God Bless America! Having worked internationally and benefited greatly from global learning experiences, I say, with confidence that there is no better place to do business than right here in the USA despite its fallibilities. As CFO at Palette Hotels Developments, I write this during the most challenging times our industry faces in modern history due to the Covid Pandemic. Shutdowns and the economic contractions that followed brought us to a near halt but fortunately our nation delivered on an unprecedented economic relief plan that salvaged so many companies from shutting down permanently. Still the struggle is very real and very rough, but I work for a steadfast company, in a mighty country, with a mightier team.
I was always sure of my team and was aware of their reliability, but it was not until my month-long battle with Covid 19 that I fully appreciated the many strengths and well-rounded competencies my team possessed. It takes a steady hand to lead during tumultuous times and I am proud to say I have six pairs of them on the Accounting Team here at Palette Hotels Developments. Fortunately, I am back on my feet as I can reflect on the outstanding work my team did to obtain all the financial assistance available to ensure our hotels remained healthy during this pandemic. We learned a great deal through the process, and I am pleased to share some insight and hindsight with you my fellow operators and owners.
At our home base in El Paso, TX, the few weeks after March were primarily focused on the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) for my team. Whilst a lot of management companies stayed away from processing these private-public financial support funds primarily because ownership groups must provide personal guarantees and private financial information, at Palette Hotels we jumped in to aid the relief effort for our property owners. By doing this we were highly appreciated by all our investment groups. Many of these investment groups needed our collective expertise and horsepower to ensure PPP and EIDL funding. We were happy to successfully deliver to our partners. After all, we are stewards of these assets and we believe in an all hands-on deck approach at Palette Hotels Developments. We moved swiftly and nimbly on PPP applications across our portfolio and we both were relieved and pleased to say that we achieved the maximum and necessary funding for both PPP and EIDL for over 40 hotels. Furthermore, we achieved this within a span of a few days, surprising even ourselves.
At Palette Hotels Developments our outlook is focused on growth, progress, and learning. The last several months have provided ample opportunities for all three. We are learning on our toes in a high-pressure contingent mode, getting aid through lengthy forms, tons of reports and confusing terms that are still not finalized. My team and I picked up a lot of knowledge of getting PPP and EIDL. The process is not over yet as the forgiveness of PPP is a measure that we hope to achieve. Currently, we still are seeking clarity as to whether the PPP loans are solely loans or can be considered on a grant system due to the Pandemic effects? The detailed laden PPP process was done through our local banks. Our local bankers were immensely supportive, thinking on their toes non-stop, which made our job a bit easier. Though, at times even our bankers were flummoxed with the ever-changing terms. That said, we pushed through and are proud to say that as of today we successfully processed 40 PPP notes signed by various partners.
Making our way through the PPP maze we arrived at a more intense loan. This one is precisely a loan like the name suggests, EIDL. The SBA is directing this in a systematic manner, but we jumped the gun on this, eager to remain solvent and inadvertently had to redo many steps. Lesson learned on our no pain no gain first approach. With EIDL, every LLC must be treated separately. The financial vetting of all the various LLC members is intense and thorough, asking questions such as the cars and houses they own. Off the record, you know a HNI (high net individual) as they have a hard time with this question. Patience has known to elude me many times but again this was a great opportunity to bag some. Luckily, my team reminds me to take a breath. We worked arduously and around the clock on the phone lines with our partners to get their personal and financial information. Glad to report we got it done!! EIDL is secured!! We were able to obtain substantial EIDL loans across the portfolio.
The EIDL success is one of the biggest reasons that the hotels are still in business. At Palette Hotels we are proactive from the outset of this pandemic. We formulated our own in-depth breakeven analysis and reanalysis. We disseminated tactical cost management tools and expense management courses across the portfolio. We updated numerous cash flow management models. Still, without PPP and EIDL we would have been severely impacted. Our fiscal health depended on it.
Though not perfect, we are so proud and grateful to be hospitality operators here in this great country, the USA. As Six Sigma teaches, at Palette Hotels Developments we believe that continuous improvement is the pathway of progress. Therefore, I remind myself to stop whining about the red tape because I know the tape is much longer and much redder in many countries around the world. Globally as an industry, we are chomping at the bit for an end to the Pandemic. I am optimistic it will come swiftly, only then will the hospitality industry begin its stalwart recovery. At Palette Hotels Developments we are fortifying ourselves, eager to bounce back even stronger.
Written by Punit Sheth, CFO of Palette Hotels Developments with inputs from Asha Bhakta-Roziere, Founder of Thrive Leadership & Development
