Marriott International’s business operations and growth remain strong, CEO Anthony Capuano told CNBC on Monday, despite the layoffs of more than 800 corporate employees and the continued weakness in China’s tourism market.
“We’re firing on all cylinders in every region,” he said.
The company’s third-quarter earnings showed a 3% increase in worldwide RevPar, or revenue per available room, despite an 8% decline in RevPar in China, the company’s second-largest market. .
Capuano said he didn’t think China’s weak domestic demand would be a long-term problem, pointing to a record number of hotel contracts in early 2024.
“In the first half of 2024, we signed more contracts than in any other six months in our history in China. To me, this means that both public and private real estate companies in China “It suggests that we are betting on the viability of the travel and tourism sector,” he said.
China’s domestic tourism is gradually gaining momentum, and inbound travel exceeded pre-pandemic levels in the third quarter of 2024, he said.
“Before the pandemic, about 18-19% of total overnight stays were cross-border travel,” he said. “By the third quarter, it was already over 20%, and in terms of the recovery of airline seat capacity in Greater China, it will increase further going forward. Therefore, we think there is more and more room for upside in international inbound. ”
Marriott International reported a 6% year-over-year increase in net rooms and a 2.5% increase in room rates due to a strong recovery in group travel, which Capuano called a “bright shining star” for today’s business.
The company raised its year-end outlook for netroom growth and added 9 million new Bonvoy members in the third quarter. Marriott’s loyalty program now has 219 million members, which Capuano credits to the work of hotel front desk employees and new partnerships Marriott has formed with companies like Uber and Starbucks. That’s what I think.
Headcount reductions are ‘not a traditional cost-cutting measure’
During Marriott’s third-quarter earnings call on Nov. 4, Capuano alluded to a “company-wide process to increase effectiveness and efficiency,” which Chief Financial Officer Reenie Oberg later called the company’s It was estimated that costs could be reduced by $80 million. From 2025, this will increase to $90 million annually.
The action turned out to be corporate layoffs, first reported by travel media company Skift on Nov. 14 and later posted on the Maryland government’s labor website, of 833 Marriott employees. linked to the notice of dismissal.
Capuano denied that the company, which has doubled in size over the past decade, has become too large and growing too fast, at least in terms of employee numbers, and instead called the move a coveted part of the global corporate structure. He called it a “reorganization.”
“This is not a traditional corporate cost-cutting measure,” he said. “in [the past] Ten years later, the continental team has matured. We have grown dramatically. We expanded into 60 new countries. So we turned to this exercise to move more decision-making to the continent. ”
Capuano said decentralized decision-making means the impact of job cuts will be felt most acutely at the company’s global headquarters in Bethesda, Maryland.
The majority of the layoffs are being made at the “above property” level, or the corporate office level, which means there will be “absolutely no impact” on service levels at Marriott-branded hotels, he said.
Rather, the cuts “should allow us to be more agile and make decisions in real time through the lens of local markets.”
Expansion into the mid-sized market
Capuano noted strong occupancy and average rate growth in most regions in Asia Pacific, particularly in Japan, where Marriott opened its 100th hotel this week, Four Points Flex by Sheraton (formerly known as Four Points Express by Sheraton).
The brand will be launched by Marriott in Europe and Asia Pacific, alongside City Express in North America, to capture budget-conscious consumers looking for simple, comfortable rooms with modern needs such as Wi-Fi. The company is leading the expansion into the mid-sized market. .
The company plans to open more than a dozen more Four Points Flex by Sheraton hotels in Japan within the next six weeks, according to a press release issued Monday.
