Amid 800+ layoffs, Marriott CEO says business operations are strong
Marriott International’s business growth remains robust despite recent corporate layoffs, CEO Anthony Capuano assured during an interview with CNBC on Monday. On the other hand, the company announced the reduction of more than 800 corporate positions and reported challenges in China’s tourism sector.
“We are firing on all cylinders in every geography,” Capuano emphasized, highlighting Marriott's performance despite the headwinds.
Marriott’s third-quarter earnings revealed a 3% global increase in revenue per available room (RevPAR), even as RevPAR in China, the company’s second-largest market, dropped by 8%. Capuano expressed confidence that the slowdown in China is temporary.
Pointing to a record-breaking pace of hotel signings in early 2024, he noted, “We signed more deals in the first half of 2024 than in any six-month period in our history in China. This indicates strong faith from both public and private entities in the long-term potential of the travel and tourism industry.”
Domestic travel within China is gradually rebounding, and inbound travel outpaced pre-pandemic levels in the third quarter. Marriott expects further recovery as international airline capacity in Greater China continues to improve.
Globally, the company reported 6% net room growth year-over-year and a 2.5% increase in room rates, buoyed by a resurgence in group travel, which Capuano described as the “bright, shining star” of the quarter. Marriott also added 9 million new members to its Bonvoy loyalty program, which now boasts 219 million members. Capuano credited this growth to effective front-desk engagement and partnerships with brands like Uber and Starbucks.
The announcement of 833 corporate layoffs, described as part of an “enterprise-wide process to enhance effectiveness and efficiency,” sparked questions about Marriott’s growth strategy. However, Capuano clarified that the layoffs were not a conventional cost-cutting measure but a strategic move to decentralize decision-making.
“In the past decade, we’ve doubled in size and expanded into 60 new countries,” Capuano explained. “This reorganization will shift more decision-making to the continents, enabling us to respond faster to local market needs.”
Most job cuts are concentrated at Marriott’s global headquarters in Bethesda, Maryland, and will not impact service levels at its hotels, Capuano assured. Instead, the changes aim to make the organization more agile, with decisions being made closer to where they have the most impact.
Marriott is also intensifying its efforts to capture budget-conscious travelers. In Japan, the company recently opened its 100th hotel, a Four Points Flex by Sheraton, marking a significant milestone in the Asia-Pacific region.
The Four Points Flex brand is spearheading Marriott’s push into the midscale market in Europe and Asia-Pacific. Meanwhile, the City Express brand is playing a similar role in North America.
“Budget-conscious travelers are seeking simplicity and comfort with modern amenities like Wi-Fi,” said Capuano, noting that Marriott plans to open a dozen more Four Points Flex by Sheraton hotels in Japan in the coming weeks.
As Marriott navigates the challenges of layoffs and sluggish performance in China, the company remains optimistic about its growth trajectory. With strategic adjustments and continued global expansion, Capuano believes Marriott is well-positioned for long-term success.