by Property Forum | Hotel

Marriott is closing food and beverage outlets, reducing staff and closing floors or even entire hotels due to the extremely low levels of occupancy across the world. 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.


Arne M. Sorenson, president and chief executive officer of Marriott said in a company statement, „the travel industry is being impacted in unprecedented ways by COVID-19. As the virus and efforts to contain it have spread around the world, demand at our hotels has dropped significantly.” He also stated, however, that lodging demand will rebound once the pandemic is over. Marriott is confident that they have the expertise and the resources to weather this crisis.

The statement says that trend lines in most parts of the world are negative with very low occupancy levels in North America and in Europe. Marriott does not expect to see material improvement until there is a sense that the spread of the virus has moderated. 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.

There are, however, very early signs of improvement in China, as workers return to their jobs. The number of closed hotels in China has declined from over 90 hotels a month before to under 30 mid-March. While occupancy levels in China are still under 15 percent today, this is an improvement, and trend lines are pointing in the right direction.

The company is taking numerous proactive steps to mitigate the negative financial and operational impacts of COVID-19. 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 canceling non-essential travel and spending. Marriott estimates these cost-cutting measures will reduce 2020 corporate general and administrative costs by at least USD 140 million. As additional measures continue to be implemented, this number is expected to grow. 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 USD 700 to 800 million of spending in 2020, generally proceeding with funding only when the company was previously obligated.