Click here if you want to read this week's post in your web browser. Otherwise it's pasted below for your convenience.
Our Family Biz Got Coronavirused
My parents own a small roadside motel in Montville, NJ. They’ve owned and operated this business full-time since the mid 80’s.
But if you ask my dad today what he does for a living, he would say, “I’m retired, my son handles the family business.”
My dad is currently 65 years young, and this past month proved to me he’s as sharp and determined as ever.
Since Coronavirus became a major issue, Phil Murphy, the Governor of New Jersey, has been signing Executive Orders as often as I eat cereal (every night before bed).
In these Executive Orders, the Governor’s office outlines the Do’s and Don’ts of going about your life as a resident of New Jersey.
Here are the relevant Executive Orders (103 - 108):
I’ve read through all of these Executive Orders line by line, and none of them mention hotels, motels, lodging businesses or transient / seasonal guests.
Then there’s Administrative Order 2020-8, signed on April 4th, 2020 by Colonel Patrick J. Callahan, State Director of Emergency Management.
Administrative Order 2020-8 is a two page document, but only page 2 matters for context.
Here it is: (No need to read; summary below)
Here’s the TL;DR of Administrative Order 2020-8: Individual municipalities and counties can decide whether or not they will allow seasonal and transient guests into their territory.
Pool me into the same category as Elon Musk. The Federal & State governments have no issue with us conducting our business. However, our local government couldn’t help but get in the way.
I was this close to tweeting, “If anyone is arrested, I ask that it only be me.”
Three days later, on April 8th, 2020, we received a letter from the Mayor (Frank Cooney) and Township Administrator (Victor Canning) of Montville, NJ.
Here’s the letter: (No need to read; summary below)
Here’s the TL:DR of the letter from Montville Township: Effective immediately, as of April 8, 2020, and until further notice, our business will no longer be able to accept seasonal or transient guests.
Seasonal and transient guests include everyone except for:
- Individuals housed as part of a state-directed, non-congregate shelter initiative
- Individuals taking temporary residence supported by Federal, State or Local Emergency or other housing assistance
- Health care workers taking temporary residence.
Basically, we are left with Section 8, OTA Guests (Office of Temporary Assistance), and homeless people supported by government assistance.
If we’re being realistic, no self-respecting health care worker is going to stay at our property. It’s too.... budget-friendly.
In the motel business, “budget-friendly” is the politically correct way of saying dingy. I have no problem admitting that, as we’ve carved out a robust niche for ourselves as the low-cost provider in our market.
Once this letter hit our inbox, we began to scramble. We were no longer allowed to accept new guests.
Here’s how we tried to mitigate our losses.
- Retain current guests. We do quite a bit of long term stays (weekly or longer). We informed all of our guests that if they checked out, they will NOT be able to return for the foreseeable future. We maintained 35% occupancy with these guests alone.
- SOTA Program. Back in 2017, the Bill de Blasio administration (Mayor of NYC) introduced the Special One Time Assistance (SOTA) program, paying 12 months of rent upfront to landlords in and outside the city willing to house the homeless. This yielded zero results for us.
- FurnishedFinder.com. A website that helps Travel Nurses find Affordable Houses, Rooms, Cottages, Apartments, and Condos. Think AirBnB for Nurses. This yielded zero results for us.
- GoSection8.com. The largest affordable housing listing service in the nation. Think Apartments.com for Section-8 Voucher holders. This yielded zero results for us.
- OTA: Office of Temporary Assistance. Morris County, NJ offers financial, medical, and social service assistance to clients in need: Battered Women, Homeless, etc. This yielded zero results for us.
As you can see, we weren’t able to capitalize on any of the programs at our disposal. However, that didn’t stop us from trying a new strategy as often as we could think of them.
My dad and I spent hours on the phone trying to talk to anyone who might be experiencing a similar situation. It was through these conversations that we were able to identify where to focus our effort next.
Paying a mortgage is difficult on 35% occupancy. Luckily, we were prepared for this moment. We keep 4 months of mortgage payments in the bank as working capital.
We quickly learned that wasn’t going to be enough. Aside from our mortgage payment, we have other fixed and variable costs that 35% occupancy simply wasn’t going to sustain.
The next step was to request mortgage forbearance. Our bank really dragged their feet on our application. However, on May 14th we received a letter detailing the terms and approving our request.
3 months of principle and interest payments (May, June, July) were moved to the back end of the loan. We would still be required to continue funding our escrow account for property taxes and insurance.
Reaching Out to Local and State Officials:
I tried calling and writing to both the Governor of NJ as well as the Mayor of Montville, NJ. I never once heard back from either of them. Bust.
My dad randomly went to the Montville Township Municipal Office and spoke with the Secretary of the Township Administrator’s office.
Later that same day, I received a call from someone in the Health Department.
She started the conversation with, “Hey, I heard your dad is quite the character. Tell me about what’s going on. Why did you stop accepting new guests?”
… “Because we received a letter telling us to do that.”
“Well, I just spoke with the Township Administrator and he says you can accept guests.”
… “OK, can you send that to me in writing, please?”
We’re Open for Business Again!
After closing our doors to new customers for over a month, we’re back in business. I called the team and told them to turn everything back on.
I have to admit, getting permission to be back in business was anticlimactic. A two minute phone call that treated the entire thing like a misunderstanding hardly seemed like a reason to celebrate.
During all of this, I was reading Meditations by Marcus Aurelius to Luna. These two quotes stood out for me as I re-read it this time around.
“When something threatens to cause you pain: the thing itself was no misfortune at all; to endure it and prevail is great good fortune.”
“The cucumber is bitter? Then throw it out. There are brambles in the path? Then go around them. That’s all you need to know. Nothing more. Don’t demand to know “why such things occur / exist”. Anyone who understands the world will laugh at you.
Playing by the rules is for suckers. When we received that letter from the local government telling us to stop accepting new guests, we were shaking in our boots. We immediately complied and tucked our tail between our legs. We could have just as easily continued doing business. If we ended up getting in trouble, I would have claimed ignorance, “What email?”
Doing the right thing is always the right thing. I think deep down, we wanted to do our part in flattening the curve.
Focus on what you can control. My dad and I had a 5 minute call every day basically asking each other what we were going to do to adapt to the current situation. Although most of our efforts yielded zero results, I’m proud we put our heads together and had a solutions oriented approach.
The squeaky wheel gets the grease. My dad is relentless. I would bet anything May 15th wasn’t the first time he made an impromptu, uninvited visit to our town’s Municipal building. It’s just the first time he told me about it because he gained some traction.
I’m not sure how long it will take us to get back into full swing, but I appreciate how eye opening this stress test was for our business.
I’m looking forward to tweaking our “worst-case scenario” strategy once all this is over. I’m also going to continue the conversation with the new travel partners we’ve acquired (Furnished Finder, GoSection8, and the Office of Temporary Assistance).
Finally, I think it might behoove me to actually pay attention to local politics going forward. Ugh.