Marriott, MGM, Hilton to Furlough Tens of Thousands of Employees

3/23/20: Updated to include new estimates by  American Hotel and Lodging Association (ALHA) and Oxford Economic Study.

Marriott released new information regarding how they will deal with corporate employees.

Marriott International is set to lay off tens of thousands of employees in response to the coronavirus (COVID-19) that has left many hoteliers without business since the disease spread in early February, according to The Wall Street Journal.

The travel industry—in America and abroad—is facing a serious decrease in demand as residents are encouraged to stay home to prevent the virus’ potential spread.

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“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,” Marriott said in a statement. “We are adjusting global operations accordingly, which has meant either reduction in hours or a temporary leave for many of our associates at our properties.”

At the end of 2019, Marriott had around 174,000 employees globally. The company said the furloughs will affect a wide range of their employees, from house cleaners to general managers. The company will also cut its corporate staff about two-thirds. Furloughed staff will not be paid during this period, but will continue receiving health care benefits; furloughed corporate employees will receive 20 percent of their salary, those corporate employees still on staff will be subject to 20 percent pay cuts.

In late February, the company revealed they would be closing 90 of its 375 hotels in China, resulting in an estimated $25 million loss per month in revenue.

Bill Hornbuckle, president and chief operating officer of MGM Resorts International, stated in a letter to employees on Monday that corporate employees who are able to work from home should begin doing so starting this week. Hornbuckle also said all day clubs and night clubs will cease operations, as well as 150 food and beverage outlets, with more closing in coming days. The brand closed all 13 of its properties on the Strip; as well as its properties in Ohio, Michigan, Massachusetts and Maryland.

“We will continue to pay our Flexible Time Off (FTO) eligible employees on furlough for two weeks and our hourly employees can use all available Paid Time Off (PTO) in their bank. We’ve also made the decision to maintain existing employees’ benefits, for individuals who are on our health plans and impacted by the layoffs or furloughs through June 30th,” he stated in his letter.

A few days ago, one of Hilton’s properties, Hilton Knoxville, reported the same fate that Marriott has, operating with roughly 20 percent of their staff. This layoff came as a result of the property’s occupancy dropping from 100 percent to 8 percent over four days.

According to Chip Rogers, president and CEO of AHLA, this disruption in the industry is more severe than 9/11 and the 2008 recession combined. As of mid-March, 44 percent of the hotel industry have lost or is projected to lose their job in the coming weeks, which comes to roughly four million jobs. In major cities across the United States, including Seattle, San Francisco and Boston, hotel occupancy rates are below 20 percent and many properties have cease operations altogether.

This is a developing story.

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