Recently, it was reported that Marriott International, the world's largest hotel group, plans to lay off 833 employees by early 2025 according to information submitted on the official website of the Maryland government, where its headquarters is located. According to estimates, based on the approximately 5000 employees mentioned by Marriott last year, the proportion of layoffs at the headquarters this time is about 16%. According to other reports, in addition to the headquarters, Marriott will also have layoff arrangements in other regions of the world. Marriott China has stated that its business in China is currently not affected, and the layoff plan is not currently related to the Chinese market.
CEO says company urgently needs structural restructuring
It is reported that Marriott stated in a statement that the layoffs are a step towards a comprehensive strategic reassessment of Marriott International's global operations to enhance overall efficiency. As part of the restructuring plan, Marriott will open hundreds of new job vacancies. Affected employees can apply for these positions and, if hired, can continue to work in the company.
Southern Metropolis Daily reporters noticed that when Marriott International announced its third quarter 2024 results in early November, the company's president and CEO, Anthony Capuano, revealed that it expects to reduce general management costs by $80 million to $90 million annually starting from 2025 to continue developing the company's business and supporting global growth opportunities. It is expected that this move will save costs for the owners and franchisees of Marriott hotels.
In a recent interview with foreign media, Anthony Capuano also acknowledged the news of layoffs and stated that the number of employees at Marriott has grown too fast in the past decade. Layoffs are an urgent structural restructuring for the company, not purely to cut costs, but to enable the company to adapt to market changes more quickly. However, layoffs will not affect the service level of any Marriott branded hotels.
According to the financial report, Marriott International Group's revenue for the third quarter was 6.255 billion US dollars, a year-on-year increase of 5.52%, with a total net profit of 584 million US dollars, a year-on-year decrease of 22.3%, indicating an increase in revenue but no increase in profit. During the reporting period, revenue per rentable room (RevPAR) increased by 5.4%, mainly due to significant growth in the Asia Pacific Economic Cooperation and Europe, Middle East, and Africa regions, strong domestic and cross-border demand, and an increase in ADR (Average Daily Rate). However, during the performance conference call, Leeny Oberg, Chief Financial Officer of Marriott International, mentioned that the decline in RevPAR in the Greater China market and the continued weakness in performance mean that the consumption level of Chinese tourists is not as high as before.
International hotel groups' performance in China is generally under pressure
According to statistics, as of the end of the third quarter, Marriott's global system had nearly 9100 hotels with approximately 1.675 million rooms, and the pace of opening stores in the Chinese market is still accelerating. In order to enhance the flexibility of organizational structure and reduce labor costs, Marriott International recently announced the full launch of the Freelander gig project for freelancers. It is reported that the project has been implemented in over 200 hotels in Hainan, Jiangsu, Zhejiang, as well as Beijing, Guangzhou, Shanghai, and Shenzhen since September 2024. So far, 22 hotel specific gig jobs have been opened, with a job filling rate of nearly 90%.
In fact, during the post pandemic and economic recovery period, companies such as Marriott, InterContinental, Accor, Airbnb, and online travel platform Booking Holdings have all been exposed or announced plans to lay off employees. This year, not only Marriott, but also international leading hotel groups such as Hilton Hotels&Resorts, InterContinental Hotels&Resorts, and Wyndham Hotels&Resorts in Greater China have seen a decline in RevPAR in the first half of the year, while relevant indicators of domestic hotel groups in China continue to be under pressure. Layoffs and recruitment at the same time reflect the internal business adjustments and cost reduction and efficiency improvement of the hotel group in the uncertain global economic situation.
Analysis has pointed out that international hotel groups are generally under pressure in the Chinese market this year, partly due to the high year-on-year base brought about by the rapid recovery of the Chinese hotel and tourism industry last year; On the other hand, the rise of domestic hotel brands has intensified competition in the Chinese market; In addition, it is also affected by factors such as the slowdown in demand for business travel from Europe and America under the current international situation, and the slow recovery process of China's domestic high-end business travel market. These will become the challenges that international hotel brands need to face in the future development of Greater China.