NYC Gazette

New York-based Ares Capital Corporation isn't responding to questions about whether it will abide by a newly founded hotel industry group's lending standards amid the ongoing COVID-19 pandemic that has gutted the hospitality industry.

HOTELS Together recently formed by hotel owners following the government-mandated shutdown of the hospitality industry, issued new lending standards calling for flexibility for business owners.

"Loan servicers must help hotel owners protect the long-term value of their businesses for employees and our communities, lenders and bondholders, and other stakeholders," HOTELSTogether says on its website. "This should include flexible repayment plans until positive cash flows are restored. HOTELS Together has developed 'Fairness in Hotel Lending Standards,' a balanced lending standard that addresses the needs of hotel borrowers while preserving asset values for our lenders."

HOTELS Together's multipoint Fairness in Hotel Lending Standards includes no additional costs levied on borrowers, including no default interest rate, special servicer or related fees, extension fees or late fees.

Without these standards, hotel owners can be expected to go bankrupt as the hospitality industry hasn't received the sort of government aid and bailouts that many lenders have, HOTELS Together officials say.

Ares Capital did not respond to questions from NYC Gazette about whether the company will follow these standards.

Ares Capital, headquartered on Park Avenue, is a business development company and one of the nation's largest direct lenders that focuses on delivering financing solutions to middle-market clients.

The leisure and hospitality industry in a "fight for survival," American Hotel & Lodging Association (AHLA) President Chip Rogers told FOX Business last month.

"When you look at the numbers and realize we had more jobs lost in industry than in retail, construction, manufacturing, education and others combined it becomes a real question of if the industry is going to survive in the short term and what it will look like in the long term," Rogers said.

The leisure and hospitality industry has been particularly impacted by the ongoing pandemic. 

An AHLA report, which cited data from the U.S. Bureau of Labor Statistics, showed that the industry endured a loss of 7.7 million jobs and is dealing with with impact from coronavirus nine times worse than September 11. A separate AHLA report estimates that it hotels will not return to 2019 occupancy and revenue levels until 2022.

The lending standards issued by HOTELS Together also include automatic approval of relaxed Capex, Funding of PIP or FF&E Reserves; loan repayment and prepayable at any time without penalty or defeasance; 90-day forbearance and lender protected cash management.