How Marriott plans to manage a 45% drop in hotel occupancy rates
03/26/2020|7:01:39 PM|The Points Guy

The hotel industry — like just about every other sector of the economy — is suffering greatly from the essentially nonexistent demand for travel as a result of the coronavirus pandemic.

Predictably, as a result of the collapse in travel worldwide, hotels are seeing dramatic decreases in occupancy rates, average daily rates and revenue per available room (RevPAR). The drop in demand is having a real-world effect on businesses across the industry, with Marriott having already announced temporary layoffs of tens of thousands of workers in hotels across the world — from management level to housekeepers.

On March 19, Marriott held a call for investors featuring its president and CEO Arne Sorenson and Ms. Leeny Oberg, Marriott International’s executive vice president and chief financial officer. These executives painted a picture of a company that is making big changes at the hotel and corporate levels to weather this crisis.

There’s no way to sugarcoat it: Things are currently grim for Marriott and all hoteliers. As Sorenson said on the call, the chain is seeing occupancy rates in North America at under 25%, down from about 70% last year. And, things will get worse before they bottom out and eventually improve.

From its latest update, it seems the world’s largest hotel chain is using learnings it has acquired from past economic downturns and hopes to emerge from this current crisis stronger than before, but it will not be easy. There will be a lot of pain to endure in the short- and medium-term.

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