Marriott announces CEO Arne Sorenson's salary will be suspended for the rest of the year and senior executives' salaries will be reduced by 50% as the coronavirus ravages the hospitality industry
Drew Angerer/Getty Images
- On an investor call on Thursday, Marriott announced that it will suspend the salaries of its CEO and Executive Chairman for the remainder of 2020 to cut costs amid global hotel closings and low occupancies due to the coronavirus pandemic.
- Marriott will also reduce the salaries of top executives by 50%.
- Marriott expects to furlough tens of thousands of employees in the coming weeks, Craig Karmin reported for the Wall Street Journal.
- The US hospitality industry as a whole is facing an unprecedented decline in occupancies, which could lead to a loss of 4 million hotel jobs, according to the American Hotel & Lodging Association.
- Visit Business Insider's homepage for more stories.
In a conference call with investors on March 19, Marriott's Executive Vice President and Chief Financial Officer Leeny Oberg announced that the company will suspend the salaries of President and CEO Arne Sorenson and Executive Chairman Bill Marriott for the balance of 2020 to offset revenue losses due to the coronavirus pandemic.
A November 2018 Marriott data breach revealed that Sorenson took home close to $12.9 million dollars that year, David Goldman reported for CNN Business.
The world's largest hotel brand will also reduce the salaries of senior executives by 50%.
In an emotional video address posted to Marriott International's Twitter account following the call, Sorenson said that "in most markets, our business is already running 75% below normal levels."
Amid global hotel closings, Marriott has started to furlough employees and expects that tens of thousands of employees will be affected in coming weeks, Craig Karmin reported for the Wall Street Journal on Tuesday. The hotel company employs around 130,000 people around the world, a spokesperson told the Journal.
Additional cost-cutting measures include hiring for only essential positions, shortening work weeks around the world, and pulling back on all non-essential spending, Oberg announced on the call.
"We estimate the cost-cutting measures currently in place will reduce 2020 G&A costs by at least $140 million. We're still in the process of implementing some of these plans and expect there will be additional savings beyond that amount," Oberg said.
Across the US, hotel companies are facing unprecedented occupancy declines and shutdowns as a result of the coronavirus pandemic. A forecasted 30% decline in US hotel occupancy in the coming weeks could result in the loss of four million hotel jobs and a $300 billion hit to the GDP, according to a study released by Oxford Economics and the American Hotel & Lodging Assocation.
On Tuesday, leading hospitality and tourism executives gathered at the White House to ask for a $150 billion bailout to keep the travel and hospitality industries afloat.
"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," American Hotel & Lodging Association President and CEO Chip Rogers said in a release.
A message to Marriott International associates from President and CEO Arne Sorenson. pic.twitter.com/OwsF14TZgb- Marriott International (@MarriottIntl) March 19, 2020
NOW WATCH: Veterinarians debunk 15 dog myths
- Xiaomi is worried that investigations in India might affect it cash flows, operating results
- Delhi and Kolkata are the two most polluted cities in the world: Report
- There is a yawning gap between the confidence of consumers and businesses
- TikTok’s in-app browser on iOS includes code that can monitor your keystrokes and taps
- Couch and Surf: What’s streaming on OTT this weekend?