Newell: NOLA tourism must battle bad headlines from early days of pandemic

GNO Inc's Michael Hecht describes road to recovery

Newell Normand
May 20, 2020 - 4:44 pm


GNO Inc President and CEO Michael Hecht returned today for his weekly segment with Newell to discuss the state of business and industry in the metro area as New Orleans approaches the end of the first week of Phase One reopening. 

“Michael, the Small Business Administration has been doing some tweaking and fine-tuning of the Paycheck Protection Program,” Newell began. “Melvin Rodrigue, head of the National Restaurant Association and President of Galatoire’s Restaurants sat down with President Trump the other day, saying that some things need to change in order to help that industry… what did he mean?”

“Let’s start off with the good, and the good is that the PPP is by far, objectively, the biggest, fastest and most impactful relief program for small businesses that we have ever seen,” Hecht answered. “By comparison, if you consider what was done by the Federal government after Katrina, Rita, Gustav and Ike, the PPP to date is close to 5,000% more in total value that’s been pushed out the door. The secret is that this time the private banking industry was used, and this model makes so much more sense. We have to codify this in Federal legislation so the next time this happens we can just turn it on instead of having to reinvent the wheel. The challenge is that it was initially set up to help businesses retain their employees instead of maintaining cash reserves to get them through. For restaurants in particular, they wondered, if I spend all this money retaining my employees and after 8 weeks I’m still not able to reopen and make money, from a business standpoint, that’s been a bridge to nowhere. The Feds are being responsive, relaxing rules so money can be spent on overhead like rent.”

“I watched Senator Elizabeth Warren try to box the Treasury Secretary into a corner the other day, to guarantee that businesses that received money under this program would keep their employees employed basically in perpetuity,” Newell continued. “But Mnuchin doesn’t answer the question - in my mind, he can’t answer that question because we have a very fragmented approach here as to how we are reopening our economy state by state, city by city. There’s nothing that’s consistent at all, but she’s asking him to make these projections.”

“That’s exactly right, that was an unanswerable political question,” Hecht said. “The best way to encourage businesses to retain employees is to create conditions for them to have robust business. That's pretty clear. It has to be remembered in all of this that as these relief measures are described as a bailout, this recession was done by government fiat in order to combat the virus. The government shut down the economy, so these aren’t bailouts. Businesses did nothing wrong, they were just caught up in the pandemic.”

“When I think about New Orleans facing a 3,4 or 5 year recovery in terms of tourism… unlike the 2008 financial crisis, which was very short in duration, this is a type of challenge we have never faced before. Your thoughts?”

“The challenges are particularly acute in two areas. In restaurants and in large events and travel. But just like Katrina, where we ended up with more white tablecloth restaurants than we had before, the culture of his pace and the restaurant industry and festival culture - it’s just so intrinsic to who we are, and so beloved around the world, which is becoming increasingly homogenous. The culture of this palec shines brighter and brighter every year. That industry will come back, but it is going to take time, and unfortunately, there will be losses along the way despite our best efforts. I have no doubt it will be back, and in some ways it will be better than ever.”

Hear the entire interview in the audio player below.

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