Marriott International released a video yesterday, March 19th, in which CEO Arne Sorenson outlined the impact the ongoing coronavirus (COVID-19) pandemic is having—and will have—on the company. In a rare appearance from Sorenson, following treatment for pancreatic cancer, he discussed the hotel giant’s longterm goals, citing the address as his “most difficult.”
“In terms of our business, COVID-19 is like nothing we’ve ever seen before,” Sorenson says. “COVID-19 is having a more severe and sudden financial impact on our business than 9/11 and the 2009 financial crisis combined. The worst quarter we had in those earlier crises saw a roughly 25% decline in hotel revenues, on average, across the globe.”
Sorenson cited a 90% decline in business in China beginning in January 2020, as the coronavirus spread across the country from its point of origin in Wuhan.
“In most markets, our business is already running 75% below normal levels,” he explains. “The restrictions on travel, gatherings of people, and required social distancing is having an immediate impact by depressing demand for our hotels. As a result, we have hotels around the world that can’t operate without incurring substantial economic losses and risking, permanently, their ability to reopen when this gets behind us.”
Sorenson also acknowledged that hundreds of Marriott properties have already closed or initiated the process of closing, but also confirmed that the company was working to implement business contingency plans globally.
“We have worked to take controllable costs out of the business, like suspending all non-essential travel. We have paused all new-hires with the exception of a small number of mission critical positions,” he continues. “We have stopped all hotel initiatives for 2020 and have gone dark on our brand marketing and advertising during this period.”
Sorenson also pointed out that he and Bill Marriott would not be taking salary for the balance of 2020, while Sorenson’s executive team would be accepting a 50% cut in pay. In addition to shortened work weeks, Marriott will also be putting temporary leaves in place for at least 60 to 90 days in the U.S., a move that Sorenson noted would impact most associates at the company’s headquarters in Bethesda, Maryland.
While measures will vary property to property, Sorenson claimed that F&B outlets would close along with entire floors of certain hotels. Staff reductions would also occur.
“If there is any good news visible today, it is the signs of early recovery in Greater China. China is now bringing manufacturing back online and we are seeing some early signs of lodging demand begin to return,” Sorenson says. “If this holds, it may bode well for the course of this epidemic in other parts of the world.”
Just two weeks shy of his eighth anniversary as CEO, Sorenson concluded the video fighting back tears as he explained he has “never had a more difficult moment than this one.”
“There is simply nothing worse than telling highly valued associates, people who are the very heart of this company, that their roles are being impacted by events completely outside of their control,” he continues. “I have never been more determined to see us through than I am at this moment. I wish you good health and a sense of optimism. Together we can, and we will, overcome this and we’ll thrive once again.”