Pandemic deepens economic pain at Trump’s company, already suffering from a tarnished brand

WASHINGTON — The head of President Donald Trump's flagship hotel stood on Pennsylvania Avenue with face mask on and two thumbs up.

After three brutal months of empty hotel rooms and a skeleton staff, Mickael Damelincourt finally had something to celebrate: new sidewalk seating to safely welcome back Trump's MAGA-loving customers. "Let's get back to work," Damelincourt tweeted on May 28.

By the next day, Trump was in his underground bunker, protesters swarmed downtown Washington cursing Trump's name, and the hotel's outdoor seating experiment was tabled.

The whiplash at Trump's D.C. hotel is emblematic of the problems faced by his company, which was already suffering from a tarnished brand before the novel coronavirus hit. The fresh wave of political anger directed toward Trump complicates an already difficult recovery for the company.

Interviews with current and former Trump Organization employees and tenants and emails obtained by The Washington Post show the pandemic in particular has rattled operations at the company. As thousands of Trump’s hotel rooms empty, the company laid off or furloughed more than 2,800 employees and scoured for even the smallest savings. It eliminated flowers, chocolates and newspapers at its New York hotel and turned off lights in common areas in its Chicago hotel to save on electricity, according to letters that hotel management sent to investors.

"This was not just a step down," Eric Danziger, the chief executive of Trump Hotels, told board members of Trump's Chicago hotel on April 22, according to an account of his phone call obtained by The Post. "This was a steep dive."

Trump's business struggles present a potential conflict as he tries as president to manage a pandemic that has already claimed more than 110,000 American lives. The outbreak has devastated industries at the core of Trump's business — travel, luxury tourism and hospitality — and the company's fortunes largely depend on people's willingness to travel and ability to gather in large groups.

Trump has handed day-to-day operations of the company to his eldest sons. Neither Eric Trump nor the Trump Organization responded to questions about the state of the Trump Organization.

The damage of the past months appears extensive. Out of Trump's five top-earning hotels and resorts, four of them — in Miami, Las Vegas, Scotland and Ireland — shut down in March and remained closed through May. An analysis by The Post of Trump Organization revenue, based on Trump's latest public financial disclosure, which covers 2018, indicate Trump probably lost out on tens of millions of dollars in revenue over the past three months.

Even before the pandemic, Trump's polarizing presidency had sapped revenue from his business. At least two of Trump's U.S. hotels — in Chicago and Miami — had reported sharp declines in business after Trump entered politics. The company's hotel in Washington is now up for sale.

More recently, protesters have denounced Trump outside his New York, Washington and California properties, hurling invectives at these physical symbols of his presidency. At Trump's golf course in Jupiter, Fla., the 18-year-old son of a former Republican congressman was arrested for spray-painting "B.L.M." — an abbreviation for Black Lives Matter — on the entrance sign.

But along with the rest of the country, the Trump Organization has begun opening back up. Members can visit Mar-a-Lago, but only the beach club. Golfers can step out onto Trump's course along the Potomac River and some, like him, even do so without a mask.

Eric Trump tweeted Wednesday that Trump's Doral resort in Florida — the company's highest-earning hotel — will be reopening next week. President Trump quickly chimed in on Twitter about this financial burden: "And the Trump family didn't ask the Federal government for money to carry this and many other very expensive to carry properties!"

Because it is owned by the president, the Trump Organization was excluded from portions of federal relief funding.

One former Trump Organization executive said the company should get out of the hotel business, which accounts for about a third of company revenue.

"They have too many rooms to fill in a market where demand has suffered," the former executive said on the condition of anonymity to discuss the company's private financial situation. "He is too divisive a character in Chicago and NYC. In any market one wants to be neutral — he leaves many potential guests bitter and hostile."

The picture is not all dire. The Trump Organization receives licensing and management fees for some Trump-branded properties that are owned by others; and there is no indication those fees have been disrupted. The company so far appears to have met its financial obligations even while seeking relief from creditors.

In late March, Trump's golf club in Pine Hill, N.J. — which pays a monthly fee of $20,833 to use town-owned land — told the town it "may not be in a position to make [the payment] for a minimum of 120 days," according to an email obtained via public-records request. But the next day, the club reversed itself and paid the fee, other emails said.

Some former employees expect the company to weather the current difficulties because Trump owns an array of major real estate assets and has fans to patronize his properties.

"I think he's going to be fine," said one former Trump employee who spoke on the condition of anonymity to discuss a former boss. "If you own all these things outright, it's going to be a lot easier to get through it."

And yet, the current crisis is now affecting even the strongest parts of the Trump business portfolio. The office buildings in New York and California that Trump owns wholly or in part are considered more insulated from politics than his hotels and clubs because they are leased to corporate tenants, and some buildings don't use Trump's name.

One of the tenants in Trump-owned buildings that is almost certainly asking to pay less is Starbucks, which wrote to its thousands of landlords May 5 asking for a year's worth of reduced rent beginning June 1. The coffee chain rents space at Trump Tower in New York and at Trump's D.C. hotel. In Washington, Starbucks pays Trump $14,118 per month, increasing to $15,787 a month in 2023, according to Trump Organization documents obtained by The Post.

"We are having ongoing conversations with our landlords in various markets regarding what may be commercially reasonable lease concessions in the current environment," Starbucks Chief Financial Officer Pat Grismer told investors in April. Starbucks spokespeople didn't respond to multiple requests for comment about rent negotiations at the Trump properties.

Other Trump tenants are now facing their own difficulties.

A massive Italian restaurant had been scheduled to open later this summer on the ground floor of a Wall Street skyscraper owned by Trump. But instead, as the coronavirus spreads, Nero.lab's Italian Food Zone will probably have to adjust its initial concept — an 18,000-square-foot food hall where diners were to share communal tables and wait in lines for gelato and espresso. The Rome-based company's chief executive, Alfredo Polizzi, remains optimistic about future prospects at 40 Wall Street. But he knows the restaurant won't open until next year.

"We surely would've liked to do it sooner," Polizzi said in an interview. "But given the situation, I don't feel that would be wise."

Another tenant at 40 Wall Street is Neapolitan Express, which operates pizza restaurants and food trucks in New York. The company has rented space in the building since 2015, said owner Max Crespo.

Crespo's business has cratered — revenue dropped 27 percent in March, 55 percent in April, and 90 percent in May — but he has so far retained all 45 of his employees while also donating thousands of free pizzas to medical personnel and first responders. Just as things were opening up last month, protests and looting again drove away customers. The 40 Wall Street building got boarded up and spray-painted with anti-Trump graffiti, Crespo said.

"Our city's on its knees right now," said Crespo, 47, a lifelong New Yorker. "This is the worst I've ever seen it."

Crespo said the Trump Organization collected full rent the past three months but also that Trump Organization employees have been "good partners" who "said if we have any problems going forward they can work with us."

He pays the Trump Organization more than $20,000 per month but hopes to renegotiate and expects many restaurants across New York will not be able to continue operating at current rents.

"Obviously, I'm going to go and ask for a reduction in rent," he said. "I'm sure they would work with us."

Trump's business is uniquely positioned to suffer from this pandemic. The luxury tourism and leisure sector that the Trump Organization inhabits has been devastated over the past two months as travel plummeted, international borders closed, and events and conferences evaporated.

Even when stay-at-home orders end and more people return to work, hotel operators and office building owners face tremendous uncertainty about how their businesses will recover. Hotels in the United States lost 82 percent of their business for the month of April compared with last year, according to hotel data analysis firm STR. Luxury hotels saw their businesses wiped out almost completely, losing 96.6 percent of their business in April after taking in just $60 million in revenue nationwide.

Analysts also expect the hotel industry to be one of the last sectors to recover given people's aversion to travel during the pandemic.

Hotel experts predict the corporate meetings-and-events sector will be particularly slow to recover.

"I have no idea what corporate group [travel] looks like in a six-foot world," said Jan Freitag, a senior vice president at STR.

Buffets? Open bars? Networking events? he said.

"There is corporate group demand that likely will not come back for four or five years," he said.

This has meant layoffs on a large scale for Trump's employees, with the steepest cuts at the hotels. Twelve Trump Organization properties in the United States and Canada laid off or furloughed employees, including cooks, waiters, housekeepers and valets, according to local filings.

Some of the job losses will not be temporary: At Doral, the company initially furloughed 560 employees, then later said in a filing that 250 of those jobs would be permanent layoffs.

Danziger, the chief executive of Trump Hotels, said in his call that the company could begin shifting toward using more part-time employees, who are not entitled to health benefits.

Even before the pandemic, there were signs that Trump's politics drove away some potential customers.

"The vibe I got was that half of the guests wouldn't feel comfortable ever coming to a meeting there," said a former employee at Trump's D.C. hotel who was involved in booking conferences. Some hurdles can be overcome with good salesmanship, the former staffer said, but "this wasn't overcome-able."

The staffer, who spoke on the condition of anonymity to preserve relationships in the hotel industry, was laid off last year because of lack of business.

The pandemic eliminated months of events across Trump's company. At Doral, at least 10 events this year have been canceled or postponed, according to the groups planning the events.

Trump's Mar-a-Lago Club was forced to shut down in late March, missing the last month of Palm Beach's traditional winter social season. The club reopened its poolside Beach Club in mid-May, but with restrictions: The number of diners was limited, congregating was prohibited, and the club warned that "social distancing will be enforced" even in the Jacuzzi.

The club said it would now stay open a month longer than usual, to the end of June. One member, who spoke on the condition of anonymity to discuss the private club, told The Post that he planned to stay away anyway.

At the D.C. hotel, the patio seating plan was scheduled to restart again Friday. A previous attempt for outdoor tables earlier in Trump's presidency ended after pedestrians regularly insulted hotel guests and staff, former employees said.

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The Washington Post’s Stefano Pitrelli in Rome contributed to this report.