Marriott to Furlough Two-Thirds of Domestic, International Corporate Staff

Pictured here is a Marriott hotel in Overland Park, Kansas. The Maryland-based hotel giant plans to furlough the majority of its corporate and onsite employees as revenues drop in response to the COVID-19 outbreak.

BETHESDA, MD. — Marriott International Inc. (NASDAQ: MAR) will furlough approximately two-thirds of its 4,000 corporate staff members in the company’s Bethesda office, as well roughly two-thirds of its international corporate staff, according to multiple media sources.

A company spokesperson first confirmed the news to The Wall Street Journal, which also reported that most furloughs are expected to last 60 to 90 days. Hospitality and travel blog One Mile at a Time reported the same time frame.

The announcement comes on the heels of Marriott’s decision last week to furlough what could ultimately be tens of thousands of employees at its hotels around the world. According to the company’s website, Marriott owned and operated about 7,300 properties under 30 brands in 134 countries. Those properties total more than 1.3 million rooms. Marriott also employs some 130,000 people worldwide.

On a conference call late last week, Marriott CEO Arne Sorenson told investors that after seeing strong growth in revenue per available room (REVpar) in its European and North American hotels during the first two months of the year, these properties were now seeing an average occupancy rate of about 25 percent. That figure stood at roughly 70 percent a year ago, Sorenson added.

On a more positive note, Sorenson also noted that the company’s business in China, the initial hotspot of the COVID-19 outbreak, was improving, with some 30 hotels still closed on a temporary basis as opposed to 90 hotels earlier in the year.

Marriott’s stock price opened at $75.02 per share on Monday, March 23, up from $66.80 per share at the close of trading on Friday, March 20. The stock price is down roughly 50 percent from $151.50 per share on Jan. 2, 2020.

Other large owner-operators in the hospitality space have taken similar measures at their properties. The Wall Street Journal also reports that Hilton Worldwide Holdings and Hyatt Hotels Corp. will furlough employees as the spread of the virus severely reduces global travel and tourism.

Pebblebrook Hotel Trust (NYSE: PEB) announced this morning that in addition to having already temporarily suspended operations at 28 of its hotels and resorts, the company expects to do the same with the 26 remaining hotels and resorts in its portfolio by March 30. The company is also postponing all nonessential capital investments in a move that is expected to conserve some $50 million in working capital. 

The hotel REIT expects to complete projects that have been under construction for a number of months, assuming that local authorities in those markets do not suspend construction activity to slow the spread of the virus. Pebblebrook also said it would furlough about 8,000 employees as part of its suspended operations.

A new study from Oxford Economics and the American Hotel & Lodging Association (AHLA) found that 44 percent of hotel employees in the United States have lost or will lose their jobs in the coming weeks.

Chip Rogers, president of AHLA, noted over the weekend that the impact of COVID-19 on the hotel industry was “more severe than anything we’ve seen before, including September 11th (2001) and the Great Recession of 2008 combined.” Rogers also said that he expects half of all U.S. hotels to cease operations by the end of March.

Hotel executives convened in Washington, D.C., last week to lobby the federal government for financial protection for hospitality jobs. Multiple news outlets, including The Los Angeles Times, reported that the industry is seeking $150 billion in federal aid.

Taylor Williams

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