Marriott International Group CEO Anthony Capuano told CNBC on Monday that Marriott International Group’s business operations and growth are solid despite the layoff of more than 800 corporate employees and the continued downturn in the Chinese travel market.
“We’re firing on all cylinders in every region,” he said.
The company’s third-quarter earnings showed global RevPar, or revenue per available room, rose 3%, although RevPar in China, the company’s second-biggest market, fell 8%.
Capuano said he does not believe sluggish domestic demand in China will be a long-term problem, noting that early 2024 will see a record number of hotel signings.
“We have signed more deals in the first half of 2024 than any six months in China’s history. To me, this shows that both public and private real estate entities in China are betting on the long-term viability of real estate in China. Travel and Tourism field,” he said.
China’s domestic tourism is growing slowly, and inbound tourism in the third quarter of 2024 will perform better than pre-pandemic levels, he said.
“Before the outbreak, about 18% to 19% of our total room nights were cross-border travel,” he said. “By the third quarter, we were over 20% and were restoring greater China airline seats. Capacity-wise, there’s more recovery to come, so we see more and more upside for international inbound flights.”
Marriott International reported 6% year-over-year net room growth and 2.5% room rate growth, driven by a strong return to group travel, which Capuano called the “bright, shining star” of the business today.
The company raised its year-end net room growth guidance and added 9 million new Bonvoy members in the third quarter. Marriott’s loyalty program now has 219 million members, which Capuano attributes to the work of hotel front-desk employees and new partnerships Marriott has signed with companies like Uber and Starbucks.
Layoffs ‘not a traditional cost-cutting measure’
During Marriott’s third-quarter earnings call on Nov. 4, Capuano mentioned “enterprise-wide processes to improve our effectiveness and efficiency,” a move that Chief Financial Officer Leeny Oberg later estimated would reduce the company’s Cost $80 million Starting in 2025, it will increase to $90 million per year.
The result of this measure is that companies will lay off employees, First reported by travel media company Skift November 14, later linked to Notice News of a “massive layoff” of 833 Marriott employees was posted on the Maryland government’s labor website.
Capuano denies that the company – which has doubled in size over the past decade – is growing too big, too fast, at least in terms of its employees, instead calling the move a much-needed “restructuring” of its global corporate structure .
“This is not a traditional corporate cost-cutting measure,” he said. “The team on the continent has matured over the[past]decade; we’ve also grown tremendously. We’re in 60 new countries. So we’ve thought about this job to try to shift more of the decision-making power to African continent.”
Capuano said decentralized decision-making means the global headquarters in Bethesda, Maryland, will be hardest hit by the layoffs.
He said most of the layoffs occurred at a level “above the hotel” – in corporate offices – meaning the layoffs will “absolutely not” impact service levels at any Marriott-branded hotels.
Instead, the cuts “should make us more nimble and allow us to make decisions in real time through a local market lens.”
Entering the mid-range market
Capuano said occupancy and average room rate growth were strong across much of the Asia-Pacific region, especially in Japan, where Marriott this week opened its 100th hotel, the Four Points by Sheraton Flex Hotel (formerly Four Points by Sheraton). Express hotel).
The brand is leading Marriott’s push into the mid-market in Europe and Asia-Pacific, and is partnering with City Express in North America in an effort to attract budget-conscious consumers who want simple, comfortable rooms with modern needs like Wi-Fi. .
The company plans to open a dozen more Four Points Flex by Sheraton hotels in Japan over the next six weeks, according to a news release issued Monday.
