Choice Hotels' permanent job cuts show even companies that rely more on the rapidly recovering drive-to, leisure travel segment aren't immune to coronavirus' negative business impact.
While global hotel occupancy rates continue to rise from record lows seen during the peak of coronavirus lockdowns, hotel companies continue to signal it will be a while before they need pre-pandemic levels of employment.
Choice Hotels has laid off all previously furloughed U.S. corporate staff. A company spokesperson declined Tuesday to disclose how many employees were impacted. But an April filing with the U.S. Securities and Exchange Commission shows 15 percent, or 220 employees, of Choice Hotels’ domestic workforce had been placed on a 60-day furlough.
“Choice Hotels made the difficult decision to transition previously furloughed corporate roles in the United States to a reduction in workforce, effective July 1, 2020, as part of the ongoing evolution of its efforts to help ensure the long-term health of the business and its independently owned and operated hotels amid a significantly reduced consumer demand environment resulting from the Covid-19 pandemic,” a spokesperson said via email.
The July 1 job cuts means Choice reduced more than 20 percent of its global workforce through layoffs and furloughs since the beginning of the year, the spokesperson added. The company employed 1,807 around the world as of mid-February, according to its most recent annual report with the SEC.
The layoffs at Choice are the latest in an ongoing wave of corporate employee reductions within the hotel industry, as analysts have begun to rally around a longer-than-envisioned recovery timeline.
U.S. hotel demand is not expected to fully recover until 2023, according to a late June forecast revision from STR and Tourism Economics.
Choice Hotels CEO Patrick Pacious hinted last month at permanent layoffs on the horizon but also indicated alternative revenue streams could buoy the company through the downturn. He was bullish on brand conversions and even colleges using hotels as temporary student housing in the fall as various growth and recovery opportunities.
The company’s chief executive has repeatedly indicated the company was in a stronger position than its competitors due to its portfolio relying more on leisure and drive-to travel. However, he also indicated there are still pockets of the company relying on the kind of group and business travel expected to take longer to recover.
“For it to get fully back to where it was in 2019, I think [the availability of a vaccine is] why most people in the industry do expect that segment of travel to be [back by] 2022 at the earliest,” Pacious said in late June. “That is something that is more of an impact on our competitors than us because we don’t have many convention hotels, but we do have hotels that depend on convention business.”
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Photo credit: Choice Hotels permanently laid off all U.S. corporate employees that had previously been placed on a 60-day furlough. Choice Hotels International