Arne Sorenson, chief executive officer and president of Marriott International, discussed operating the world’s largest hospitality company during the coronavirus pandemic on Bloomberg’s Leadership Live With David Rubenstein last week.
Sorenson, who has led Marriott as president and CEO since April 2012, said the virus outbreak is impacting the industry worse than 9/11. “A certainty we thought we knew, it will never be this bad again, and of course this is worse.”
In the fourth quarter of 2001, after 9/11, Marriott business was down about 25%. The worst quarter in the Great Recession was down about 18%, which was a global crisis, compared to 9/11 which was “by and large a U.S. number.”
While Marriott does not yet have a full quarter yet of impact, March was “pretty profoundly impacted, I think the industry in the U.S. is down almost 60% in the month of March, compared to the 25% from 9/11.”
Marriott currently has about 2,000 hotels closed of its 7,500 across its 30 brands worldwide, Sorenson said. Of the 5,000 hotels in the U.S., about 1,000 are closed and tend to be bigger properties in cities where the health crisis is more intense, as well as those more dependent on group business and long-haul travel.
With about 11 hotels in Wuhan and 350 across mainland China, Marriott saw the effects of the coronavirus as early as January, Sorenson said. “We saw it come on very, very quickly, and so by the first week in February our business was down 90% as a whole, not just Wuhan.”
Now, hotels in China are starting to come back online and are preforming “reasonably better.”
“If we lost about 90% of our business, we probably had occupancy down to 6% or 7%, compared to a norm of 70-80%. I think as we speak today China’s back in the 25% range, so if you do the percentage it’s up massively, but it’s still down from where it should be.”
For hotels that are still open, gyms are generally open with higher cleaning protocols but it varies by market. Food and beverage in U.S. properties are limited, with specialty restaurants closed but three-meal restaurants open. “Where the operations look most normal is china, 70% of restaurants in our hotels are open, and most hotels in China have multiple restaurants, so that’s a big portfolio,” Sorenson said.
‘Where do we go from here?’
Sorenson and his team have “increasingly, as the weeks have gone on, talked about ‘Where do we go from here?’ How do we get ready for maybe some signs if life?”
He said in the early stages – at least the next year or so before there’s a vaccine – there will be clear operating implications to protect associates and guests. It will impact how hotels do housekeeping and check-in guests, there will be different cleaning protocols, and more distance between associates and guests. Additionally, all Marriott employees will wear masks in hotels.
To that end, the company unveiled Tuesday concrete ways it will increase its cleanliness standards to meet the new health and safety challenges brought on by COVID-19. Enhanced technologies will be rolled out over the next few months, including electrostatic sprayers with hospital-grade disinfectant to sanitize surfaces in guest rooms, lobbies, gyms and other public areas. The company is also testing ultraviolet light technology for sanitizing keys for guests and devices shared by associates.
To increase food safety, all food handlers and supervisors will be trained on safe food preparation and service practices, and is “modifying its operational practices for in-room dining and designing new approaches to buffets.”
“This is the kind of environment no one could have ever predicted. So how do we find a way to work ourselves out of it as a community?” Sorenson said during the interview. “When we go back to normal operations, and we don’t know when that will be, we need to make sure we can learn from this.”