Chateau Marmont workers say iconic West Hollywood hotel misused rescue funds

Union claims hotel has not used $1.95M loan for payroll

The Chateau Marmont (Getty) and protest signs (Unite Here Local 11)
The Chateau Marmont (Getty) and protest signs (Unite Here Local 11)

It’s not all glitz and glamour at the Chateau Marmont.

The hotel, where Kate Hudson was a teenage rock-and-roll groupie in Almost Famous and Emma Stone settled after her character’s newfound fame in La La Land, is now under fire for allegedly misusing $1.95 million in funds from the Paycheck Protection Program.

On Thursday, workers who say they were laid off by the West Hollywood hotel marched with giant checks and signs saying “My hotel got $1.95 million, what about me?” to the U.S. Small Business Administration’s district office in Los Angeles, calling on the federal agency to investigate whether the famed establishment misused the funds.

A local chapter of Unite Here, a union representing the workers, alleges that the hotel has not used the funds for payroll, as only a small percentage of the more than 200 laid-off workers have returned to their positions after they were let go last March. The hotel says it followed the law.

“We never got anything from the hotel or its owner,” Alejandro Roldon, a former housekeeper at Chateau Marmont who was laid off last March, told The Real Deal. Roldon said he was never offered health insurance and was never contacted about coming back onto staff.

Owned by luxury hotelier André Balazs, the Chateau Marmont prides itself as an “always open” West Hollywood anchor for celebrities and the wealthy. Last July, Balazs said he was planning to convert the hotel into a members-only club, only upping the exclusivity.

Just seven months later, Balazs’ Chateau Marmont secured a $1.95 million loan from the SBA, saying it would help retain 151 employees, according to SBA data. The union submitted a complaint to the SBA in April, but has had no response.

The Chateau Marmont “is complying with all federal laws and regulations regarding the proper uses of the loan,” a spokesperson for the hotel said.

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The hotel has used “some of the funds” for payroll for 19 rehired employees who were laid off in March last year, the spokesperson said, adding the union’s claims were “outlandish” and “untrue.”

The federal loan program was enacted as part of Congress’s Coronavirus Aid, Relief, and Economic Security Act, signed in March 2020. The SBA-backed loans were granted to businesses to help “keep their workforce employed” during the pandemic.

Borrowers can also apply for forgiveness of the loans if they can prove employee and compensation levels are “maintained” and if at least 60% of the funds are spent on payroll. Around 3.3 million loans have been forgiven as of May 24, according to the SBA. The status of Chateau Marmont’s loan has not been disclosed.

“Many large hospitality corporations used loopholes and a lack of strict oversight in the PPP program to game the system,” California Congressman Alan Lowenthal said.

More than 1,000 real estate and real estate-related firms received at least $1 million in forgiveable PPP loans last year. Last May, Texas hotelier Monty Bennett returned $68 million in PPP funds, saying there was “inconsistent federal guidance” and “compliance risk.”

Roldon said he enjoyed working at a distinguished hotel, where he could develop a relationship with guests for the over two-and-a-half years he was employed there.

“Guests knew me,” Roldon said. “I want to be there.”