POLITICS
01/23/2017 02:41 pm ET

Trump's D.C. Hotel Was Losing Money Before He Won The Election

Democrats want to know if it's making money now that he's president.

WASHINGTON ― President Donald Trump’s hotel in Washington, D.C., lost money in its first two months of operations, far underperforming his company’s own projections, according to a letter sent by leading House Democrats to the General Services Administration on Monday.

The congressmen would like to know if Trump’s subsequent electoral victory is now proving financially beneficial for this one branch of his business empire ― and thus for the president himself. 

They also requested that the GSA take immediate action to declare the Trump International Hotel in D.C. in breach of its lease.

The lease governing the hotel’s operation within the Old Post Office building, which is owned by the federal government, specifically states that it cannot be held by an elected official. Trump announced on Jan. 11 that he would not divest from his multibillion-dollar business, which means that he will remain the chief beneficiary of all its holdings. 

The letter ― sent by Reps. Elijah Cummings (D-Md.), Peter DeFazio (D-Ore.), Gerry Connolly (D-Va.) and Andre Carson (D-Ind.) to acting GSA Administrator Timothy Horne ― points out that documents provided by the GSA show that the Trump International Hotel brought in less revenue in September and October, its first two months of operation, than company officials initially projected.

Forecasts by the Trump hotel suggested that it would bring in revenue of $2.1 million in September and $4.3 million in October, according to the congressmen’s letter. The hotel’s revenue was actually just $1.3 million in September and $2.8 million in October.

The hotel had forecast that it would lose $84,000 in net income for September and make $481,000 in October, for a total projected gain of $397,000. The hotel wound up taking a loss of nearly $1.2 million for the first two months.

Chart from Democratic representatives' letter to GSA

But since early November, when Trump won his unexpected election victory, numerous annual parties held by foreign embassies, lobbying groups and the Republican National Committee have been booked in his hotel’s ballrooms. The hotel manager held an event for foreign diplomats urging them to stay there as a way to curry favor with the Trump administration. During the inauguration festivities, the hotel was a hot spot for big donors, Trump’s foreign business partners and others looking for the immersive Trump experience.

This raises the question of whether the hotel is now succeeding because Trump won the presidency and booking a room there directly enriches the president.

“The documents include monthly reports only for September and October, and it is possible that subsequent months drew more business and higher income levels,” the letter reads. “The possibility that President Trump will profit from large increases in hotel revenues because he was elected President highlights the grave concerns we have raised for months about his conflicts of interest and potential violations of the Emoluments Clause of the Constitution.”

The emoluments clause bans government officials from receiving or accepting gifts or payments from foreign governments and foreign government-owned corporations. Trump’s tax lawyer claimed at the Jan. 11 press conference that payments for hotel rooms or event space are not emoluments because they constitute a fair market exchange. Numerous ethics experts and constitutional lawyers disagree.

On Monday, a number of those experts filed a lawsuit, along with the watchdog group Citizens for Responsibility and Ethics in Washington, arguing that Trump is already violating the Constitution by accepting emoluments through his hotel and other properties. CREW also filed a complaint with the GSA on Friday, pressing the agency to rule on whether Trump is in violation of his lease.

The Democratic congressmen additionally ask for more information about how the GSA is dealing with the $5 million in liens filed against the president’s company for failing to pay contractors who worked on the Washington hotel.

In December, House Democrats released a letter stating that Michael Gelber, the deputy commissioner of the GSA’s Public Buildings Service, had told them that Trump would be in breach of his lease as soon as he was sworn in. The GSA later said that the Democrats misunderstood Gelber’s remarks and that the agency would not state its position until Trump was officially sworn in as president.

But in that earlier letter, Democrats wrote that Gelber had detailed the process the GSA takes to determine if a tenant is in breach of its lease. If the agency reaches that conclusion, a contracting official sends a letter to the tenant giving the tenant 30 days to fix the breach.

It is unclear what, if anything, Trump could do to prevent himself from breaching the contract. He is the majority beneficiary of the company that owns the hotel.

Monday’s letter also said that Gelber had essentially told Democrats that the incoming administration would not be able to improperly influence the GSA’s interpretation of the law. The letter states that “the Deputy Commissioner assured our staffs that GSA contracting officials are independent, base their decisions on the laws and regulations governing the contracts they oversee, and would not change their positions based on inappropriate political influence.”

The risk of this nonetheless happening is exactly why the GSA lease bans elected officials from being a party to it.

The president will soon appoint a new GSA administrator. That person will then be in charge of contracting officials who must conduct yearly negotiations with the president’s company, now supposedly run by his two adult sons, Donald Jr. and Eric Trump.

“In a 60-year, complicated contract, we’re going to ask a civil servant at GSA to negotiate annually with the president’s children,” Steve Schooner, a government contracting expert at George Washington University Law School, previously noted to HuffPost. That, he said, is “mind-boggling.”

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