Marriott Furloughs Two-Thirds of Their Corporate Employees - Pizza In Motion

The crisis surrounding the coronavirus pandemic continues to spread in ways that might have seemed unimaginable even weeks ago. Marriott just announced that they're laying off thousands of corporate employees, two-thirds of the entire corporate team.

It was just a few days earlier that Marriott started furloughing tens of thousands of workers around the world in hotels that were part of closures due to the drop in travel. Now, that appears to have expanded to their corporate office.

The Wall Street Journal is reporting that Marriott is furloughing approximately 2,600 of their roughly 4,000 corporate employees at their Maryland headquarters:

Marriott said the corporate staff furloughs would begin early next month and estimate that they will last 60 to 90 days. During that period, furloughed U.S. corporate employees will receive 20% of their salary, which can be put toward health care and other costs, the spokeswoman said. Corporate employees who stay on are subject to 20% pay cuts and reduced workweeks, the spokeswoman said.

When Marriott acquired Starwood, they inherited their entire corporate team. It had been reported that Starwood already had more corporate employees than they needed. Marriott went about trimming their team as they combined the two entities. Still, Marriott has a massive collection of hotels across the world and has a big team to manage them. For the next few months, they'll be doing it with a much smaller group of folks.

The Bottom Line

Marriott executives have noted that occupancy levels at hotels worldwide are down as much as 75% since COVID-19 has disrupted everything we know as normal. That's a massive drop in rooms and revenue. The majority of hotels carrying a Marriott brand across the globe aren't owned by Marriott. That insulates them to some degree from the crisis, putting the burden on hotel owners. But, with low occupancy and some hotels closing, Marriott's biggest source of revenue (royalties from hotels) is drying up.

Marriott is hunkering down for the long haul. They expect business to be at historic lows for months. They could always bring employees back early if business rebounds. But, this is just another sign that the biggest corporations of the world think we're in for a prolonged reduction in travel the likes of which I've never seen.

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