Marriott International has pointed to small signs of recovery in the Chinese hospitality market as chief executive Arne Sorenson offered a business update amid the rapidly evolving coronavirus outbreak.
The number of closed Marriott hotels in Greater China has declined from over 90 a month ago to under 30 today, he said.
While occupancy levels in Greater China are still under 15 per cent today, this is an improvement, and trend lines are pointing in the right direction.
However, the picture was much darker elsewhere.
In the rest of the world, where the crisis is much more recent, the trend lines are still negative, Sorensen explained.
North America and Europe have seen occupancy levels below 25 per cent over the last few days, compared to around 70 per cent a year ago.
The company said it could see further erosion in performance in the weeks ahead and does not expect to see material improvement until there is a sense that the spread of the virus has moderated.
While there have been historically high levels of cancellations for stays through the first half of this year, there have not yet been meaningful group cancellations for 2021 related to Covid-19, and many group customers are at least tentatively rebooking for later in 2020.
Sorenson added: “The travel industry is being impacted in unprecedented ways by Covid-19.
“As the virus and efforts to contain it have spread around the world, demand at our hotels has dropped significantly.
“We are working tirelessly to take care of our associates, our guests, our owners and our other key stakeholders.
“The situation is changing by the day and there is still tremendous uncertainty, but we feel it is important to share an update on some of what we have seen to date and describe key measures we are executing to mitigate the impact of Covid-19.”
The company is taking numerous proactive steps to mitigate the negative financial and operational impacts of Covid-19.
At the corporate level, these steps include making significant cuts in senior executive salaries, requiring temporary leaves in North America, shortening work weeks around the world and cancelling non-essential travel and spending.
Marriott estimates these cost cutting measures will reduce 2020 corporate general and administrative costs by at least $ 140 million.
As additional measures continue to be implemented, this number is expected to grow.
In the current environment, a major priority is preserving liquidity.
Marriott has a $ 4.5 billion revolving credit facility that expires in June 2024 to provide liquidity when needed.
As of March 17th, the company has drawn down $ 2.5 billion primarily to support commercial paper maturities.
Given the meaningful coronavirus impact experienced to date and the uncertainty and fluidity of the ongoing situation, Marriott has withdrawn all aspects of its outlook and assumptions for 2020.
In the long-term, Sorenson offered cautious optimism.
“While we cannot predict today how long this crisis will last, we know that it will get behind us.
“And when it does abate, lodging demand will rebound.
“We are confident that our company has the expertise and the resources to weather this crisis,” he concluded.
Sorenson had the below message for Marriott employees:
A message to Marriott International associates from President and CEO Arne Sorenson. pic.twitter.com/OwsF14TZgb
— Marriott International (@MarriottIntl) March 19, 2020
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Image: Chai Ting/Xinhua News Agency/PA Images