dollars in forgivable loans without retaining or recalling most of their workers.

The program requires loan recipients to use at least 60% of the money on payroll and lets them wait as late as December to spend that money on payroll. If the recipient doesn’t follow the guidelines, the loan is no longer forgivable — but it converts to a low-interest loan that is much cheaper than loans offered by traditional lenders.

The PPP launched in April with $349 billion for forgivable loans. Congress added $320 billion later that month. The program ended Aug. 8 with more than $100 billion left unused.

Columbia Sussex, through affiliates, employed about 6,500 people nationwide before the pandemic. Porter and her colleagues accused the hotel conglomerate of receiving the PPP funding through 17 affiliates, registered at the same Kentucky address, and double counting employees of the various companies to justify the need for more PPP money.

The letter asks the SBA to investigate the 17 loans and respond by Monday.

Porter’s office said the call for an investigation is supported by Unite Here Local 11, which represents thousands of hotel workers in Southern California and Arizona. The union has been critical of the Columbia Sussex-operated JW Marriott Santa Monica Le Merigot hotel, accusing management of firing a housekeeper after she was infected with COVID-19 and of

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Hospitality firm HES Group planned new hotel in Midtown Miami. Now, it’s selling the site.

When hospitality development firm HES Group purchased a Midtown Miami lot in 2014, it planned to build a hotel. Monday, the 4company is putting the 1.02-acre site up for bid in a direct sale or joint-venture opportunity, said Francisco Arocha, the firm’s CEO and founder.

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The mortgage on the lot at 3601 N. Miami Ave. is three weeks in arrears, and the mortgage holder has begun foreclosure proceedings, Arocha said, due to the pandemic’s severe impact on the hospitality industry.

“The hospitality industry has been hit,” Arocha said. “Once you’ve been hit, you have to digest that situation and prepare for the new cycle that is going to begin in the next few months. Miami is going to continue to position itself as one of the most attractive cities in the world and, as in the past, it will recover. [Already,3/8 we saw people travel by car in the summer and we are just starting to see air travel.”

Design-savvy HES also co-owns Aloft hotels in Brickell and Coral Gables, a Hotel Indigo in Brickell, and several Miami restaurants and hotels in Latin America.

HES purchased the property for $12.25 million in 2014 with plans to build a 500,000-square-foot, 20-story mixed-use Triptych, with retail, office and 297-room hotel. The Miami Urban Development Review Board approved of plans in 2015.

The site is approved for a 24-story tower with up to 300 hotel rooms.

Miguel Pinto, president and broker at the MiMo-based Apex Capital Realty, and Daniela Lainville, Realtor with Yaffe International, are representing the seller.

The site is ideal for a mixed-use project, including all of the components — retail, office, and hospitality — HES Group originally planned for, Pinto said. “Anyone that buys this site won’t get off the ground for 18 or 24 months. I don’t see ourselves wearing a mask in 24 months. People will be coming back.”

Pinto and Lainville will issue requests for offers in December. Although HES has not specified a minimum price, Pinto and Lainville are not asking for a specific amount, a comparable sale closed at $544.60 per square foot. In April 2020, the 1.11-acre site at 201 NW 21st St. sold for $26.4 million.

South Florida’s hospitality industry has been severely impacted by the pandemic. HES Group’s original predictions of an overall 50% drop in occupancy rates in its South Florida hotels have proven optimistic; in September, hotels experienced a 37% occupancy rate in Miami-Dade County, according to industry data firm STR. Across the market, employee furloughs have been widespread.

However, some developers are betting on recovery and moving forward with new projects, including Dezer Development’s Sunny Isles Monaco hotel; Fernandez Properties’ 64-room hotel in South Beach, and the new luxury Aman hotel and condos, planned for the historic Versailles hotel in Mid Beach.

“Hospitality is going through a tough time right now but the rainy days are going to go away,” Pinto said.

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