As the Covid-19 pandemic continues to batter the hotel
industry, Marriott International CEO Arne Sorenson told investors and analysts
that the company is “taking very aggressive actions” to cut general and
administrative costs by a minimum of $140 million.
“We will work our way through this,” said Sorenson during a
conference call Thursday morning. “Perhaps not next month or even next quarter,
but nonetheless, reasonably soon our associates will be back at work, our
guests will be back on the road and we will collectively look back at this
experience as something we worked through together.”
Earlier this week, Marriott said it would furlough tens of
thousands of employees with hotels forced to close restaurants, close floors or
shutter entire hotels.
Other mitigation plans at the property level include a
temporary deferment of most brand standards, with owners and franchisees
permitted to delay renovations due in 2020 by one year, defer any required
furniture, fixtures and equipment funding and suspend brand-standard audits.
At the corporate level, Marriott is making significant cuts
in senior executive salaries, including a suspension of salary for both
Sorenson and executive chairman Bill Marriott. Additional corporate measures
include implementing temporary leaves for some North American staff, shortening
work weeks globally and canceling nonessential travel and spending.
Meanwhile, Sorenson said that the health crisis in China is
showing signs of stabilization, with the number of closed Marriott hotels in
greater China down from over 90 a month ago to just under 30 today.
As the virus spreads, however, key performance metrics in
other parts of the world are just starting to hit critical levels. Marriott
reports that North America and Europe hotels have seen occupancy levels below
25% over the last few days compared with about 70% a year ago, with “further
erosion in performance” expected in the weeks ahead.