Marriott International provided significant business updates amidst the rapidly evolving coronavirus (COVID-19) situation.
President and CEO, Marriott International, Arne M. Sorenson stated: “The travel industry is being impacted in unprecedented ways by COVID-19. We are working tirelessly to take care of our associates, our guests, our owners and our other key stakeholders. The situation is changing by the day and there is still tremendous uncertainty, but we feel it is important to share an update on some of what we have seen to date and describe key measures we are executing to mitigate the impact of COVID-19.
“While we cannot predict today how long this crisis will last, we know that it will get behind us. And when it does abate, lodging demand will rebound. We are confident that our company has the expertise and the resources to weather this crisis,” he added.
Marriott International continues to work with its customers to navigate through this crisis. While there have been historically high levels of cancellations for stays through the first half of this year, there have not yet been meaningful group cancellations for 2021 related to COVID-19, and many group customers are at least tentatively rebooking for later in 2020.
The company is taking numerous proactive steps to mitigate the negative financial and operational impacts of COVID-19. Business contingency plans have been implemented and will continue to be adjusted in response to the global situation. At the property level, contingency plans include measures such as closing food and beverage outlets, reducing staff and closing floors or even entire hotels. The company has also temporarily deferred most brand standards to help owners and franchisees, including delaying renovations due in 2020 by one year, deferring required furniture, fixtures and equipment funding and suspending brand standard audits.
At the corporate level, these steps include making significant cuts in senior executive salaries, requiring temporary leaves in North America, shortening work weeks around the world and cancelling non-essential travel and spending. Marriott International estimates these cost cutting measures will reduce 2020 corporate general and administrative costs by at least $140 million. As additional measures continue to be implemented, this number is expected to grow. The company has also taken steps to dramatically reduce costs related to programmes and services that hotels reimburse it for, such as marketing costs, to be more in-line with the expected decline in funding given likely lower systemwide revenues.
The company has also reviewed its investment spending plans and currently expects to eliminate or defer at least one-third of its prior forecast of $700 to $800 million of spend in 2020, generally proceeding with funding only when the company was previously obligated.