During the past five weeks, Marriott International's U.S. occupancy level incrementally has ticked up a percentage point and a half per week, and has crossed the 20 percent threshold at open hotels, Marriott president and CEO Arne Sorenson said Monday during a travel conference sponsored by Goldman Sachs.
"It's a meaningful improvement from where we were, but it is a long way from where we need to get to," Sorenson said.
Marriott's strongest-performing markets are those with drive-to leisure business, but drive-to business travel is increasing in some markets as well, he said. This trend shows up particularly in extended-stay brands, "where occupancy can be in the mid-30s to mid-40s. The Residence Inn brand would be performing better than the Courtyard brand," Sorenson said.
He noted that leisure stays are leading the way back, then he projected business travel will follow. Group stays would be last, he said, but it will come back. "The importance of being together is well-recognized and understood, and when people feel safe, it will come back." he said.
In China, all 350 of the company's hotels are now open, and occupancy has crossed the 40 percent mark, up from its low point in late January and early February of about 7 percent to 8 percent, Sorenson said. He added that China remains largely a domestic travel market for now, and those numbers represent not just leisure but also business travel.
While addressing costs, Sorenson noted that the company is spending more on cleanings between guests than before Covid-19, and that Marriott is rolling out electrostatic sprayers globally.
"There's a cost to the equipment, a cost to the materials, and there will be some labor costs associated with that incremental step, but I think it is imperative to do that to deliver to guests a safe room that can give them confidence they need to get back out there," Sorenson said. At the same time, he said there likely would be savings on housekeeping, as there will be less interest in having employees inside guests' rooms during their stays.
Some of these changes might stick after Covid-19 ebbs, but others only will be "for a period of time, as long as the virus is in any way relevant to decisions we are collectively making about travel," Sorenson said.
Last week, Marriott announced it was extending its furloughs and reduced work scheduled to Oct. 2, 2020. Sorenson said that cuts and furloughs affected two-thirds of headquarters staff. "[That] would have been incomprehensible before Covid-19," he said. Prior to this pandemic, the only other crisis that was remotely comparable was in 1991, when the company laid off about one-quarter of headquarters staff. He added that while "furloughs" sound better than "layoffs," the company hopes " to bring many [people] back, but we know we won't be able to bring everybody back."
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