Barry Sternlicht has voiced worries of the next “calamitous recession,” but now he is optimistic that the epic disruption of the global coronavirus pandemic will be over in three months.
“I don’t think in the history of the world have you ever had this many labs, this many people focused on a cure or a vaccine with technology that didn’t even exist 10 years ago,” he said during a television interview with “Bloomberg Markets: The Close.”
“I’m pretty optimistic that this long slide to oblivion that people are looking at is going to be shorter, and we have to hold together and act as one,” he continued.
Sternlicht, chairman and CEO of Starwood Property Trust, one of the nation’s largest mortgage REITs, said he is feeling “pretty comfortable” with its credit exposure and, after checking in with its bank lenders, he said he is confident that the institutions “aren’t really in tremendous duress.”
That said, he admitted real estate is “slow” to adjust to conditions and that there will be pain, but maintained that he believed the pandemic will be reined in across the U.S. by this summer.
“We’re facing World War III for 90 days. It’s not World War III for five years, or World War III for 10 years. It’s going to be a 90-day gap,” he said.
“If the banks behave themselves, the companies won’t be under too much strain if we’re talking about 90 to 120 days,” he continued. “Maybe they should turn the market off for two weeks and let us get through this.”
Sternlicht also spoke out on how the government should assist hotel and service workers. He criticized the Trump administration’s $1 trillion stimulus package, attacking its proposed payroll tax cut in particular.
“This discussion about a payroll tax cut is so stupid. It’s a trillion dollars and you have to be employed to be a beneficiary of that. That’s not the issue. The issue is the people that are unemployed, or will become unemployed,” he said.
“What we ought to do is give those 20 million people in the service industries that are [going to] lose their jobs, $5,000,” Sternlicht continued. “We don’t need to make these trillion-dollar facilities available to banks. We need to get the money to the people who are unemployed.”
On Tuesday, the hotel industry requested a $150 billion bailout package, $100 billion of which was proposed to go to worker retention. The same day, Marriott International began furloughing its hotel workers as it closed its managed properties.
Airlines and other travel-related businesses, such as vehicle rental companies and travel agencies, are also asking for $150 billion.
“There’s no choice for American Airlines or Marriott or Hilton to lay off workers because there’s no guests in the hotels, partly because the government shut them,” said Sternlicht.
“They’ll be back at work as soon as we can rehire them,” he noted. [Bloomberg] — Erin Hudson