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Marriott International CEO Says Business Won't Return To 2019 Levels For 3 YearsPlay
Marriott International announced this week that it's laying off 17% of its corporate staff in October.
With a loss of $234 million in the year's second quarter, the world's largest hotel company with more than 7,000 properties around the globe has been hit hard by the steep drop in travel during the pandemic. CEO Arne Sorenson says Marriott's business dropped 90% when the pandemic first began and it’s still down as much as 65% for August.
“It's a meaningful improvement,” he says. “But minus 65% compared to the Great Recession or the events after 9/11 is multiples worse than what we experienced then.”
Business isn’t back to normal in any of the 131 countries Marriott operates in, he says, but it’s closest in China.
As different parts of the U.S. reopen at varied speeds, vacationers are traveling to places where they can drive such as beaches, mountains and deserts instead of cities like New York. People can’t do activities like going to a show or a restaurant in New York City, he says, for example, and business travel is still halted.
Marriott locations across the country are laying off employees. About 750,000 people around the world “wore our name badge every day” before the pandemic, Sorenson says, but it’s hard to estimate the number of jobs lost because not all of these workers are Marriott employees.
The company expects that business next year will remain down a third compared to before the pandemic and then a two-year recovery will be necessary to bounce back to 2019 levels, he says.
“It implies a headcount reduction around the world,” he says. “And of course, each market will vary a little bit. Each hotel will vary a little bit. But there are certainly tens of thousands of jobs that will be lost across our system across the globe.”
To ensure employees can survive the pandemic, Sorenson says the company continues to advocate on Capitol Hill for unemployment insurance to help people pay for necessities such as housing and food. Marriott did not take money from the CARES Act, he says, but many small franchise hotel owners utilized the Paycheck Protection Program or the Main Street Lending Program.
People can debate whether an additional $600 on top of state benefits is necessary in some markets, he says, but he supports “replacing the lost income with state benefits and supplemental federal benefits.” Laid-off workers in urban markets feel the loss of income more compared to people in secondary or tertiary markets with lower pay scales, he says.
“The most important thing for us from the beginning has been to make sure that our people have the resources they need to survive the pandemic and to come out of it without lives ruined,” he says.
The protest movement that followed the killing of George Floyd served as a “stark reminder” of the inequities Black Americans face and to use the company’s voice to reduce inequality through policy, he says.
American Airlines announced this week that it will allow its workers to wear Black Lives Matter pins. Marriott generally discourages political statements by front desk workers, he says, but the company publicly supports the movement to address racial inequities in the U.S.
“I think the more powerful steps that we can take are really to make sure that we are doing everything we possibly can around inclusion in our own business,” he says, “and then combining our voice with others in society to make sure we're driving policy changes.”
Businesses around the world have stopped sending their employees on trips and to conferences, but Sorenson believes that business travel will bounce back to pre-pandemic levels.
After the Great Recession, Sept. 11 and the tech bubble burst of 2001, people predicted travel would not return to the same volume as before but that wasn’t the case, he says. When the economy turns “vibrant” again — which will take a few years of recovery — he predicts people will travel for work at the same rate again.
Now, he says his biggest frustration is the large number of offices that remain closed. He’s visited the company’s Washington, D.C., headquarters, which he describes as “a whole lot safer than the grocery store,” in terms of the risk of exposure to COVID-19.
Marriott’s headquarters is at a quarter to a third capacity compared to pre-pandemic, he says.
“But there's no reason that we should be keeping everybody out,” he says. “And I think there's a sense broadly, including one I have, which is productivity — particularly when you're looking at future issues and collaboration and training — gets harder with each passing month.”
The company plans to welcome its employees back to the office instead of mandating that they return, he says. People with preexisting health conditions, child care issues or those who feel uncomfortable for any reason could continue working remotely, he says.
“It's not just about what we can accomplish or what other employers can accomplish, but think about all the small businesses that are located near where we go to work: the lunch counter, the coffee shop, the florist, the dry cleaner,” he says. “Those businesses are closed, and they won't open until we start to step back out.”
Julia Corcoran produced and edited this interview for broadcast with Tinku Ray. Allison Hagan adapted it for the web.
This segment aired on September 10, 2020.