It's tough to build your hotel business by laying off hotel-market managers. Still, having the dough to conduct more hotel marketing is mandatory if the company is to compete.
Orbitz Worldwide laid off a substantial number of employees in the last few days as a way to throw more money into marketing its hotel business, and become more profitable.
The company declined to specify how many employees were fired.
A source outside the company pegs the number at 70, which would be more than 5% of the staff based on Orbitz’s reported 1,329 employees as of the end of 2011, the latest tally available. However, the source believes that the layoffs represented around 4% of the current staff.
In response to a query from Skift, Orbitz spokesperson Chris Chiames says:
“Along with other measures, we are making some targeted staffing adjustments related to 2013 business initiatives and efficiencies gained from the completion of projects like the global platform and the American Express ramp up.
“This involved eliminating some open positions as well as specific existing ones. We are also selectively hiring for positions related to new initiatives like the upcoming loyalty program launch.”
The source indicates that the layoffs took in hotel marketing managers in California and Hawaii, although the layoffs are undoubtedly broader-based than staff in the hotel business.
Orbitz officials didn’t specifically mention layoffs during the company’s fourth quarter earnings conference call today, but CEO Barney Harford told analysts:
Now that we have all our businesses on the current platform and have launched American Express, we’ve been able to achieve some targeted cost reductions that will lead to cost of sales and SG&A leverage.
These cost reductions position us well to achieve strong bottom line performance, while at the same time, being able to step up our marketing investments to drive further acceleration in hotel room night growth. This is particularly important, given the increasing competitive intensity in the online travel space.
For the fourth quarter, Orbitz Worldwide’s net loss widened to $314.6 million, from a loss of $46.5 million a year earlier. Revenue rose 7.1% to $189.7 million.