Marriott's CEO says business is solid amid corporate layoffs

Marriott International's operations and growth are solid, CEO Anthony Capuano told CNBC on Monday, amid layoffs of greater than 800 company employees and the continuing slowdown in China's tourism market.

“We are firing on all cylinders in every region,” he said.

The company's third-quarter earnings showed a 3% increase in global RevPar – or revenue per available room – although RevPar fell 8% in China, the corporate's second-largest market.

Capuano said he doesn't think weak domestic demand in China can be a long-term problem, citing a record variety of hotel deals in early 2024.

“We signed more contracts in the first half of 2024 than in any other six-month period in our history in China. “That suggests to me that both public and private real estate companies in China are betting on long-term viability in the travel and tourism sector,” he said.

Domestic tourism in China is slowly gaining momentum, he said, while domestic travel exceeded pre-pandemic levels within the third quarter of 2024.

“Before the pandemic, about 18% to 19% of our total overnight stays were cross-border travel,” he said. “In the third quarter we were already over 20%, and there is more to come in terms of restoring seat capacity for airlines in Greater China. Therefore, we believe there is always more upside potential for international inbound.”

Marriott International reported net room growth of 6% and room rate growth of two.5% year-over-year, driven by a robust return in group travel, which Capuano today called a “bright, shining star” for the corporate.

The company raised its year-end forecast for net room growth and added 9 million recent Bonvoy members within the third quarter. Marriott's loyalty program now has 219 million members, which Capuano credits to the work of hotel front desk employees and the brand new partnerships Marriott has formed with corporations like… Above And Starbucks.

During Marriott's third-quarter earnings call on Nov. 4, Capuano alluded to a “company-wide process to increase our effectiveness and efficiency,” a move that Chief Financial Officer Leeny Oberg said would later reduce company costs by $80 million to $90 million per yr, starting in 2025.

This measure turned out to be corporate layoffs. first reported by travel media company Skift on November 14, which was later linked to a observe of “mass layoffs” of 833 Marriott employees posted on a Maryland government employment website.

Capuano denied that the corporate – which has doubled in size within the last decade – was too big and growing too fast, at the least when it comes to the variety of employees, as a substitute calling the move a much-needed “reorganization” of its global corporate structure.

“This is not a traditional business cost-cutting measure,” he said. “In [the past] The continent teams have matured over the past decade; We have grown dramatically. We are present in 60 new countries. That’s why we looked at this exercise to try to shift decision-making more to the continents.”

The decentralized decision-making means the layoffs will be felt most acutely at the global headquarters in Bethesda, Maryland, Capuano said.

Most of the job cuts are happening at the level “above the property” – corporate headquarters – meaning they will have “absolutely no” impact on service levels at Marriott-branded hotels, he said.

Rather, the cuts were intended to “make us more flexible and allow us to make decisions through the lens of the local market in real time.”

Capuano said occupancy and average rate growth are strong across a lot of the Asia-Pacific region, particularly in Japan, where Marriott opened its a centesimal hotel this week – a Four Points Flex by Sheraton (formerly often called Four Points Express by Sheraton).

The brand, alongside City Express in North America, is leading Marriott's push into the mid-range market in Europe and Asia Pacific to draw price-conscious consumers who want easy, comfortable rooms with modern amenities equivalent to Wi-Fi.

The company plans to open a dozen more Four Points Flex by Sheraton hotels in Japan in the following six weeks, in line with a press release issued Monday.