It's fairly certain that many Marriott International-affiliated properties will never reopen. CEO Arne Sorenson is showing leadership in being candid about the tough measures the hotel chain has to take to emerge with a business worth running when coronavirus hopefully fades.
In an emotional video message on Thursday to Marriott International employees, CEO Arne Sorenson characterized the coronavirus crisis as more severe for the hotel chain than the Great Depression and World War 2. He added that the chain’s global business is running about 75 percent lower than normal, hundreds of hotels have closed, and some may never re-open.
The current financial situation, he said, is more dire than the worst quarter ever in the company’s business, which saw roughly a 25 percent decline on average in hotel revenue globally. He didn’t detail which quarter that was, but said later it was the fourth quarter of 2001.
“In terms of our business, COVID-19 is like nothing we’ve ever seen before,” Sorenson said, adding that the financial impact is worse than 9/11 and the 2009 financial crisis combined. (See the video embedded below.)
Sorenson said across Marriott’s businesses the number of employees infected with coronavirus is “low,” although he expressed his support for “hundreds of Marriott colleagues who are at this minute quarantined.”
Standing in front of a grayed-out world map, Sorenson detailed various steps Marriott is taking to get past the crisis, including Marriott International:
A message to Marriott International associates from President and CEO Arne Sorenson. pic.twitter.com/OwsF14TZgb
— Marriott International (@MarriottIntl) March 19, 2020
- Furloughing — perhaps tens of thousands — of employees for at least 60-90 days, as well as shortening work weeks at the “above-property” level, and at headquarters in Bethesda, Maryland. Above-property refers to employees and executives not working directly at hotels, such as regional vice presidents or workers at headquarters.
- Suspended all non-essential travel for employees.
- Froze hiring “with the exception of a small number of mission-critical positions.”
- Marriott Executive Chairman Bill Marriott Jr. and Sorenson will receive no salary for the rest of 2020, and the Marriott International executive team will take 50 percent pay cuts.
- Stopped all hotel initiatives, and suspended brand marketing and advertising.
Varies by Geography
The above steps are being carried out globally, Sorenson said, although some other measures vary by geography and occupancy rate. For example, some hotels that remain open are reducing staff, closing floors at properties, and closing food and beverage facilities.
China May Be Bouncing Back
Although Marriott saw a 90 percent decline in its business in China at the height of the coronavirus pandemic there, Sorenson said “we are seeing some early signs of lodging demand beginning to return.”
Sorenson, who’s battling pancreatic cancer, appeared with his head shaven in the video, a fact that made some staffers worried because of the optics, he said. He reassured employees that his appearance was what was to be expected.
“I feel good and my team and I are 100 percent focused on overcoming the common crisis we face,” Sorenson said.
The Marriott International CEO said his eight-year anniversary in the position is in two weeks. “I can tell you that I’ve never had a more difficult moment than this one,” he said.
Sorenson added that Marriott employees will be there to welcome back guests when the crisis is over, adding that “together we can and will overcome this, and we’ll thrive once again.”
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Photo credit: Marriott CEO Arne Sorenson was candid in a video message to employees about the cuts the hotel chain has to make to survive. Marriott International