Marriott has confirmed that it may furlough tens of thousands of employees because of the COVID-19 pandemic, the first public indication from a major hospitality company that wholesale payroll cuts are beginning.
But the list is already growing. Pebblebrook Hotel Trust, a real estate investment trust that owns 54 hotels, said late yesterday that it had laid off 4,000 employees and intends to furlough another 2,000 by the end of the month.
“We are looking at closing the doors at more than half of our properties,” said Pebblebrook CEO and current American Hotel & Lodging Association (AHLA) Chairman Jon Bortz. “This is the reality we, and countless other owners and operators around the country, are facing in the wake of this public health situation.”
About 4 million lodging jobs have been or are on the verge of being eliminated, according to the AHLA. It cites research that shows the cutbacks will cost employees $180 billion in lost wages and lower the gross domestic product (GDP) by $300 billion.
The association said members in cities such as Seattle, San Francisco, Austin, Texas, and Boston have seen their room occupancy rates fall below 20%, and many others have shut down.
“The impact to our industry is already more severe than anything we’ve seen before, including September 11th and the Great Recession of 2008 combined,” Chip Rogers, CEO of the AHLA, said in a statement.“The White House and Congress can take urgent action to protect countless jobs, provide relief to our dedicated and hardworking employees and ensure that our small business operators and franchise owners—who represent more than half of hotels in the country—can keep their doors open.”
Marriott said furlough employees will not be paid but will remain eligible for health benefits.
Employees at all property levels, including foodservice personnel, will be affected, according to the company. Others are likely to have their hours cut, the innkeeper said.
Corporate personnel will initially be spared from the cutbacks, but executive salaries have been cut, it revealed yesterday. CEO Arne Sorenson has reportedly discontinued collecting hi salary.
Marriott said it intends to rehire the furloughed employees once the crisis passes. It employs 130,000 people in total.
“As travel restrictions and social distancing efforts around the world become more widespread, we are experiencing significant drops in demand at properties globally with an uncertain duration,” a Marriott spokesperson said. “We are adjusting global operations accordingly.”
Occupancy rates at Marriott properties have fallen below 25% in many areas of the county, compared with a rate of 70% a year ago.
A number of properties have already closed, the company said.
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