TIME TO SHIFT target from beggar airlines to beggar hotels. I see that our hoteliers are not happy with the government's HK$11.8 billion package for relief of the economic symptoms of atypical pneumonia. They want bigger concessions on rates and bigger loan guarantees. What strikes me here immediately is that they do not speak with one unified voice. Our story yesterday on their pleas - Hoteliers seek extra relief citing $11.8b as insufficient - quoted representatives from both a federation and an association of hotels. They both had only whinges to offer, of course, but I would not mind knowing who speaks for whom. I suppose one represents hotel owners and the other hotel operators, but I cannot see that their interests differ much here. Come on, folks, one lobby is all you need. Get your act together. Let us turn to the big question, however. Let us say that things are indeed so bad and hotel occupancy rates so low that without relief, some hotel owners would go bust. What would happen then? First of all, let us get it clear that this is a very unlikely scenario. Hotels in Hong Kong have had it good for many a year with much higher occupancy rates than the average of hotels elsewhere in Asia. In addition, few if any of their owners have all their money tied up in hotels alone. There is still plenty of fat here to endure what has been only a brief diet, both in accumulated past earnings and in the other resources of the owners. But let us suppose the bankruptcy scenario for a hotel. What then happens is that it goes into the hands of a court-appointed receiver and the first thing he will do is tell the staff to keep working while he sorts out matters with creditors and potential buyers. In some bankruptcies, things are so bad as to leave no choice but to close everything, walk away and refer the employees to the labour office for unpaid wages. We are talking of hotels, however, and it just does not happen that way with big real estate assets in good locations, particularly when their troubles have been a matter of only a few weeks. What actually happens is that the receiver comes to an arrangement with banks to defer their demands and to support the hotel payroll for a while so that he will have a going operation as he puts the hotel up for sale. Now here is the critical point. If he gets only HK$1 from a buyer who is willing to pick up the outstanding debt, then the hotel stays in business. Even if the debts exceed the value of the hotel he can still sell it and the banks will just have to make a loss provision in their accounts for part of the loans they made. Better that than lose the entire value of the loans. The hotel still stays in business. At the very worst the receiver can come to the view that no one wants this hotel, that even on a pure operating basis with no capital costs it is a loser and that the most profitable use for the site is tear the building down and build something else instead. Once again, this is very unlikely and the only scenario under which it could really occur is a huge oversupply of hotel rooms, even for good times, in which case the best idea would indeed be to close the hotel and reduce the oversupply. This would still help the creditors in boosting occupancy at other hotels to which they may have advanced money. And who are the losers under any of these scenarios? Simple answer: the hotel's shareholders. They lose it all. Tough luck for them. It was a risk business, they chose to take that risk and if the risk had worked they would have taken it all. But let us get this straight. Where the rest of us are concerned, where the fortunes of the overall Hong Kong economy are at stake, there is no loss. If the hotel continues operating under different owners, there is not the slightest change in economic output and if it has to be shut down because there is too big an oversupply then best do it immediately. Delaying the inevitable will result in even greater economic damage later. And this is what we have to bear in mind when hoteliers ask us for support from the public purse. It could conceivably make sense if there was a direct and real benefit to all the rest of us in a stronger economy, a benefit that could not be had otherwise. But there is no such benefit when the workings of bankruptcy already serve the purpose of keeping the economy as strong as it can be and therefore no reason to open the public purse for hoteliers. All we would do is make a gift to their shareholders and that would be a waste of public money. Bankruptcy is a wonderful tool for keeping an economy on track and directing money to where it is best spent with the minimum of impact on the general public. If hoteliers want to avoid it, they should take out insurance against the impact of disease outbreaks or ask their shareholders to put up more money. Their finances are their responsibility, not ours. Beggar airlines or beggar hotels, the pitch never changes. Scream and shout for public help when a rough patch comes along, however briefly, but keep quiet and keep all the money when times are good.